How to Convince Vendors to Accept Electronic Payments
Paying vendors electronically is ideal, but not always the first option.
You are ready to automate your accounts payable process and stop stuffing envelopes with paper checks, but not all your vendors are on board. This is common but the good news is, it’s changing. With the pandemic still limiting person-to-person interaction, many vendors who previously preferred paper check payments are switching gears. Still the day when you can just take it for granted that all vendors support electronic payments is a long way off. In this post we will discuss your options to pay vendors electronically and how to get your vendors to accept electronic payments. We will also discuss your options for automating paper checks.
What’s the difference between EFT, ACH and Wire Transfers
ACH stands for automated clearing house and it is a type of EFT or electronic funds transfer. This is a secure method of transferring money from your bank account into your vendor’s. Most banks support ACH for free. Wire transfers are a different type of electronic funds transfer that requires direct interaction from both banks. Typically, wire transfers are faster, but they tend to come with hefty fees. Another benefit of ACH over wire transfers is that ACH allows you to send batch payments while money wires have to be done one at a time.
How to Get Your Vendors to Accept ACH and other Electronic Payments
Why ACH is better than Checks?
Paying by ACH is cheaper, faster and more secure than paying with checks. Electronic payments are especially important if you are automating your AP processes, since printing checks and stuffing envelopes is hardly an automated process. From your vendor’s perspective, ACH is also cheaper, faster and more secure. They are more likely to get paid on time and less likely to be defrauded. Now you just have to get them to accept ACH.
You’ve got hundreds of vendors and reaching out to them, obtaining their e-payment info and keeping it up to date seems like a lot of work. With a paper check, all you need is the vendor’s name and address. However, with a robust AP automation solution maintaining data is not so complex, and the amount of manual work involved in writing and mailing checks month after month is much greater over time than the one-time effort of obtain e-payment info.
Why Your Vendor Doesn’t Accept Electronic Payments and How to Change That
In most cases the answer is, the vendor will accept electronic payments and they are just waiting for you to set up the process. Many vendors have simply always been paid in paper checks and doing a widespread campaign to get their customers on board with electronic payments is not a priority. Change of any kind to an enterprise’s accounting processes can create strain and switching all their customers to ACH does not offer enough value for them to make that push. Essentially, the ball is in your court.
Often the vendor is just busy. If you have asked for their info to set up ACH and you have been ignored, they probably just don’t have time. Remember that their accountants are not sales reps or customer service people. Their priority is the books. It may just come down to asking a couple or even a few times.
In some cases, a vendor might be weary of sharing their banking information, but if you have the right accounts payable automation software, managing vendor information is simple and secure. The first step here is just assuring them that you are taking the necessary security measures. The second step is to remind them that paper checks are much more likely to be lost or stolen, which means they don’t get paid on time.
If your vendor is resistant it may take a little finesse. Think of it as sales. You have to convince them of the value and it may take a phone conversation or two. It may take periodic emails just to see if their mind has changed or remind them that this is a win-win for everyone involved.
Remind your vendor of these ACH Benefits:
- ACH saves them time over counter signing and depositing paper checks
- ACH gets them paid faster
- ACH is highly secure
- ACH enables auto-pay so their customer can’t forget to pay
- ACH can’t get lost in the mail
Securing and Streamlining Paper Checks When They Are the Best or Only Option
Maybe it’s the vendor who insists on paper checks. Maybe it’s just that you have a few vendors you don’t use on a regular basis, so setting up ACH is just not a worthwhile step. It is still important to secure and streamline your paper checks.
The best way to secure and streamline how you deliver paper checks is by selecting and AP automation vendor that offers remote check fulfillment. By outsourcing your checking printing to your AP solution vendor, your company’s accounts payable process is still able to become fully automated.
The best way to secure your paper checks is with Positive Pay. Positive Pay is an automated system designed to stop fraudulent check payments from being processed and is offered by the cash management department of most banks. A business creates a preapproved list of checks which the bank will be able to cross-reference to ensure only approved check payments are made. Learn more
Keeping your Options Open When Selecting AP Software
Despite the fact that paper checks are becoming increasingly rare, there are still many cases where they are necessary. If you are automating your accounts payable process, it is important to select a solution that supports both electronic vendor payments and paper checks. As we said above, choosing a solution provider that delivers check fulfillmand and supports positive pay for your paper checks is also critical.
If you are a Microsoft Dynamics GP user, Fidesic AP is the best way to manage your entire vendor payment process with our web-based approval workflow system, ACH and outsourced check fulfillment.
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