Over the last five years, there has been a decline in the use of paper checks for business to business payments. Many forward-thinking businesses have grasped the financial and eco-friendly benefits of reducing paper check processing. Businesses that have converted to electronic payments have found that their efficiency has increased with the reduced use of paper.
"With the number of businesses equipped to handle faster, more secure, and less fraud-prone payment methods, the continued use of checks in business to business payments is both astounding and disappointing," Wex Inc., a payment solutions company adds. "Electronic payments are 10 times cheaper than checks. Writing checks to suppliers is not only time consuming and inaccurate, it’s wasteful in terms of cost, as the average cost of writing a business check ranges from $4 to $20."
This is no surprise. The transition from paper-based to digital payment processes allows for a faster, more secure, and easier to use payment platform. It simply takes less time to find and process information.
Companies are now adding up the fees and mishaps allocated toward traditional payment systems. Manual check processes are susceptible to human error and late check payments can become both costly and detrimental to a business' vitality. Businesses simply cannot function without a proper payment system in place and yet, payment processes are most commonly one of the last business processes to be updated.
A new study from AIIM and ASG Software Solutions revealed that more than half of companies participating in the study are still making at least 75 percent of their business-to-business payments by paper check. Of the 50 percent of companies still using paper processes, one-third are producing more than 25,000 checks per month. The estimated costs of using paper checks in the office can often run 13 to 31 times the purchasing costs, labor aside. “This is unfortunate,” says Mary Schaeffer, the survey’s sponsor, “as paper checks are expensive, inefficient, and create extra work on several levels.”
Of the survey results, it's unfortunate that 51 percent of respondents are not actively reducing their paper check volumes and actually saw an increase in paper consumption in the past two years. That said, there were also 45 percent of heavy check users who indicated that they want to reduce the number of paper checks they issue. Moreover, 83 percent of survey respondents’ organizations use ACH to varying degrees and 79 percent have issued commercial cards to employees for the purchase of goods and services.
Whenever paper checks are used to pay vendors, large costs are associated with making them. While electronic payments have become the preferred payment method, paper check processing still accounts for the largest portion of business financial transactions. “Checks retain a stronghold in too many organizations," says lead Payments Survey analyst Lynn Larson, “I was encouraged by the number of organizations who are equipped with ACH and commercial card functionality but usage of these two electronic payment methods definitely has room for improvement.”
We agree that there is room for improvement and hope you will discover an increase in efficiency and cash management benefits that are granted by using automated payment systems. Learn more about why hundreds of companies rely on payment automation.