Many businesses have begun to migrate away from using paper checks to pay vendors. In the recent past, there has been a sharp increase in the number of electronic payment options available in the B2B space. Many businesses are taking advantage of new payment methods that allow them to pay vendors more quickly and securely, while providing greater visibility and control.
However, some vendors are still apprehensive when it comes to accepting electronic forms of payment. In this blog, we will explore the top reasons vendors do not yet accept electronic payments and how to encourage them to do so.
Top Reasons Vendors Do Not Accept Electronic Payments (Yet)
If you’re at the beginning of the journey of automating your accounts payable processes, one roadblock you may encounter is that many vendors still prefer paper checks. Of course, an AP automation solution can automate check payments so you no longer have to print, sign, stuff, seal, and mail checks from the office. However, while this approach certainly delivers efficiency gains, you’re leaving significant benefits on the table for your organization–and your suppliers–by not converting those checks to electronic payments.
Before addressing how to convert these hold outs, it’s important to understand where they’re coming from and what their objections may be.
- They believe switching to a new payment method will be too time consuming: Especially if they already have a system they feel is working for them, suppliers may feel like the transition just isn’t worth it. They feel they’ll need to retrain their accounts receivable department on new technology or processes. To them, it feels like a large hill to climb, and when they are unsure or unaware of the potential benefits, they feel they have no reason to do so.
- They’re avoiding change: Sometimes it’s less about the work involved in making a switch and more about inertia. They may assume because they’ve always done it one way–with paper checks–and it always worked in the past that they’re just fine with things the way they are (because they have nothing to compare it to). Because of this, it’s important to show them how B2B payments are changing–there’s a whole host of benefits to going electronic and they may be missing out by not joining the trend.
- They’re worried about security: Vendors that have always handled paper checks may assume that electronic payments are less secure. This is often a false assumption resulting from a misunderstanding of how electronic vendor payments work. The sense of a physical payment in hand just somehow feels safer than 0s and 1s moving through the internet–notorious for its cyberthreat landscape. What they don’t realize is that paper checks are the most vulnerable to fraud, while electronic payments meet some of the highest security standards around.
- They’re worried about fees: Accepting electronic payments sometimes results in fees on the vendor’s side. Some vendors stick with checks in order to avoid those fees, not realizing that there’s a cost to process check payments. Check payments must be physically handled, mailed, and processed, which eats up costly time and resources.
How Suppliers and Vendors Benefit from Electronic Payments
As a buyer, you may be keenly aware of the benefits you receive from electronic payments. But suppliers and vendors benefit as well in a number of ways, including the following:
- No more signing and depositing paper checks: Suppliers can avoid manual processes associated with paper checks and instead accept electronic supplier payments with just a few clicks.
- No more costly checks: It’s estimated that businesses spend about $5 to process a paper check. And if that check bounces, that number can go way up.
- Stronger internal controls: Paper checks are still the primary target for payment fraud. Using electronic payment methods such as ACH payments or virtual cards adds a layer of protection.
- Improved cash management: If vendors opt for virtual card payments, they’ll receive full remittance details right alongside their payment, making it much easier to reconcile accounts. Vendors will also know exactly when payment will arrive, instead of waiting for the unpredictable mail.
- Improved speed of payment: Not only can checks get lost in the mail, or have unpredictable arrival times, but it simply takes longer to deliver payments this way than electronically. Vendors will receive payment notification right away and funds in their accounts faster.
- Better communication: Any vendor who has tried to call an AP department with a question about payment status is likely aware of how difficult that can be. They may get voicemail, have to wait for a call back, or get routed from person to person–in the end, only sometimes getting an answer. But accepting electronic payments supports the use of vendor portals such as MineralTree’s Supplier Central, which allow vendors to log in and look up real time invoice and payment status whenever they need.
- Remote friendly: It’s much easier to work remotely in an accounts receivables department if there aren’t paper checks to process. Paper checks require the processor to be in the same physical place as the checks, whereas electronic vendor payments can be processed from anywhere with an internet connection.
Benefits of Accepting Electronic Payments with MineralTree
When it comes to AP automation, you have a multitude of vendors to choose from. MineralTree is different. We understand the importance of your vendor relationships and seek to make the payment process streamlined for both buyer and vendor alike.
Our new Supplier Central portal allows suppliers to view invoice and payment information for all customers in one central location. Suppliers can realize the benefits of electronic payments while also saving time, gaining insights, and securely updating payment account details.
MineralTree also makes supplier onboarding easy–not just for the buyer, but the supplier as well. We handle onboarding in a way that caters to the supplier’s needs without pressuring them into accepting one specific payment method. Instead, we work toward understanding their processes and provide them with information that can help. We also offer continuous enrollment, which means we reach out and try to enroll new and existing suppliers to capture more spend over time.
MineralTree also has a team whose sole responsibility is handling payment inquiries. This means suppliers can reach a human if they can’t find an answer to their questions through Supplier Central.
Electronic payments offer maximum benefits for both buyers and suppliers alike. Helping suppliers understand this value is the first step in encouraging them to accept electronic payments over paper checks. MineralTree seeks to optimize the payment experience for both buyers and suppliers, helping young and fast-growing companies scale better and streamline their payment processes.