Ditch Paper Checks and Achieve Your ROI Goals with Accounts Payable Automation

Check usage has slowly declined over the past two decades. However, most Accounts Payable (AP) departments still use paper checks for their business payments. On the surface, this tried-and-true method seems like a wise way to pay vendors, but paper checks could be doing more harm than good to your business.

Although digital B2B payments are gaining traction in finance, many AP departments still heavily rely on paper checks. An estimated 40% of all business payments nationwide are still paid via paper checks¹, and 81% of firms still use paper checks to pay other businesses at least occasionally².

The Hidden Costs and Fees of Paper Checks

In today’s rapidly changing economy, AP departments must reduce operating costs. The hidden costs and fees associated with paper checks make it increasingly difficult to improve cash flow and increase profitability without outside help.

Many finance departments believe that AP Automation is more expensive than paper processing, especially for smaller organizations. But that’s not the case. Issuing one paper check can cost between $1 to $26 with an average of about $6 per check³. ePayments drive down payment processing costs between 50% and 85% compared to paper checks⁴.

If you’re wondering why checks are so expensive, you must consider the supplies and labor required to issue a paper check:

• Supplies and Hard Costs:
  • Check stock
  • Envelopes and postage
  • Toner
  • Check printer, folder, stuffer…
  • Maintenance
  • Bank fees

• Labor:
  • Printing
  • Reviewing and approving the checks
  • Sorting and stuffing checks into envelopes
  • Mailing or transporting the checks
  • Follow-up and reconciliation

The Downside of Paper Checks:

Besides being expensive and time consuming, another major drawback to paper checks is their susceptibility to fraud. Paper checks contain vulnerable information such as bank account and routing numbers that fraudsters can easily intercept. In 2021, 66% of companies paying by check experienced real or attempted fraud, compared to only 3% when paying with single-use virtual cards⁵. Fraudulent attacks negatively impact your organization’s bottom line and potentially cause irreparable damage to businesses.

The ROI of AP Automation:

The ROI of AP Automation proves to be a smart decision for any department wanting to increase profits to offset overhead costs. By implementing a best-in-class Invoice and Payment Automation provider like Paymerang, AP departments will benefit from:

• Reduction in operating fees:
  • Outdated manual accounting processes drive up operating costs as they result in late payments, missed discount opportunities, and duplicate payments. AP Automation speeds up the approval process and enables your team to take advantage of early pay discount opportunities. Imagine saving an additional 2%-5% on your AP spend.

• A less busy schedule:
  • Paymerang’s AP Automation solutions eliminate the manual tasks that bog AP departments down, saving teams thousands of hours annually. Paymerang provides 80%-time savings on payment processing, allowing your team to focus on higher-value tasks and strategic initiatives.

• Increased security and fraud mitigation:
  • In addition to saving money by eliminating the costs associated with paper checks, AP automation safeguards payments and helps keep bank accounts safe from fraud. When implementing Paymerang, clients receive white-glove services from more than 100 payment experts. The internal security teams employed by Paymerang prevent hundreds of fraud attacks against their clients, saving millions of dollars each year.

• Improved relationships with vendors:
  • As previously mentioned, paying your vendors with paper checks is time-consuming and costly, and slow manual invoice approvals can make the process even longer. Payment delays often damage vendor relationships, but AP eliminates these inefficiencies, resulting in cheaper invoice processing. According to Ardent Partners, the average time it takes to process a single invoice manually is around ten days, with an estimated average cost of $10.896. Paymerang provides a 60%-70% reduction in cost, saving you money on each invoice while delivering significant gains to your P&L.

• Fewer errors:
  • When your team manually enters invoice data, it’s tough to prevent errors. AP Automation reduces errors and improves accuracy with automated invoice capture and posting, ensuring fewer mistakes are made and saving your organization money. For example, Paymerang’s Invoice Automation software creates an 80% reduction in errors with coding and invoice exceptions.

Despite the heavy reliance on paper checks, the future of B2B payments looks promising. Currently, 51% of AP organizations use an electronic B2B payments solution, and 24% plan to use it within the next one to two years⁷.

To become more productive and effective, AP departments must implement finance automation and stop using paper checks. Implementing Paymerang’s easy-to-use Invoice and Payment Automation software takes 10 hours or less. It can transform your finance department, regardless of size and how well you think your current process works.

Sources:

¹PYMNTS (B2B Payments: 40% Are Made with Paper Checks):

²PYMNTS (81% of Firms Still Use Paper Checks to Pay Other Businesses At least Occasionally):

³Check Issuing: The Cost of Issuing Checks (A Guide for Businesses)

⁴Ardent: Accounts Payable Metrics that Matter in 2021

⁵The Association for Finance Professionals

⁶Ardent: Accounts Payable Metrics that Matter in 2021

⁷Ardent: The State of ePayables 2021