Control Cash Flow

The Last Check?

The Future of Payments is Electronic

The Last Check?
 

The passing of the check has been predicted for years, yet checks survive.

Despite a steady reduction in paper check volume (6 percent per year 1), businesses still feel the drag of higher invoice processing costs, continued missed discounts or late fees for payments to suppliers, and imprecise cash tracking.  Add to that list lose controls on employee spending and more time spent researching and reconciling checks.

Businesses are motivated to shift away from paper checks. Executives seeking reduction of time-wasting tasks associated with checks and tighter control over cash and working capital can do so by making the switch to electronic payments.

Electronic payments on the rise

Forty-three percent of business payments have already shifted to electronic means like ACH (Automated Clearing House), wire transfer and card payments.  Businesses want to send even more payments electronically, targeting almost 60 percent of their payments to be sent electronically2.

There are a number of reasons electronic payments have become more widely adopted in recent years and can prove valuable to your business:

 

 

  • Precise management of electronic payments can improve the cash cycle through scheduled payments and invoicing.  Businesses cite speed as the top reason they want more payments to flow electronically2. Best practice captures 90% of early payment discounts3.
  • Accurate visibility into payment and collections movements can improve decision-making with better information, sometimes even reducing working capital needs or freeing cash to be deployed more productively.   Sixty-two percent of companies cite accessibility via online reporting as extremely important to them2.
  • Simplified payment-related processes reduce fraud risk and prevent compliance issues. Costs for financial staff and processing from invoice generation and disbursement through payment reconciliation and balancing can be slashed by up to 60 percent4.
  • Employee spending can be more easily controlled through electronic purchasing or payment cards that can provide accurate individual and spend category controls.
  • Payroll with direct deposit or payroll cards offers one of the fastest ways to reduce business checks while getting funds directly into employees' bank accounts, a key step in helping them establish personal financial discipline and control.
  • Fraud risk can be greatly reduced.  Fraud attempts strike 73% of businesses and in 28% of cases causes financial loss, typically $25,000 or less in damage.  Checks remain the most-often targeted payment method5. Most businesses can’t afford the distraction, costs or reputation risk that fraud can bring.

Moving past paper

Payments strategy sits at the core of your financial operation and your cash cycle. Whether you are squeezing your balance sheet to drive growth, controlling financial and administrative costs or doing all you can to protect your business from fraud, making the move to more electronic payments is a great place to start.  That financial and capital efficiency along with improved cash management through electronic payments functionality may even help to drive up the value of your business as well.

Make the move to lower cost electronic payments.  Talk to your Treasury Sales Officer or Relationship Manager about setting up a payments review for your business.

1 2013 Federal Reserve Payment Study
2 SunTrust Research Q4 2015
3 Aberdeen Group, 2012
4 APQC Accounts Payable (AP) Process Productivity Survey June 2015
5 Association for Financial Professionals (AFP), 2016 Payments Fraud and Control Survey

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

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