The digital payments landscape has undergone a significant progression, evolving from a luxury reserved for large enterprises to a necessity for businesses of all sizes. Businesses seek to optimize their operational efficiency as part of their digital transformation.
In today’s business environment, physical checks present several challenges that hinder operational efficiency, including time-consuming processing, high costs, and susceptibility to errors or fraud. Although the use of checks continues to decline, as of 2021, the Federal Reserve reported 11.2 billion payments (27.23 trillion dollars in value) per year still being transacted via check. And despite this being a significant decrease in volume, check fraud continues to increase. In February 2023, the Financial Crimes Enforcement Network (FinCEN) advised financial institutions of a number of mail-theft schemes targeting check payments:
“Mail theft-related check fraud generally pertains to the fraudulent negotiation of checks stolen from the U.S. Mail. Fraud, including check fraud, is the largest source of illicit proceeds in the United States and represents one of the most significant money laundering threats to the United States.”
Simplify Business Processes With a Comprehensive Digital Payments Strategy
The best way to confront these issues is through a comprehensive digital payments strategy that can provide more efficient transactions, help lower fees, enhance security, and simplify record-keeping. With technology continuously advancing, businesses that persist with physical checks run the risk of falling behind and missing out on the benefits offered by modern payment systems.
Key Benefits of Digital Payments
1. Greater Security
Some businesses still rely on paper checks to pay suppliers and vendors, despite the rising prevalence of check fraud, as highlighted in a FinCEN alert from February. Paper checks are inherently vulnerable to fraud due to the sensitive information printed on them, and fraudsters have become increasingly adept at stealing company checks from mailboxes.
Moreover, instances of check fraud surged during and after the pandemic, prompting many treasury banks to caution against broad check utilization unless accompanied by adequate technology or services to mitigate fraud risk. Companies are seeking payment providers that offer enhanced security measures to counter the persistent threat of fraud.
2. Time Savings
Over the years, companies have turned to solutions such as single-use virtual cards and comprehensive accounting and reconciliation automation to enable timely payments for invoices. Like payroll automation, the speed of vendor payments has accelerated. Digital payment methods allow accounting teams to effortlessly track payments electronically, eliminating concerns about managing paper trails. By automating and digitizing payments, employees in accounting, finance, accounts payable, and accounts receivable can allocate more time to high-value tasks that drive business growth.
3. Cost Efficiency
The cost of updating infrastructure to facilitate the transition to digital payments is often cited as a barrier. Yet, the cost efficiency of embracing digital payments far outweighs the initial investment.
On average, businesses have approximately 24% of their monthly revenue tied up in accounts receivable. With accessible and affordable B2B payment technology, this need not be the case. Digital payments enable quicker settlement, providing businesses with greater opportunities for growth.
4. Faster and Real-Time Payments
One of the significant advantages of digital payments is the accelerated speed at which businesses can pay vendors and receive funds from customers. The laborious process of writing checks, which is prone to human error, often results in voided checks and delayed proceedings.
Furthermore, the time required to process incoming checks prolongs the settlement and revenue realization timeline. Digital payments facilitate near-instantaneous transactions, eliminating the need to physically deposit checks at a bank. Businesses can access funds promptly, allowing them to focus on growing their operations.
Conclusion
Digital payments represent the future of the payments industry. As businesses continue to prioritize digital transformation, digital payments offer faster and more efficient transactions with lower fees, improved security, and simplified record-keeping.
Perficient specializes in creating and engineering payment strategies that bring efficiency and savings to your account receivables, account payables, and collections process. Reach out to one of our subject matter experts today to learn more about how we can elevate your customer experience and bring new efficiencies to your business.
