It is hardly momentous to reflect on the seven percent increase in electronic payments that have occurred over the past four years. But there is no doubt that companies are slowly relinquishing paper checks and taking advantage of technology that allows both payments and cash receipts processing through electronic systems.
Technology Moves in Another Direction
At the present time, most companies make about half of their B2B payments using one of the acceptable methods of electronic payments rather than paper checks. This is a steady increase that AFP (Association for Financial Professionals) reported at 36% in 2007 and 43% in 2010. A total of 484 organizations responded to the survey conducted, and most of those still rely predominantly on checks rather than other payment methods. Approximately 43% of the time companies fail to take advantage of payment methods that allow them to transact business with suppliers electronically.
On the other hand, businesses that choose to use electronic methods are increasing in numbers. Some of the statistics on this include:
- 82% pay some suppliers by using wire transfers
- 81% take advantage of automated clearing house (ACH) credits
- 50% use cards for making purchases
- 34% conduct transactions using ACH debits
- 13% have access to a single-use account
Handling Accounts Receivables
In today’s market of electronic payments, it makes one wonder how the consumers of individual firms and retailers receive payments. While paper checks comprise the majority of payments for the U.S. market and cross-border transactions, there are several other methods available for B2B payments. The percentage varies according to the scope of the business and the customers (businesses or individual customers).
One of the advantages of electronic payments is the reduced cost of processing, and the fact that it improves a company’s ability to forecast cash flow and exercise fraud control according to the AFP survey. However, there were also five disadvantages cited by survey respondents that include:
- Difficulty converting customers to make payments electronically
- Difficulty convincing suppliers of the advantages of accepting payments electronically
- Lack of sufficient IT resources to implement a system for paying invoices electronically and receiving payments from customers electronically
- Lack of a standard format for relative information on remittances
- Lack of integration between accounting and electronic payment systems
The transition from paper to electronic methods of payment can be a difficult one if not managed carefully—one much easier for larger companies with limitless financial resources. However, for the 99% of companies that don’t have these kinds of resources available, Traxpay is here to help. Within the next three years it is reported that more than 80% of companies expect to manage all of their B2B payments electronically. For faster, safer, smarter B2B payments, give us a call.