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Reasons Checks Are Not Cutting It for Businesses

For many businesses, 2022 was a year of digital transformation. Continuing through 2023, we expect more companies to leave behind the days of paper and manual processes and take that first step to digitize processes by automating their payment procedures and ditching paper checks.


The start of a new year is critical for all businesses as they want to drive sustainable growth, optimize cash flow and improve visibility throughout the year. To do this, companies will need to part ways with old processes and begin embracing technology in every aspect of their organization. With digital payments on the rise, accounts payable (AP) departments must be at the top of the list for system upgrades.


Improves Business Efficiencies 

Despite individual consumers making the most of digital transactions, many businesses across different industries still use physical checks to make payments to partners and vendors, wasting time and revenue.


Regardless of how many transactions your business makes throughout the year, your company is likely wasting too many resources on mailing physical checks to vendors. Automating business-to-business (B2B) payment solutions allows businesses to pay their vendors faster, more securely and through their preferred payment methods. Checks are a significant financial burden when you add material postage, bank fees, and, most importantly - labor required for writing, approving and error correction. Companies that can automate payments to their partners and business customers significantly speed up time to revenue and increase the company's overall efficiency.


Automating payment services allows the employees responsible for processing the payments to focus their time and attention on projects that can help drive further growth across the business. Companies that have taken advantage of automated AP processing have reduced manual data entry, avoided late fees and increased operational efficiencies. Fifty-four percent of respondents from the J.P. Morgan 2022 AFP Digital Payments Survey cite that the speed of payment is a significant driver in adopting digital payment methods, especially with the current market disruptions of inflation and weakened supply chains.


Additionally, businesses can use savings as additional revenue streams across their organization. Paying by automated clearing house (ACH), virtual card or credit card via an automated system can save your business thousands, on average up to $8 per transaction, per a study done by REPAY. Companies have also realized substantial rebates when sending payments through virtual cards.


Vendors Prefer Automation

The cost and time to digitize a whole department could be expensive and tedious. Still, most experiences have been the exact opposite, with much of the heavy lift put on the automation technology provider.


Research completed by PYMNTS' "The AP/AR Quick-Start Guide" discovered buyers often prefer to pay suppliers using typical methods like ACH or paper checks. In turn, their suppliers prefer receiving payments through methods that give them faster and easier access to funds, such as realtime payments.


J.P. Morgan's 2022 AFP Digital Payments Survey results suggest companies in the U.S. are actively shifting their payment methods away from checks to digital alternatives. Thirty-three percent of B2B payments in the U.S. and Canada continue to be made by check, a nine-point decline since 2019. Globally, payments made by check account for only 31% of B2B payments. Within North America, when paying significant suppliers, the gap between paper and digital payments has widened to 13%, with 39% of organizations using ACH credits while 26% continue to use checks.


Payment Security

According to the Wall Street Journal, check fraud is one of the fastest-growing types of fraud and makes up the most significant percentage of bank fraud losses at about $1.3 billion in 2018 and 66% of financial professionals report check fraud activity was unchanged from 2020 to 2021.

It is not surprising that check fraud remains the most predominant form of payment fraud today as checks continue to be the payment method most often used by organizations. Checks are more susceptible to fraud because they have important information that can be stolen or forged. An effective way to combat B2B payments fraud is to cut ties with paper checks altogether. One of the most secure methods of payment is the virtual card. These single-use cards remove the ability for fraud as the technology can enable payment for only one invoice and at a designated transaction amount.

Don't be Intimidated by New Methods

B2B payments can provide your business with the tools needed to establish a streamlined payment process by automating outbound payments, setting vendor-preferred payment methods, customizing reports for easier reconciliation and virtual card rebates. Running AP operations using spreadsheets, manual processes and legacy systems makes it fundamentally tricky for a business to build and scale its operations. As companies grow and digital payments advance, so will the expectations of B2B payments.


So, ditch the checks! Spend less time cutting and tracking paper checks using REPAY’s AP automation technology. We automate the entire outbound payment process, ensuring your vendors are paid faster without manual effort from you. Payment technology providers like REPAY offer robust tools to enable AP automation for any size business. Start supporting digital vendor payments to simplify outbound payments and get back to what matters - your business!

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