When waiting to get paid, we all want the same thing: to get paid as quickly as possible. Whether waiting for friends to pay back the money you lent them or waiting on a virtual card payment for a huge shipment of office supplies, nobody’s keen to wait around for money to show up. Chances are you have plenty of people to pay who’d also like to be paid as quickly as possible.
The need for speed in repaying personal loans increasingly applies to accounts receivable in business. And, when you’re talking about tens of thousands or even millions of dollars in payment, the need becomes more pressing. The suppliers I talk to on a daily basis are no longer content to sit back and wait for a check to wind its way through the U.S. Postal Service over the course of 7-to-10 days. They want the money quickly, and they’re right to expect speed with new payment options offering nearly instant transactions.
What strategic vendors may not realize is that we’re in the midst of a golden age of accounts receivable and accounts payable partnership, where AP isn’t just dictating terms and forcing you to accept paper check transactions. Digital payments can help your AR team get paid faster—that’s music to your ears, I know—but they also carry benefits for AP teams that make them eager and willing to start paying via methods like ACH and virtual card.
Let’s talk about why we’re seeing a rapid ramp-up in digital payments, and how that can solve your need for speed.
Eliminating mail float
Checks just take a long time to get to you. The float that’s inherent with mailing checks was an unavoidable nuisance when payments were largely manual and paper-based, but today it’s a threat to your business’s ability to maintain predictable cash flow. When virtual card payments happen instantly and ACH payments take hours to process, waiting around for a check that takes a long time to show up, which also can be intercepted or lost in the mail, is a relic of a bygone era. Like an 8-track player, or that Flock of Seagulls haircut you destroyed all the pictures of, it’s better left in the past.
Reducing payment process time
Of course, part of the delay with getting paid involves what the process looks like on the payer side. Whether check, ACH or physical card payments with legacy processes, your contact in accounts payable at Slow-Rite has to email her boss, who emails his boss, who may respond in a timely fashion or may not. Then once the check is approved, it needs to be printed, stuffed into an envelope, and mailed, whereas other types of payments can take minutes or hours to appear in your account.
At Paymode-X, we encourage payers to automate core processes and approvals and make payments digitally, especially for recurring expenses. This eliminates lengthy approval times and ensures you get your payment quicker.
Greasing the payment skids
You’re probably already leaning toward accepting more digital payments because before you read this article you understood the speed, security and efficiency benefits that accompany those. Especially in a world rocked by process disruptions due to supply chain issues, global conflicts, and whatever’s coming next.
We’ve found that most buyers are eager to offer faster payment terms if you stop getting paid via check, because they’re saving money and time themselves by switching over to ACH or virtual card. Why not take advantage of that to boost your payment speed, and enjoy all the other benefits we just talked about? I know I would.
Ultimately, digital payments carry efficiency and security benefits for payers, which matters a lot for AR teams—and significant remittance, efficiency and payment quickness benefits for suppliers. The need for speed is as old as time and more urgent than ever, and while I’m still waiting for my friend to pay me back that $20, there’s no reason for you to wait weeks to get payments from your key payers.
Related topicsDigital Payments
Evan Hall is the Director of Vendor Enrollment Success and Strategy for Paymode-X, where he has spent the past six years. In this role, Evan regularly talks to suppliers about their accounts receivable pain points and strategies.