As a finance professional, you continually calculate direct costs, indirect costs, the cost of risk, and so on. When was the last time you assessed day-to-day costs within your own department? Take, for instance, writing a check. How much does it actually cost? How much does it cost to enable ACH payments for a vendor? And what are the costs associated with paying bills with a credit card? How much does it really cost you to pay a vendor?
Materials and fees
The most concrete place to find vendor payment costs with the materials and fees that go into the process. How much do you spend on paper and ink? What do you spend on postage for vendor payments? Those may seem pretty minor compared to the cost of running your business. But when you consider these are the costs you pay day in, day out to pay your bills, they can become significant over time.
Labor and opportunity
In a recent blog post “The Time Drain in Your Payment Process”, we dove into all the places payment processing burns up time in you finance organization. As you add up the time, you not only deal with direct labor costs but the opportunity cost of tying up the time of skilled accounting staff. How much time goes into ordering and managing check stock? What is your process for printing checks, stuffing envelopes, and dropping off the mail? How much time goes into setting up ACH payments? What is the time drain for handing out credit card numbers and updating credit card numbers with vendors? What could your talented accounting professionals do with that time if they weren’t spending it on mundane busy work?
Risk and risk mitigation
Calculating the cost of risk may differ from business to business, but you can look at the cost of implicit risks involved in each of your payment tasks. What would be the cost of misappropriated and fraudulently used check stock? How much do you spend in cabinets, locks, and time to mitigate that risk? How much effort goes into reviewing statements to catch incorrect ACH or credit card charges? How many phone calls to the bank does it take to fix incorrect charges? What are the total business costs when a stolen credit card number needs to be replaced?
Automate to save
Have you figured out your costs? Independent research reported by Scotiabank found that check issuance alone cost between $9.28 and $24.75 per check.
Intacct and American Express have created a way to take the buried costs, busy work, and risk out of paying your bills. Vendor Payment Services eliminates the physical costs of paper, ink, and postage. It provides automated payment processes right into accounts payable, handing busy work off to the system. Users simply select a payment method and let Intacct and American Express handle the rest.
The services really shine in risk mitigation. Beyond the fact that the system is built on Intacct and American Expresses secure payment infrastructures, you can see immediate risk savings in your daily payment processes. You no longer need to keep large quantities of check stock on hand, because American Express takes care of printing and mailing checks against your existing bank accounts. You no longer need to scour statements for ACH or credit card charges, because processed payments get posted back to your general ledger. And never worry about handing out or updating credit card numbers with vendors. Instead of your actual card number, vendors receive a one-time-use number tied to the specific transaction.
Now may be the time to find out if automating payments is right for you. For more details about Intacct and American Express Vendor Payment Services, see here: https://us.intacct.com/vendor-payment-services.