Pressured by the need to reduce cost and maximize working capital, corporate treasurers are embracing electronic payments. Although checks still account for half the payments in the U.S., research by the Ardent Group shows that 88 percent of companies expect to pay most of their suppliers electronically by 2016.
In an effort to assist CFOs and treasurers amid this changing payments landscape, AFP has released Becoming Check-Free: How Treasury Can Move to E-Payments, the latest installment in the Treasury in Practice series. This guide, underwritten by KeyBank, explores some technological and process solutions for treasurers to consider as they make the shift from paper to electronic payments. Implementing these broad payments solutions will require treasurers to lead the charge, break down internal silos and build cross-functional teams that can take a strategic approach to the entire payment process.
Treasury’s E-Payment To-Do List:
- Educate customers and suppliers about the e-payment value proposition.
- Get involved with accounts payable (AP) and accounts receivable (AR) to improve working capital.
- Get internal groups and the banks to work together.
- Work with your bank to identify the optimal payment mix.
- Implement e-billing where possible to encourage online payments.
- Consider joining a payment network if your suppliers and clients participate.
- As an interim step, streamline using products like digital lockboxes.
- Build a business case internally with working groups as to why straight-through processing (STP) is the end goal.
- Tie working capital incentives back to AR and AP initiatives as a business case build-out.
- Have a “post it once, post it right” mentality.
- Remittance detail is often the laggard, work to resolve that as a driver for better e-payment adoption.
Download Becoming Check-Free: How Treasury Can Move to E-Payments here.