There are many aspects in accounts payable that can be automated, but the easiest to implement and see a clear return on is to use Automated Clearing House (ACH) payments.
In recent years, accounts payable has made major achievements in automating certain processes. Still, many businesses have been left behind because of the cost and difficulty of implementing the new technology. However, paper invoices, paper checks, and paper records increase the chances for fraud and mistakes – wasting both time and money.
Let’s start with something simple. One of the easiest processes to automate and also see a clear return on is the vendor payment process. We like to use (and recommend) Automated Clearing House (ACH) payments.
Top 5 Benefits of using ACH for Vendor Payments:
1. Reduce printing and processing
Printing hundreds of invoices and checks every week, then processing them through accounts payable and sending it out via snail mail consumes time & resources. With automation, printing and processing is eliminated from the process.
2. Cost savings
A company can spend around $2.00 a payment using the traditional paper process. Companies that are using ACH have a cost-per-payment of around only $0.15. With hundreds (or even thousands) of payments going out monthly in a mid-market business, the potential for cost savings is dramatic.
3. Increased security
If human hands are removed from the process, human error and fraud are drastically reduced. No one touches the checks in the office, in the postal system, or even in the vendor’s office. ACH removes the likelihood of check tampering.
4. Enhanced productivity
Traditional payment processing is a manual, labor-intensive process that takes up a lot of an employee’s time every week. If the process is automated, employees will be more productive with other tasks.
5. Improved cash management
Managing your accounts payable manually leaves room for error, lack of oversight, and disconnects between the budget and vendor payments. Management will have a clear picture of cash flow when it is all done electronically and simple weekly or monthly reports are delivered via email.
With all of these benefits, why are not all businesses using ACH? Despite the cost, security, productivity, and management benefits, many companies have not realized the full benefit of ACH for accounts payable because their vendors are not set up to accept electronic payments.
Let’s spread the knowledge! Start by informing your vendors of the ease and importance of ACH payments. Convince them to accept electronic payments by using an automated system. You can direct the vendors to the self-registration portal online, through automated emails, messages on paper checks, or by phone. ACH can provide some great efficiencies and cost reductions, but only if you can extend it to a significant portion of your payments.
Did your office make the switch to ACH payments for vendors?
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