Digital transformation and technology are necessary for business success. In spite of gains in digital transformation, many departments — such as accounts payable (AP) and accounts receivable (AR) — still rely on paper-based processes to do their work. Many organizations use paper checks simply because it’s what they’ve always done, while other businesses avoid ePayments because of the fees.
However, paper checks aren’t an efficient way to run your business. If you want to fully embrace digital transformation, it’s time to automate your AP and AR processes with digital-friendly payment options. Let’s look at how paper checks work and why, in spite of the fees, online payment options are superior.
If you shop at a grocery store or retailer, you likely won’t see everyday consumers paying with checks. That’s because checks account for just 7% of all consumer transactions.
Although consumers are eager to opt for digital payments, businesses have had a harder time letting go. Checks are still a very popular way for businesses to send and receive payments: in fact, 81% of businesses use paper checks at least occasionally. This is often because businesses are accustomed to paper checks, but also because some businesses (and even government agencies) still require paper checks.
Even though paper checks might not be avoidable in some cases, they shouldn’t be your business’ go-to option for making or receiving payments. Checks have so many downsides, including:
While checks don’t usually come with payment fees, the security risks, time loss, and opportunity costs make them an inefficient option for businesses.
Paper checks are just too clunky and inefficient for modern businesses. ePayment solutions, on the other hand, allow organizations to:
Many organizations choose ACH deposits and virtual cards as solid alternatives to paper checks.
ACH deposits are also referred to as “electronic checks.” With ACH, you can initiate an electronic transfer from one bank to another. There’s no need to visit your physical bank or post office: intelligent AP software processes these ACH payments automatically. Plus, clients and vendors can save their payment information in your system, so they don’t need to re-enter their information in the future.
While ACH payments are convenient, they do have longer waiting periods than other ePayment options. On average, you can expect an ACH payment to take three business days. They often come with modest fees, which usually range from $1 to $50, depending on the amount deposited and how quickly you need it to process.
In spite of the fees and waiting period, ACH deposits are still faster and more secure than checks. Because they’re digitized, your accounting team can easily track their status online, which gives you more visibility and control over your finances.
Virtual cards work like traditional credit cards, but with one big difference: they exist only online. Your bank doesn’t print a physical card. Instead, it provides a card number, CVV, and expiration date digitally.
Some virtual cards allow you to generate new card details for every transaction. This makes it far more secure than a paper check, and even more secure than a traditional credit card. Even if scammers steal your card information, the single-use virtual card numbers are useless to them.
The downside to virtual cards is that you can’t use them to pay for goods in-person, so if you frequently make trips to Office Depot, you might want to opt for a physical card. But for making payments online, virtual cards are incredibly convenient and safe.
In terms of fees, they vary depending on the card you have. Like traditional credit cards, many virtual cards have fees ranging from 1.5% to 3% per transaction. Even so, virtual cards give the recipient immediate access to their funds, which cuts down on the time required to process payments.
Yes, ePayment options come with processing fees that you likely won’t pay for paper checks. However, the benefits outweigh the minimal costs of these fees. Checks aren’t “free,” either: they cost your business time, productivity, and security.
With solutions like DTI Payments Automation, AP departments can fully automate the AP process. Free up cash flow, improve payment transparency, and take advantage of vendor discounts for paying early. See how DTI can help you ditch paper checks for good: check out our Payments Automation solution now.