Does your company still pay suppliers by check?

Does your Accounts Payable Department still use manual and labor-intensive tasks for processing incoming invoices?

If this describes how your company processes and pays bills, you need to know that there is a strong trend away from these practices, which is highlighted in the following article from Ardent Partners. This piece talks about accounts payable trends for 2016, specifically around the topics of internal and external collaboration and more automation. In conversations with prospects and clients, we concur with these findings, especially that accounts payable is becoming more strategic. However, for accounts payable to become more strategic requires change and this change means moving away from manually processing invoices and paying suppliers by checks. The time has never been better for companies to leverage existing technologies to gain better insight into who they pay, what they are buying, when they are paying and how much.

Credits: Accounts Payable Predictions for 2016: Greater … – Ardent Partners

Holistically looking at the entire process from the prospective of all three constituents (Accounts Payable, Treasury and Procurement) is the right thing to do and will ensure an organization is successful when moving to an automated environment. The end result for companies is improved processes, increased visibility, better controls and significant cost savings – not just soft, “estimated” savings, but real hard dollar revenue.

What was not covered in this article was the “how?”. In other words, how will a company pay for this change? We have a suggestion…

Can virtual payments pay for an electronic invoice system?

Yes!

Accounts Payable has an opportunity to generate revenue from its existing disbursements and turn change from a pure cost center into a revenue provider. Yes, you heard that correctly.

In turn, this revenue can be used to offset the cost of electronic invoice automation. Instead of adopting a one-size fits all payment strategy using a single payment type i.e. checks, companies can identify, through an accounts payable analysis, suppliers where virtual payments technology can be used to replace paper checks to pay invoices. In return, companies receive a revenue share on these disbursements that is paid back to them monthly. Our experience suggests that up to 30% of a company’s vendor list can be paid using virtual payments technology. Again, not a one-size fits all approach, but companies need to understand that based on relationships, terms, supply chain consideration, etc. a payments optimization approach is recommended that aligns with an overall cash management strategy. Utilizing a single payments method is not optimal.

By simply changing how you pay with a select group of suppliers can go a long way in paying for your electronic invoice system. Think about it.