In 2015, the Association for Financial Professionals released a Payments Cost Benchmarking Survey in which 79% of surveyed organizations said they wanted to switch from paper checks to electronic checks.¹ That’s not surprising, considering that paper checks often produce payment errors and cause late payments, slow approval times, and make viewing cash flow more difficult.
Paper checks are one of the most expensive, inefficient payment methods businesses can use in B2B, B2C, and payroll transactions. Despite the cost, most businesses still offer traditional checks, and 97% of small businesses depend on paper checks to make and receive business payments.²
Why do so many companies still rely on paper checks for B2B financial transactions when alternative payment methods are faster, more efficient, and cheaper?
Surprisingly, the most common reason businesses aren’t switching from paper checks to electronic is because their suppliers don’t accept electronic payments.³ That means the real problem is figuring out how to adopt alternative payment methods that allow companies to:
- Reduce financial transaction costs
- Improve the efficiency and delivery of payments
- Retain valuable, long-term relationships with customers and B2B vendors and suppliers
Let’s look at a few ways businesses can accomplish these goals.
Alternative Payment Methods that Save Time and Money
One of the best ways a company can reduce the number of paper checks they disperse is to use a third-party platform that complies with the Federal Financial Institutions Examination Council (FFIEC). This not only reduces the amount of time it takes to disburse payments, it also ensures fewer headaches for the organization and can significantly reduce the associated payment costs.
Reputable third-party funds disbursement platforms can provide a secure, self-service portal that allows payees to personalize their payment methods.
If you’re considering using a third-party platform to streamline your payment methods, make sure to research features that will allow you to customize your company’s workflows. Things like digital signatures, interactive messaging, and dynamic ID verification can help simplify the process, and reduce the amount of money and time you spend on administrative tasks.
Consider Using ACH or Payment Cards
There are several alternatives to disbursing expensive paper checks that businesses can benefit from and find in top funds disbursement platform. Two, in particular, can drastically reduce wait times and costs:
1. Same-day ACH payments. This payment method provides same-day clearing and faster settlement capability for the vast majority of payments. Same-day ACH eliminates the need for cutting paper checks and makes it easy to provide and receive accurate payments.
2. Payment cards. Using this method, companies can make fast payments through electronic funds transfer. Payment cards can be reloaded whenever necessary and used just like debit cards. They’re convenient, reduce administration needs, and are cheaper than paper checks.
In addition to same-day ACH payments and payment cards, businesses can also offset the expense of cutting paper checks by looking into emerging payment methods like instant payments and virtual wallets that are both fast and inexpensive.
Focus on Cost-Effective Payment Methods
Displacing checks as the primary payment method for your business will save money and hassle in the long run. You just need to find a payment solution that reduces the time and costs associated with processing payments and lightens your regulatory burdens.