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Forget Checks: 3 Reasons Why AP Departments Should

After all, that’s the end goal, right?

Forget payment processes that are burdened by paper and the problems that entails. Leaving that behind is the point of a digital transformation, isn’t it?

We all want jobs that are as efficient as possible, with tools that take the more manual and tedious parts of it off our hands. We want the freedom to work from wherever is convenient on any particular day. We want our company’s payments to be safe from fraud.

It’s the dream behind digital transformation. One that is coming to being, at a slow rate in some areas. While the rest of the world has moved forward and away from paper checks, B2B payments have been at a standstill. There are AP professionals alive today who have never used a check to pay for a good or service as a consumer — and yet a large majority of them use checks in the course of their regular business duties.

Our Founder and COO, Julie Negrete-Anderson, did a podcast with PYMNTS going over the history of paper checks, how OnPay came into being, and what it will take to kill B2B checks.

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Checks Are High Touch in a Low Touch Economy

Imagine two economies.

The first is heavily reliant on touch. It’s paper checks put into envelopes by hand. It’s records and forms passed between coworkers in a traditional office setting.

The second involves low touch, or no touch payment, processes. It's a digital payment that’s initiated on a laptop. It’s a system that scans and records data without input from a person, all while providing them a transparent view into the process.

It’s clear which is the old one and which is the one our society is embracing. The advent of the high tech, low touch economy means the end of paper processes — especially checks. Our recent webinar dives into this, and how it can transform AP and AR, in more detail.

Why were businesses dragging their feet on digital transformation prior to 2020s Black Swan event? This is the big question everyone involved in B2B payments has tried to tackle.

The perception that changing to digital is a huge burden to your organization is lingering. Electronic methods require more information and communication to happen effectively, whereas checks only require a name and a mailing address. This is where partnering with the right payment solution makes a difference.

Less than half of North American businesses report that checks are their preferred payment method. In fact, Statista reports its down to 41%.

Motivation to change is essential, and this year’s Black Swan event has sped up the move away from checks.

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Eliminate Checks to Remove Payment Silos

Most professionals have worked in an environment that fostered silos in one form or another. Teams and departments that don’t, or can’t, communicate between each other. The manner in which that can clog up the system is something we’ve all experienced.

In accounts payable (AP) departments that still use antiquated methods, these silos can pop up within the department. These are payment silos wherein checks are administered one way, ACH another way, and wire transfers in yet another way.

Silos don’t just mean a breakdown in communication. According to Tech Republic, they also prevent good analytics and impair your ability to analyze results and forecast for the future.

At OnPay, we offer a platform that gives our clients a single point of integration. It empowers them to make and manage digital payments in a way that cuts through the clutter of paper checks, without requiring CFOs and controllers to give up all control over the process.

Breaking down the payment silos and getting rid of checks has a variety of benefits for finance departments, one of which is making it easier to spot fraud.

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The increased ability to catch fraud is especially important as modern businesses adapt to allow staff to work remotely either part or full-time — often without home security measures such as VPNs.

Half-Measures Don’t Last the Test of Time

While one of the previously mentioned statistics makes it apparent that less than half of businesses label checks as their preferred method, PYMNTS found in a study that over 80% still use them to pay their suppliers. This suggests that businesses aren’t confident in their use of checks but have continued to use them.

Or rather, this was the case prior to the changes that 2020 has wrought on the modern working environment. The workforce is trending towards flexible work options and there are signs this is one thing that is going to stick around rather than return to previous form.

According to CFO.com, 54% of US CFOs in a June survey expect to make remote work a permanent option and 73% of financial executives said that the work flexibility that has come out of the COVID-19 crisis will make their company better down the road.

On top of that, another study predicts that by 2025, 75% of working professionals will be working from home for at least one full work week per month.

It’s imperative that businesses have payment methods that can withstand a mobile workforce. Half-measures may get your business through a Black Swan event like COIVD-19 — but they’re not sustainable in the long term.

For example, staff scanning and emailing checks from their home office. This is a measure that many took in the early days of sending their staff home. The downside of it is that it’s not truly automated, it’s open to human error, and it is vulnerable to fraud.

There’s also the option of back-up check printing. Again, this is a short-term fix and often comes with a monetary cost to you.

Digitally transforming your payment process with automation enables your staff to work from home or from the office with equal ease. It also benefits the firms that allow it. Per Business Insider, enterprises taking advantage of digital payable platforms see 73% faster processing cycle times and 81% of lower processing costs.

Forgetting checks in favor of paperless payments will:

  • Increase security by 85%
  • Provide 24/7 remote access to the process
  • Improve productivity by 90%

It’s critical for businesses to evaluate their internal systems and move to a model and process that combines both remote and on-site work in a manner that can be sustained.

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Conlusion 

Forgetting about checks has never been easier or happening as often in the B2B world, as it is today. Now is the time to kill checks and digitally transform your finance department in favor of payment automation. 

Keep your current processes, including your ERP, and digitze your payments and invoices at no captial expense. We've helped hundreds of clients do so, and have the track record to show that it advanced them forward and set them up for success in this increasingly low touch economy.