Organizations looking to better compete in a networked economy are paying more attention to electronic payments.
According to research from Ardent Partners, nearly 60% of all business payments today are electronic. Moving forward, this will only accelerate, as electronic payments become a logical extension of business process improvements that are dramatically reshaping procure to pay operations.
In its report, “Emerging Strategies and Best-in-Class Performance in B2B Payments,” Ardent Partners identified key factors driving organizations to consider or expand electronic payment programs as part of an AP automation initiative. Here’s a simple way to remember them: S-A-V-E N-O-W.
S for Speed. Electronic payments eliminate the lag time associated with the printing, handling, and mailing of a paper check, and still let you control the timing of payment. When used in conjunction with an electronic invoice process, the reduction in cycle time from processing an invoice and making the payment is dramatic: from weeks or months to days.
A for Accuracy. According to Ardent Partner survey results, 23% of respondents stated that e-payments offer a much higher level of accuracy on amounts being paid, while reducing the number of late payments, overpayments, duplicate payments, errors, and discrepancies.
V for Visibility. With visibility into the status of an electronic payment, suppliers can improve their cash flow forecasting, while eliminating the need to call their customers about payment status.
E for Efficiency. By moving off paper checks to e-payments, organizations extend the efficiency gains from PO and invoice automation to the last step in the procure to pay process. Most importantly, this includes delivery of line-level remittance advice to suppliers with an electronic payment for faster reconciliation.
N for Network. The collaborative potential of a business network is changing the perception of accounts payable from a tactical organization that pays the bills to a more strategic business partner, one that helps procurement enforce compliance and supports treasury in managing cash better.
O for Order to Pay. Next generation electronic payment solutions go far beyond vanilla Automated Clearing House (ACH) payments, allowing you to marry electronic payments with pre-payment transaction documents such as purchase orders, contracts, and invoices.
W for Working capital impact. Electronic payments support early payment discount programs that maintain or extend Days Payable Outstanding (DPO), while offering suppliers a valuable source of liquidity as needed.
Here, I’ve just scratched the surface of the impact of business payments in a networked economy. For more information on this topic, check out the webinar on Thursday, January 29, hosted by Treasury & Risk: B2B Payment in the Networked Age: How to link information and settlement to reduce risk & transform your payments process.