In a world where consumers can purchase goods with a click of a button, it seems silly that many businesses are still using paper checks to make purchases. As businesses explore electronic payment options, they are finding that there are benefits to both the supplier and customer. Here are some reasons that businesses are choosing electronic payments for their B2B purchases.
As businesses become more global, sending paper checks to vendors halfway around the world just doesn’t make sense. The majority of businesses pay their international suppliers via wire transfers. Most businesses are finding it much easier to switch their entire AP system to have electronic payment options.
The internet has made it easier to find the best suppliers anywhere around the world. Technology has also allowed businesses to work with international vendors in real-time. Companies that compete on a global level also leverage technology when it comes to their payment processing.
E-Payments Save Businesses Money
In addition to being more efficient than paper checks, e-payments are saving business money in a number of ways. There are those often overlooked costs with check-processing, such as printer, toner, and purchase of paper checks. In addition, there are costs associated with postage and labor hours, including physically taking them to the post office. E-payments reduce or eliminate these costs.
Another way that businesses save money by converting to an electronic payment system involves dynamic discounts for paying early. Businesses that rely on paper invoices, as well as paper checks, are rarely able to take advantage of these discounts. Factor in the amount of time it physically takes an invoice to arrive at a business’ location. The length it takes for these invoices to be approved and checks finally sent the “pay by” date for the discount has passed. With electronic payments, businesses can finally take advantage of dynamic discounts by eliminating these steps. These dynamic discounts save their company both money and time.
Supplier Expectations are Changing
While some businesses may have to convince their suppliers to accept electronic payments, other businesses are finding that their vendors are actually asking to use electronic payment options. In fact, 63% of suppliers that were surveyed stated that they preferred to be paid electronically. There are several reasons for this.
Some companies want to streamline labor costs and remove the processing of paper checks. Others want to get rid of third-party check processing companies or remove the need for lock boxes. Whatever the reason, many businesses are happy to accommodate the vendors with whom they have great business relationships—especially if it means saving money on their side, as well.
Ease of Use
With the right software, an electronic payment system can be easier and more efficient than using paper checks. Many business owners would be surprised at just how easy it can be to pay an entire list of vendors using the right software.
For example, AP automation software enables businesses to go paperless with e-invoicing, as well as pay suppliers electronically. Once a vendor has been set up for e-payment, it’s just a matter of selecting which invoices need to be paid. This happens without the need to input the same payment data over and over. In addition, the payment date can also be selected, giving businesses as much control regarding timing as they would have using paper checks.
The benefits of using electronic payment options for B2B purchases are many. Some businesses may be hesitant to migrate to an e-payment system due to the perceived notion that suppliers are against it, or that it is hard to implement. With the right software, however, setting up an e-payment system is often easier than many think, and business owners will be happy that they did.