Moving From Paper Checks To Electronic Payments

Moving from paper checks to electronic paymentsOriginally posted on March 24, 2016

By John Adelsperger: Vice President, Middle Market Sales & Account Development

Issuing a paper check may be a 500-year-old practice, but several of today's U.S. mid-market businesses, those with annual revenues of $10M-$1B, have yet to leave the paper check behind. Unfortunately, these manual payments carry a growing administrative burden.

The use of paper checks can potentially be more expensive when compared to sending and receiving an electronic payment, such as through an automated clearing house (ACH) or a corporate card program. A paper-based approach consumes staff time, printing, storage, ink, postage, and more time-intensive management of working capital.

AP Automation

Migrating to electronic payments—sooner or later—is expected in today’s digital age. And business leaders may want to consider accounts payable (AP) automation as low-hanging fruit when it comes to improving—and updating—vendor payment process.

Rather than jumping through the hoops of different payment protocols that are requested by hundreds of suppliers, companies can instead delegate their AP process to an outsourced payment provider. With most AP automation solutions, when it comes to settling your bills at the end of the month, you'll only send funds to a single entity (the payment provider) after you've reviewed and approved the transaction details.

Here are the potential key benefits of AP automation:

  • Lower administrative costs, shorter timelines, and reduced processing errors
  • Streamlined and digitized AP process
  • In some cases, rewards or financial incentives from your payment solutions provider
  • Data analytics for your decision-making process
  • Additional efficiencies with your Days Payable Outstanding (DPO)

Single-use virtual cards also offer a payment alternative, electronically sent to the accounts receivable department of the supplier with relevant remittance information. A payment provider gives a client company a unique set of numbers, which the supplier uses to settle a transaction for an exact amount during a specific time period. Alternative methods are buyer-initiated payment system, a push payment process that is sent to the supplier without the need for the supplier to key in a credit card number or a paper check.

For many mid-size businesses, the conditions could be ripe for a transition to electronic payments. It's how accounting and finance can potentially modernize their processes, rethink the status quo, and help to move their companies forward.

John Adelsperger

By John Adelsperger
Vice President, Middle Market Sales & Account Development
American Express

The content in this published material are provided for general informational purposes only and do not constitute investment, financial, tax, legal or other professional advice on any subject matter. Please contact your investment, financial, tax, legal or other professional advisor regarding your specific needs and situation. American Express Travel Related Services Company, Inc. and its subsidiaries and affiliates (“American Express”) do not accept any responsibility for any loss which may arise from reliance on information contained in these materials. American Express does not warrant or guarantee the accuracy of these published materials.