Did you miss our recent webinar with the Institute of Finance and Management (IOFM)? Don’t worry. You can still watch the recording of “Payment Myth Busters: The Biggest Misperceptions, Mistakes and Confusions about Paying Suppliers Electronically”.
On April 4, 2018, speakers Mark Brousseau, leading analyst and researcher of business process automation, and Doug Seaberg, veteran electronic payments expert at EML, teamed up to share their insights on the following electronic payment myths:
- Electronic payments lack visibility and control: Electronic payments provide more visibility and control than paper checks. Period. For too long, AP professionals have relied on stacks of paper invoices to gather insights into their payment process and important payment details. Most electronic payment providers offer an intuitive payer portal at no additional cost to their customers. This enhanced control also extends to suppliers who are able to access rich remittance data, which eliminates costly phone calls to your AP department.
- Electronic payments will increase my workload: It’s not uncommon for AP professionals to avoid taking vacation. If they take just even one or two days off of work, it’s likely some of their suppliers won’t get paid on time. Converting check payments to either virtual card or Automated Clearing House (ACH) eliminates the lion share of time spent writing, signing, stuffing, sealing and mailing paper checks. With the data in your vendor master file, an electronic payment provider identifies your suppliers that are most likely to accept virtual card or ACH payments. They then enroll these suppliers into a customized enrollment campaign and periodically update your payment file to ensure payments are optimized ongoing.
- All card types are the same: There are key differences between virtual cards and various other business cards, such as ghost cards and purchasing cards. Ghost cards are a great alternative to issuing credit cards to everyone within your organization and are typically used for departmental needs. A purchasing card, also known as a corporate card or an expense card, is used primarily by people within your organization who travel frequently and must submit expense reports. Virtual cards, on the other hand, are ideal for paying your suppliers. A virtual card is a digital card with a 16-digit number that uses a payment network such as Mastercard®, Visa® or Discover®. Virtual cards are delivered to your suppliers via email, and can be processed just like any other card payment.
- Optimizing payment types is too expensive: There is no cost associated with adopting electronic payments. In fact, adopting electronic payments enables buyers to reduce costs, mitigate risks, generate lucrative monthly rebates or rewards on payments made by card, and foster better supplier relationships. Together, these benefits offer compelling reasons to migrate to electronics payments and provide your business with a competitive advantage in 2018.
- My suppliers will never accept electronic payments: A fair share of suppliers already factor card acceptance into their pricing structure. It’s true that you could never get 100% of your suppliers to accept virtual cards; however, a lot of suppliers will accept virtual card payments simply because you ask them to or because they like the idea of getting paid sooner. An electronic payments provider should be able to run your vendor master file against the Mastercard® database to identify your suppliers already accepting card payments.
- I should work with my bank: Banks revenue models are fee based. When partnering with a bank, it’s imperative you understand the three key elements of any b2b electronic payment program: enrollment, support and payment execution. Your bank should have a dedicated in-house team that customizes your enrollment messaging to match your tone and voice. You want it to be easy for new suppliers to enroll in your program, so your bank also needs to offer ongoing support and be willing to deliver cards in the most efficient way possible for your suppliers – whether that means making a lockbox, call-in, portal, or email payment.
- Electronic payments threaten AP jobs: While we all know that automation is going to change our jobs in the next several decades, we also know it won’t necessarily threaten our jobs as long as we adapt. Being involved in a payment automation initiative shows executive leadership your AP department adds strategic value to the organization. Instead of spending the majority of your time worrying about how to “beat” automation, learn to work with it. Optimizing your payments and automating your AP process saves the organization time and money, allowing you to focus on more strategic initiatives.