Commercial Insights

Automating Your Payment Processing – What’s Holding Your Business Back?

By Nick Witthuhn | Johnson Financial Group

4 minute read time

While investment in new business processes and technology can appear daunting, a modest commitment upfront can lead to significant long-term efficiencies and cost savings for your business. We understand that businesses need to streamline and be more efficient with their resources, especially given the many impacts of the pandemic, including recruiting challenges and staffing constraints. One of the ways companies are becoming more efficient is by exploring alternatives to the manual payment processes that exist today.

Traditional Payment Methods – Weighing the Risks

Check writing is arguably the most manual payment process that businesses use. Although checks have long been used as a payment method, the high demand on resources and costs to facilitate their processing, not to mention the increase in fraud and the delay in mail delivery, are giving companies compelling reasons to implement alternative payment options. As instances of fraud rise, fraudsters are unfortunately still looking to checks as one of the easiest ways to commit fraud. In fact, per the AFP® Fraud and Control Survey Report, nearly 75% of organizations, large and small, were targets for payment scams in 2020. Survey respondents noted that checks continue to be the most common method for scammers, far exceeding that of wire transfer.

In addition to the fraud loss, in October of 2021, the United States Postal Service released a statement that all out-of-town mail will take an average of up to five days for delivery. This may have a large supply chain impact for companies that source material from other regions, creating significant time delays in receiving payments. Also, inflation has played a role in all-around cost increases, checks included. Generally, most companies can spend anywhere from $3.00-$20.00 per check. This includes the cost of check stock, stamps, envelopes, MICR ink and printer maintenance in addition to the resource costs for an employee to stuff envelopes and drive to the post office. In the long run, optimizing payments can save your company time and money, as well as improve supplier relationships.

Optimizing Your Payment Process

Below are some insights into leveraging the latest in payment processing technology through commercial card and virtual card payments and how those payment options will benefit your business now and in the future. Through cardless payment accounts, your organization can reduce paper check processing costs and increase accounts payable efficiency – all while retaining your existing payables processes and systems. We understand that this approach is not a one-size-fits-all solution for your organization, which is why we are committed to connecting you with the right solution that will add value and create the optimal payment process.

Benefits of Converting to Virtual Card Payments

  1. Enhance accounts payable processing. A commercial/virtual card rebate may exceed the cost of an accounts payable automation solution, putting money back in your company’s budget to invest in other initiatives. With commercial/virtual credit cards, you can earn cash rebates while paying your vendors or suppliers. For every dollar of card spend, you have the potential to earn more.
  2. Better insight into cash flow. Enhanced reporting with virtual cards allows your business to quickly see the full picture of your current cash flow instead of waiting for checks to clear.
  3. More efficient remittance to your vendors. With virtual cards, vendors get one email that includes both payment and remittance information. Also, virtual cards provide vendors with immediate payment and certainty of receipt.
  4. Provides added fraud protection. Unique, randomly generated numbers are designated for one-time use and for a specific payment amount.
  5. Increase working capital. Virtual cards enable a more strategic approach versus payments made through check. The traditional check process takes several days to print and mail the payment to vendors. Virtual card payments can be executed immediately providing your business the ability to pay faster. It also allows accounts payable teams the ability to hold on to larger payments longer.

How can your business be more strategic right now?

  • Review and analyze reporting for your payment volumes by type.
  • Begin to socialize alternative payments with your organization’s key decision makers. 
  • Contact a Johnson Financial Group Advisor to discuss your company’s unique payment needs. We’ll help you identify the right mix of payment options for you, your organization and your vendors.

Our team is here to help your business with its unique payment needs. Contact a Johnson Financial Group Advisor to discuss the most optimal payment solutions for your cash flow.