by Bob Sneed
The digitization of corporate payments is creating a new challenge for businesses: how to optimize payments to suppliers, regardless of whether the payment is made via commercial card, ACH, EFT or check.
Businesses now make 39 percent of their payments to suppliers via check, per the Institute of Finance and Management’s (IOFM) 2018 Future of Accounts Payable Study. ACH accounts for 30 percent of supplier payments, while cards represent 17 percent of payments and wire transfer represents 9 percent. A few years ago, paper checks represented more than two-thirds of payments to suppliers.
Importantly, businesses expect to make less than half as many payments to suppliers via paper check within the next three years, the IOFM study found. The biggest beneficiaries of the move away from paper checks will be ACH, which will see its share of supplier payments grow by eight percentage points, and virtual cards, which will see their share of supplier payments grow by 10 percentage points. The percentage of payments made via p-card and wire transfer will remain unchanged.
Against this backdrop, speed, simplicity, transparency and control are crucial payments requirements.
But many businesses that have taken a piecemeal approach to payments automation are struggling to balance these key requirements across their supplier payment channels. Some buyers are sacrificing supplier choice in favor of cost benefits. Other buyers give up cost savings for the perceived ease-of-deployment of ACH. Others use solutions that make it hard to capture early payment discounts.
Fast, Simple, Transparent & Controlled Supplier Payments
Businesses don’t need to sacrifice speed, simplicity, transparency or control to pay suppliers – because there are solutions that meet all these requirements to optimize payments to suppliers.
These solutions offer a single bank-agnostic platform for a variety of payment methods (including single-use virtual cards, alternative network payments, early pay discounts, ACH, private settlement networks and check). This allows businesses to use the payment method that makes the most sense for individual suppliers.
Using an integrated payables platform offers a way for buyers to optimize supplier payments, by:
- Managing and optimizing all accounts payable disbursements (including global) from a single platform without requiring the buyer to change its existing bank relationships
- Connecting buyers with suppliers through a single payments file
- Working seamlessly with the buyer’s existing ERP or other financial systems
- Integrating tools for capturing early discounts into the payment lifecycle
- Providing visibility across the payment lifecycle, regardless of the method
- Automating reconciliation processes across all payment types
Taking an integrated and strategic approach to optimize payments to suppliers overcomes the challenges businesses have historically faced when paying their suppliers:
- Rigid, paper-based payments processes
- Fragmented systems and processes
- A lack of transparency in supplier payments
- The burden of complying with regulations and rules related to payments
Integrated Payables Platforms Help Businesses Better Balance Payments Needs
Businesses never have to sacrifice speed, simplicity, transparency or control with an integrated payables platform. Here’s how an integrated platform helps balance payments requirements and optimize payments to suppliers:
- Fast: Buyers use a single platform to pay all suppliers electronically.
- Simple: Managing and optimizing all payments from a single location eliminates the need to log into multiple payments portals or upload multiple ready-for-payment files. Buyers can ensure the right payment method is used for each supplier ensuring the cost effectiveness of each payment.
- Transparent: Integrated payables platforms provide real-time visibility into the status of payments and immediate access to payment history and visibility into payment details.
- Control: Automated separation of duties, adherence to approval policies, tracking of transaction approvals and history, PCI compliance controls, and the elimination of paper checks and processes that can impact chain of custody improves control over payments. Connectivity between the payables platform and the existing financial systems enhances timing and control over supplier payments and improves working capital management.
Integrated payables solutions do more than automate payments to suppliers; they optimize them.
Optimize Payments To Suppliers
Is your business making sacrifices to pay its suppliers? Get in touch to learn how we can help.