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. Many vendors who previously preferred paper check payments are switching gears. 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.
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. Isn't it easier to just keep doing what's been working? But 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 maintaining e-payment info.
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 of times, 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 their banking info is out in the world and 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. If you are fully committed to digitizing all payments, it may even take periodic emails just to see if a vendor's mind has changed and to remind them that this is a win-win for everyone involved.
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.
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 automate how you deliver paper checks is by selecting an AP automation vendor that offers remote check fulfillment. By outsourcing your check 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 pre-approved list of checks which the bank will be able to cross-reference to ensure only approved check payments are made. Learn more about Positive Pay
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 fulfillment and supports positive pay for your paper checks is also critical.