How can I make this company better?

It’s a question all effective business leaders ask. No matter how successful your organization is, it can improve.  

The question is particularly important for rapidly growing companies who are looking to scale their operations. Even small tweaks can pack a big punch as businesses struggle to find the resources, money, and time to reach critical goals.

However, leaders often overlook one crucial area ripe for renovation - payments.

The problem with paper checks

According to Goldman Sachs, companies in North America spend almost $200 billion each year on AP processing. Much of this astronomical amount tracks to AP-related labor, as employees commit valuable time to finding invoices and tracking payment statuses.

Why is AP so expensive? The report identifies the reason: 70% of B2B payments occur with paper checks.

Paper checks may seem insignificant in the hierarchy of your company’s financial priorities. However, their cumulative impact matters. For every paper check payment, employees spend time:

  • Manually reviewing or importing invoices
  • Processing approvals
  • Printing checks
  • Getting them signed
  • Putting them in envelopes
  • Securing postage
  • Physically mailing them out and
  • Reconciling the payment after the check clears

Each of these steps may only take minutes, but the entire process consumes hours of time altogether. That’s valuable time could be invested back into your company. 

Paper check-based AP is also pricey. Lengthy review processes increase the risk of incurring late fees  - something that costs businesses an average of $25 billion a year.  Supplies are also expensive, thanks to check stock, ink, envelopes, paper, and postage. A company can spend an estimated $24,000 a year for 500 paper check payments each month.

Finally, consider the recipients of paper checks. According to a Mastercard and PYMTS study, paper checks are the most commonly used payment method, but vendors ranked them fourth in overall satisfaction.

These facts beg the question: Why do companies continue to support an inefficient and expensive payments process? It’s an area that is overdue for a transformation.

How digital business payments and AP automation refine the payment process

Replacing paper checks with digital forms of payments such as ACH transfers and eChecks can give your business quick, substantial wins for efficiency and cost savings.

Consumers have readily adopted digital payments, using mobile apps to pay everything from household bills to sending money to friends. Personal digital payments will reach $150 billion in 2019. However, consumers don’t have stringent guidelines for sending money. Payments often require only a cursory review and tracking usually consists of the amount paid, recipient, and date. As a result, the apps they use accommodate only simple processes.

Businesses have much more complex guidelines for disbursing money. Bills undergo different review processes based on factors like vendors and amounts. They require a much more robust system for digital business payments, one that includes automation, document management, audit trails, integrations, and more.  Then, they can take digital payments and combine them with an online payment system that automatically ensures the proper approval processes are followed and reduces the time and resources demanded by paper checks.

Adopting digital business payments allows automation to assist with the “heavy lifting” of AP. Instead of manually walking an invoice through a review process via multiple emails or a paper shuffle, AP automation follows your corporate guidelines to take the bill through the entire approval process. When a bill enters the system, AP automation consults the guidelines, identifies the reviewers and the review process and sends a notice to each person when it’s their turn to approve the bill. It also sends reminders to slow reviewers so that bills don’t fall behind or get lost. When the review finishes, the authorized payer can send or schedule payment in a few clicks or taps.

How much of an impact can AP automation have on a company? The cost to process a bill averages $22.26. After you introduce digital business payments and automation, that cost drops to $6.89 an invoice – a 76% savings.

Additionally, digital business payments and online payment systems streamline processes significantly, cutting the time spent on AP by 50%. They do it by: 

  • Creating a centralized repository for AP-related information like contracts or statements of work. AP automation organizes all contracts, statements of work, quotes, and payment records in a single place, rather than leaving them scattered across various filing cabinets, computers, personal drives, or cloud platforms.
  • Introducing mobile access to the AP process, allowing reviewers and payers to manage AP on the go from any connected device.
  • Providing audit trails that detail every action associated with a bill from receipt to review to payment. You can even give view-only access to allow auditors to quickly complete their review with an internet-enabled device - anywhere, anytime.
  • Syncing with other accounting solutions (such as Sage Intacct) to eliminate manual data entry and possible errors associated with it.
  • Uniting all payments in one system, including international payments made in local currencies. 

Conclusion

Consumers have been quick to embrace digital payments. Businesses, however, have lagged, opting for inefficient processes that accompany paper check payments. Companies looking to cut costs, save money, and scale can truly benefit from adopting digital business payments and the online payment systems that accompany them. The next time you ask, “How can I improve my company?”, devote some time to exploring its payment processes. 

Learn why Bill.com is the leader in digital business payments, used by thousands of Sage Intacct customers to automate their AP workflow.