5 Reasons to Go Paperless
If your business still handles paper checks, you may be missing a valuable opportunity to streamline your payables and receivables—and revolutionize the way you do business.
According to the AFP’s 2016 Payments Fraud and Control Survey, checks are the most frequently used payment method in business-to-business payments—and they're also the payment method that accounts for the largest dollar amount of loss due to fraud. Which means that if your business is still using or accepting paper checks, it may be time to think about streamlining your process with electronic options.
Currently, there are many payment choices at your disposal, including wire transfers, electronic checks and ACH with next-day processing. And now, a new operating rule created by NACHA, the governing body that manages the development, administration and governance of the ACH Network, allows for businesses to process and receive payments within the same business day—known as Same Day ACH.
There are a number of reasons why paperless billing could benefit your business, but if you’re on the fence about fully automating payments, consider the areas of your payables and receivables that will change for the better following the transition:
1. Faster Payments
In situations requiring a fast payment turnaround, consider the electronic options at your fingertips. Through ACH processing, you can independently initiate and transmit payments electronically within the US, and after the payee is verified, it will settle in one to two business days. Wire transfers are also a safe choice and offer you the ability to send payments overseas. Simply instruct your bank to perform an account-to-account transfer of funds, and it will be processed in one business day. These faster payments are particularly helpful for:
- Employee payroll
- Settling customer claims
- Working with suppliers that require payment before fulfilling orders
- Hiring domestic trade services (e.g., repairs or plumbing) or delivery services
2. Added Savings
The sheer process costs of accepting and paying with paper checks are likely working against your business. In 2010, the Federal Reserve Bank of Philadelphia made the transition from paper checks to an electronic payments process and documented the results in their 2012 working paper, “Getting Rid of Paper: Savings from Check 21.” (Opens Overlay) Following implementation, the Federal Reserve achieved over 70 percent cost savings per check, and their payment system costs as a whole decreased by an estimated $1.16 billion that year.
3. Reduced Manual Work
Automation can be used to reduce the time your company spends handling checks and preparing deposits, which can in turn alleviate the burden placed on employees to write, mail, collect, reconcile and document incoming and outgoing checks. By reducing the need for manual data entry and check management, you’ll decrease strain on staff resources and give employees more opportunities to focus on other areas of the business.
4. Consolidated Bill Pay
For an easier bill-paying process, you can use an online bill pay system, which stores your payees’ information, as well as the recent amounts paid. With a click, your bill payment will either be sent electronically in one to two days or mailed in five or less days. For increased convenience, you have the option to schedule recurring payments to ensure they’re received on time. This eliminates the need for writing and mailing checks, and you may also avoid the recipients’ online payment service fees, if applicable.
5. Extra Flexibility
For more flexibility in making outgoing payments, you can take advantage of the transparency of ACH processing. When paid via ACH, you gain greater insight into when incoming funds will be available to you—allowing you to process orders and make purchases sooner with more peace of mind.
Implementing electronic payments can make a noticeable difference in improving your business relationships—with customers, suppliers and employees—as well as in improving your company’s overall efficiency.