In today’s financial landscape, everything is going digital-first. AP automation has already disrupted the status quo of paper invoices and checks. During COVID-19 many vendors are now asking to be paid electronically, and there are many benefits of electronic payment over check payments. Virtual payment management has also become a necessity for growing businesses, and automation is critical for scaling accounts payable systems and supporting overall organizational growth.
Why Are Paper Checks Inefficient?
Your ERP may output a payment file seamlessly, but there’s no getting around the printing, folding, stuffing, stamping, and mailing of paper checks. This process is time-consuming, and checks may await a signature for days if an approver is working remotely. AP automation lets the payment approvers manage and schedule payments within one online system, from anywhere. Once payments are scheduled, the processing is handled through automation, and you can avoid dealing with banks or signing paper checks. You are able to streamline your workflow by outsourcing the process to a company that specializes in payments.
What Are the Hidden Costs of Paper Checks?
Physical Costs: According to The Wall Street Journal more than 50% of business payments in the United States are still made using checks. Issuing and depositing paper check payments costs U.S. businesses more than $26 billion annually.
Labor Costs: Consider the cost savings on labor. Your AP team can skip remedial tasks involved in managing paperwork, data entry, and check processing to focus on more strategic work that helps your business scale.
Business Costs: Your business incurs costs from printing, processing fees, and tracking down lost checks. Digitizing and automating manual tasks associated with checks can save time and money for your business.
What Are the Benefits of Using Fewer Paper Checks?
A key benefit of electronic payments is improved cash flow. Electronic payments have a faster settlement time in comparison to paper checks sent through the mail. Faster payment processing gives your business increased command over short-term cash flow and the ability to either quickly make payments to cash in on early-pay discounts or retain large sums of cash for longer amounts of time.
In addition to improving cash flow and capital management, electronic payments can reduce your fraud risk. Paper checks remain the primary target for fraudsters in comparison to other payment methods.
Electronic payments give vendors improved visibility into their transactions. With an AP automation solution like Paypool, your vendors can submit invoices electronically and check the invoice status via the vendor portal. Paper checks cannot provide comparable oversight.
What If I Still Need to Use Paper Checks?
Even if you continue to pay your vendors by check, automating can still save you time and money. Paper checks are much more efficient when you delegate the process. AP solutions like Paypool take over the check printing and mailing process and provide you with documentation of the issued check, including cashed or outstanding status and images of the cleared check. AP automation can be a vast improvement for both electronic and paper payments.
How Can AP Automation Improve My Workflow?
While many solutions can help automate your AP process, few cover all of the bases when it comes to tackling virtual payment management. Paypool’s end-to-end solution can process all of the most popular payment methods including paper checks, credit cards, ACH transfers, virtual cards, and wire transfers. Learn what AP automation can do for you—request a demo today.
Brian Acton, Marketing Coordinator at Paypool
Brian has marketing experience at agencies and internal marketing departments. Since 2015, Brian has managed Paypool’s marketing department.