In the realm of business-to-business payments, checks remain king—but their reign may soon be overthrown.
For growth-minded finance executives, the need to optimize their payments processes is becoming a priority, and not simply because they want to reduce transnational costs or gain better control over the timing of their payments. The momentum to switch to electronic payment systems is partly fueled by the security issues surrounding paper checks. “Checks are vulnerable,” says Robert Alessandrini, CFO of The Judge Group, a staffing firm. “I would get rid of them entirely, if it were up to me. But we’re a few years from that.”
Comparison – Paying Vendors and Suppliers
The closer finance executives look at cards, however, the more benefits they may appreciate, such as cash rebates for all purchases as well as robust reporting. And when respondents graded both ACH and cards on four crucial qualities, the two were nearly tied in terms of the percentage of survey-takers who ranked them as “excellent” in terms of providing “prompt payment of accounts receivable” and “convenience for transaction partners.”
The pace at which middle market finance executives seem to be moving toward corporate and purchasing cards may be a by-product of their current mindset. Having managed several technological transformations— whether exchanging on premises technology for the cloud or expanding mobile platforms—finance chiefs may be suffering from undiagnosed transformation fatigue.
If that’s the case, they are likely to receive the motivation they need from their suppliers and vendors. As suppliers become more comfortable with cards— and more knowledgeable of the benefits they provide—they become supporters. By getting paid faster, they may be able to stay away from using more costly financing options. For both suppliers and vendors, the transition to cards can help in making their own operations more efficient—by providing better data for forecasting, for example. Such benefits take time to fully materialize. But forward-looking CFOs know that the laborious system of processing checks is also making their companies more vulnerable to cyberhackers. The sooner they start making the transition to cards, the sooner their companies will see the payoff.