Why You Should Switch to ePayments Right Now

Posted by Andrew Bartolini on September 25th, 2014
Stored in Articles, General, Process, Procure-to-Pay, Strategy, Technology

Welcome to the second entry in a four-part series that previews Ardent Partners’ upcoming ePayments Rising research study. The pending research report, which is due to publish this fall, highlights the evolving perception of electronic payment methods, their benefits and overall value, and how the rise in ePayment approaches actively contributes to the attainment of a veritable “next level” of greater financial operations.

In the first entry of our ePayments Rising preview series, Payables Place highlighted the “stage” that is set for enterprises in the achievement of a “next level” of financial management success via the implementation of electronic payment methods. In the greater scope of financial operations, traditional and “back-office” functions like accounts payable are not historically tied to strategic advantages, however, the rise in AP automation, and, subsequently, electronic payment methods (such as business networks, ACH, wire transfer, and commercial cards), is inherently linked to various advantages.

The ePayments Rising research report, a new study by Ardent Partners, finds that electronic payment approaches can help enterprises:

  • Improve overall visibility into spending and ultimate cash flow.
  • Enhance the speed of payments and depth of information tied to those payments.
  • Bridge the gap between procurement and finance (and the CPO and CFO), and;
  • Assist the AP function in leveraging resources into more value-add projects.

In addition to the above items, ePayments present a series of benefits to those organizations that choose to make the leap from the age-old standby of paper-based checks (the most “manual” of non-electronic methods of payment). The majority of respondents in the ePayments Rising research survey indicated that the number-one benefit of ePayments is the cost savings borne from this approach. Electronically processed payments can net over 70% savings per payment over paper-based checks. This aspect alone is crucial enough for enterprises to make the switch, however, there are other benefits that are linked to the value of electronic payments.

For those organizations that have automated the initial phases of the procure-to-pay process, ePayments can serve as the back-end of straight-through-processing, a concept that involves “touchless” invoice-processing without the aid of human interaction. (Other benefits to ePayments include “deeper” remittance information for suppliers and increased accuracy / delivery of payments.)

Much like other business functions, although the benefits are clear to enterprises, there is still a reluctance to move to an electronic payment format for the settlement phase of the ePayables Framework. Barriers to electronic payment adoption include:

  • A general difficulty in convincing core suppliers to accept electronic payments as a standard of settlement. This barrier (which is considered the top issue in the ePayments Rising research study) is often a concern for suppliers due to their perception of costs associated with ePayments.
  • Uncertainty regarding the depth of remittance information. Remittance information, as discovered in the ePayments Rising report, is a growing concern amongst enterprises in regards to the payment process. With a high value placed on data and information regarding cash, it is critical for companies to standardize remittance aspects to ensure smooth delivery of payments and alignment on the back-end for intelligence’s sake.
  • Reluctance to move away from a method that has been an accepted part of the payment process for decades. Checks remain the most menial, cost-prohibitive means of executing the settlement phase of the ePayables Framework. However, the vast majority of payments (72% of all payments, according to Ardent’s research) are still processed in this manner, which proves that many executives a) still view AP as a non-strategic factor and b) payments remain a back-office function devoid of the corporate limelight.

Join us at the Ardent Partners LinkedIn Group to keep up on all the accounts payable and financial operations discussions. 


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Which Technologies Help Achieve ePayments Success?

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