Digital payments used to be a luxury that only very large enterprises could afford, thanks to their ability to invest significantly into the technology and the people to manually support that technology. That’s changed today due to new advancements in integration and automation tech. Businesses across industries have incorporated new technologies to make their internal and external operations run more smoothly. As businesses continue to prioritize digital transformation, it’s more likely the days of paper and manual processing will come to an end.
Nowadays, physical checks can be a hassle for businesses in terms of processing time, high costs and potential for errors or fraud. Digital payments have proven to offer faster, more efficient transactions with lower fees, greater security, and easier record-keeping. As technology continues to advance, businesses that stick with physical checks risk falling behind and missing out on the benefits of more modern payment systems.
The COVID-19 outbreak in 2020 required businesses to rethink their current payment processes and this has trickled into life today in 2023. Companies and customers saw the shift to digital payments as the new ‘business as usual’ approach to avoid the potential risk of infection from handling paper checks. Once the transition away from physical checks took hold, businesses realized numerous benefits that have changed business-to-business payments forever. Here are four key ways that digital payments can have a positive impact and why businesses need to make the switch now:
Greater Security
Even in the digital era, some small businesses are still using paper checks to pay their suppliers and vendors. According to a FinCEN alert back in February, check fraud is on the rise now more than ever. Paper checks are generally seen as more susceptible to fraud because of the important information written on them and they are often seen as unsafe due to how sophisticated fraudsters have become at stealing company checks out of the mail. Additionally, ACH fraud skyrocketed during and after the pandemic, resulting in many treasury banks discouraging companies from utilizing ACH too broadly unless they invested in technology or services to mitigate fraud risk. Therefore, companies are looking to payments providers that provide both optionality and increased security to avoid the seemingly constant fraud attempts that create such a headache to resolve.
More Time Savings
For years, companies have turned to solutions like single-use virtual cards and full-scale accounting and reconciliation automation to allow for invoices to be paid for the correct amount at the time needed. Similar to payroll automation, vendor payments are now speeding up. This payment method also enables the accounting team to easily track each payment digitally without needing to worry about the paper trail. Furthermore, automating and digitizing payments provides more time for the employees across accounting, finance, accounts payable and receivable to focus on more high-value tasks to help drive more business.
Cost Efficiency
As is typical across industries, consumer adoption of new technologies outpaces that of businesses—that’s the nature of the market. When it comes to payments, businesses have been lagging by a wider margin. A common excuse businesses make is the cost of updating infrastructure to move to digital payments, however there is a significant cost efficiency by making the transition. According to Juniper Research, the average business has 24% of its monthly revenue held up in accounts receivable. With readily available and affordable B2B payment technology, this simply doesn’t need to be the case. Digital payments allow for quicker settlement of payments for a business and greater opportunity for growth, far outweighing any upfront investment.
Faster Payments
Among the many advantages of using digital payments is the speed at which companies can now pay their vendors and receive money from their customers. The hassle of writing a check that is susceptible to human error can often result in the time suck of voiding an incorrect check and restarting the process. Additionally, the time it takes to process inbound checks slows the settlement and revenue realization timeline. With digital payments, the transactions can take mere seconds, and there is no need to go to the bank to cash checks. Instead, the business can get the funds much more quickly, ensuring more time for growing the business itself.
The Future of Digital Payments
There’s no question that B2B digital payments represent the future of the payments industry. As businesses continue to make digital transformation a priority, digital payments offer faster, more efficient transactions with lower fees, greater security, and easier record-keeping—while checks represent a liability in terms of processing time, high costs and potential for errors or fraud. New methods of check fraud will continue to emerge in the future as fraudsters become more persistent and advanced, painting an even more compelling picture for the future of digital payments. At this point it’s not a question of if businesses should adopt digital payments, but a question of when it will become the standard across the board.
