by Matt Roy
Using paper checks? Consider the move to a digital wallet
Do you find yourself writing a lot of checks every week and then having to deal with the organization and tracking of those payments? If your business is still paying invoices with paper checks, or mailing bills and receiving checks, you might consider a faster and less expensive B2B payment method. With improved technology, nearly instant processing, and easy payments tracking, there has never been a better time for small and medium-sized businesses (SMB) to consider going paperless.
According to PYMNTS.com, 70% of businesses are moving away from paper checks to automate their accounts receivable processes. Whether you’re in the business of advertising, technology, construction, energy, healthcare, food service, or transportation, becoming fully automated will save you time and money, and prepare you to significantly scale your business.
Impact of COVID on payment processing
Payment behavior changed abruptly with the COVID-19 pandemic, according to the Federal Reserve. From 2020 - 2021, B2B Automated Clearing House (ACH) transactions increased from $4.42 to $5.32 billion. These ACH transactions are processed via electronic payments. The increased convenience of electronic payments has spurred more and more accounting departments to move away from manual paper processing to the more streamlined digital payment tools.
Perhaps the best incentive for switching to an electronic payment system is improving your cash flow. In comparison to mailed paper checks, the processing time is much better, giving you access to cash faster – the same day in most cases. Not only that, but you will also eliminate the cost of printing and mailing invoices, saving you money with every transaction.
If you use a corporate card to pay vendors, you have more control over what and when you pay them. Credit cards and ACH transfers can streamline your payments and reduce the risk of check fraud. Depending on the terms you set up with your customers or vendors, you can set up payments to be a single transaction or a recurring one.
Popularity and security of digital transfers
Understanding your accounting needs will help you decide what B2B electronic payment technology is best for your business. In addition to credit cards and ACH transfers, many businesses and consumers use digital payment platforms like PayPal, Venmo, or Google Pay to transfer money from one account to another.
These payment platforms provide an added layer of security, but they charge fees for every transaction that can be quite a bit higher than other electronic payment options available today. The added benefit of using mobile applications that come with most platforms today makes digital payments even more convenient and popular than ever.
With so much control at your fingertips and some of the best payment programs today, there is no reason for SMBs to continue using paper checks. You will see immediate improvements to your cash flow and overall management of your business finances.
Meeting the rapid on-demand pace of business
For businesses in the transportation or food supply chain, the ability to accept an order and payment instantly offers an excellent benefit to your customers. You are not only providing tremendous value with the flexibility of last-minute order changes, but also a convenient electronic way to pay from any location with a mobile device.
All digital payment products on the market today are driven by this demand to innovate to meet the new expectation for fast and secure payments. With the rapid on-demand pace of business today, flexibility and instant automation are necessary to compete. The ability to provide convenient, easy, fast, and secure payment processing is not just important, it’s essential.
Personal digital wallet at your fingertips
Flume, designed by WEX, is an example of a new digital payment platform that enables small and medium-sized businesses (SMBs) to process fast, transparent payments. The unique Flume digital wallet is specifically designed to support the 30 million U.S. businesses that currently rely on slow, analog payment methods like paper checks.
“Flume was developed to put the power of customized, accessible software into the hands of all businesses, not just large corporations. Now, every business, regardless of size or industry, can stay focused on growth and not the paperwork,” said Jay Dearborn, President, Corporate Payments at WEX.
“For small businesses trying to operate and compete in a marketplace against large corporations, saving time and cash flow are essential,” he explained. “Flume levels the playing field by offering shops of any size a personal financial wizard at their fingertips.”
Powered by an FDIC insured digital wallet, Flume will allow SMBs to focus on growing their business while increasing productivity, saving money, and reducing costs. In the competitive fast-paced marketplace, time is truly money.
High costs of manual processing
Studies show that 80 percent of businesses still use paper checks for invoices. For the typical SMB that issues 450 invoices per month at an estimated cost of $15 per invoice, the cost is $80,000 a year just to manually process invoices, according to WEX. When it comes to operating income, every dollar counts.
Flume virtually eliminates these issues with its transparent, digital payments platform. The need for manual accounts payable (AP) and accounts receivable (AR) processes disappears. On average, it takes 60-90 days for businesses to get paid on manual invoices. This slow processing costs businesses literally millions of dollars annually, and the ability and agility for growth.
Real time payments to improve cash flow and avoid risk
In industries like construction and transportation, payment delays can be particularly challenging. By allowing businesses to send, store, and receive funds through a mobile and web app, Flume’s digital wallet facilitates faster real-time payments for actual money in your wallet.
Most SMBs still rely on paper-based processes to power their businesses. This may have served them well for decades, but looking ahead to the next 10 years, many of our customers, especially in the trades, tell us their current workflows can’t keep up with the skyrocketing demand.
If you consider the failure rate of all new small businesses today -- about 50% after five years –the new digital wallet technology can make or break your ability to succeed. Taking advantage of digital programs that can improve your cash flow will help businesses avoid this risk and create an added level of stability.
Driving your business strategy by understanding your business cycles
Automating the entire accounts payable and receivable process can be a game changer for most businesses. The ability to better understand your cash flow will allow you to make smarter decisions about when and where you can save, driving your business strategy for three, five, ten years and more.
Convenient payment programs like Flume will allow you to generate reports so you can see an overview of your daily, monthly, quarterly, and yearly transactions. You also have the ability to monitor your overall spending: the peaks and valleys of cash flow. Comparing these cycles in your income will make all the difference in your ability to meet demand.
Streamlining vendor payments and relations
This transparency will also clarify who your prompt payers are, helping you with your collection strategy. Many platform tools today allow you to see the person responsible for approving the payment, and possibly help you understand why payments are held up.
As the saying goes, knowledge is power, and understanding any place in your system where payments are stalled will enable you to troubleshoot issues and streamline your vendor payments and relations. Most electronic invoicing today will allow customers to pay with a simple click – making it easier to do business with you and getting the money into your account faster.
When you provide transparency to your vendors about where and when their payments are processed, you are building trust. Many digital platforms will allow vendors to pull up and review their entire payment history in the website portal for ease and time-saving convenience.
Security and control over your account
A risk that SMBs still face today is mail theft. While digital payment technology is not absolute security against data breaches, the transactions are more traceable and less risky than mailing a check. Today’s digital solutions provide greater levels of safety and peace of mind compared to the analog cash and check transactions.
Most platforms will allow you to transfer a one-time or recurring payment. If you are making payments on a regular basis, you can guarantee that your vendors are paid on time. This real-time processing gives you more control over the cash in your account, knowing exactly what day that payment is being processed.
You also can set your system permissions and designate certain employees as payment approvers, provide password protected access, and create audit trails. Having this new technology will save hundreds of accounting hours you used to spend resolving payment issues.
Improved business branding and artificial intelligence
The online portal is an excellent way to improve your business recognition and marketing with your logo and company branding. Now your customers will remember the ease of experience reviewing and completing transactions on your branded electronic website application.
In today’s digital world, there is an expectation that a certain amount of artificial intelligence (AI) is built into every platform. For example, your customers may assume you are aware of any payment problems they experience on your platform and that the technology will help solve any transaction issues instantaneously and without much difficulty.
Sophisticated payment technology today will indeed predict many issues to offer a seamless payment experience. Batch or multiple payments, for instance, have been manually tedious in the past, but with the digital online communication between payers and receivers, the information flow is significantly more streamlined.
Secure networks with every transaction
Now your employees can focus more on the immediate operational tasks at hand to stimulate your business growth. Elevating your business with innovative digital solutions can also reduce fraud. These new digital platforms only use secure networks to send and receive funds, tracking incoming and outgoing transactions.
A smart payment processing solution like Flume can make all the difference to satisfy customer and vendor needs. Making the move to a digital wallet can drive business growth by improving your cash flow, increasing your vendor or supply chain relations, facilitating easy and secure payments, and predicting and solving transaction issues.
Your business has every opportunity to react more quickly and present as a leader in your industry with advanced digital payment technology. That’s just smart business sense.
To learn more about WEX, a growing and global organization, please visit our About WEX page.