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Cash management is still important, but it has certainly gained a lot more attention over the past 18 months. The COVID-19 pandemic made me realize that the business cash management process could still be improved.
Amidst all the uncertainty, companies need to keep a very close eye on liquidity. At the same time, working remotely can make cash management more difficult. It’s hard to keep track of all the paper that the payment process traditionally requires when everyone is working virtually.
When virtual work became imperative, there was a rush on cash management. Suddenly, all eyes were on the time and manual effort required for cash management. AP professionals would come and go from the office to pick up paper invoices and check inventory. AR professionals were trying to figure out how to get to the post office or PO box and get checks deposited in the bank. Invoices and checks can wait several days before they can be processed. It was difficult to know what was going to happen and when. The lack of consistency, visibility and control was in sight.
This pain and urgency prompted some people to take action. Payments by cash and paper check decreased by 16% year on year in 2020, sliding to 45% of B2B payments. Automated Clearing House (ACH) payments topped $ 10 trillion for the first time in history.
We saw a lot of companies automation of accelerated payments in response to the COVID-19 pandemic. Nvoicepay has been around for 12 years and a third of our customers have signed up for payment automation since the start of the COVID-19 pandemic. We also saw a 26% jump in the number of vendors in our vendor network who jumped out of the check-only car and requested to sign up to be paid by virtual card or ACH.
45% is still a lot of check payments. Businesses still send thousands and thousands of checks every day. Too much time and effort, and too little visibility and control, it’s always history wherever check payments are made. Organizations have simply learned to live with pain.
Why does anyone tolerate such a painful status quo? Either they don’t know there is a better way, or they’re so absorbed in managing the day-to-day efforts that they can’t imagine a different future, or they think it might be too expensive to change the way things are done. have always been. ended.
There is a better way,
When you stop to consider the full impact of payment automation on cash management, it becomes clear how much better the future could be:
Reduced process costs. By reducing the cost of payments, you immediately improve your cash flow. Paper costs disappear. All of that printing, signing, padding, stamping and mailing jobs are replaced with just a few clicks. All payments can be made in one workflow, instead of the three or four you probably use.
Card discounts. When you move away from paper checks, you will be able to pay more vendors with virtual cards. Virtual card payments can generate discounts, which definitely helps with cash flow.
Less time to correct mistakes. Payment errors are a costly waste of time. Even if it only takes 10 or 15 minutes to correct a mistake, it adds up. This leads to interruption – you have to stop whatever you are doing and correct errors over and over.
Less hiccups. It takes time to void and reissue checks and get the right amount of money in the right place, making cash management difficult. When you automate your payments, you don’t have to search for old checks or piles of bills.
Fewer possibilities for fraud. Checks still carry the highest risk of fraud of any payment method. Your bank account and routing number are there, no phishing or hacking is required. The last thing you need when money is running out is to have money stolen from yourself.
Reducing ACH Fraud Costs. ACH fraud is on the rise, primarily through Business Email Compromise (BEC) systems. Effective management and protection of supplier data can be time consuming for IT and staff. Most businesses don’t have the resources to do this effectively. Payment automation companies are often able to do this job for you.
Less time to process requests. Payment automation companies can handle supplier and customer questions, freeing up more staff time.
Greater visibility. Cash management is so much more efficient when you can see the status of all your payments in real time. With the right payment partner, you should have access to detailed reports and information about your cash flow.
More flexibility. When you can pay for everything electronically, and all it takes is a few clicks, you can plan your payments with precision. This precision makes it possible to let go of the management of the float.
While the COVID-19 pandemic has exposed painful and inefficient cash management issues, the reality is that the cash management process for businesses has been struggling for a long time.
Efficiency, visibility and control are the most important aspects of cash management. If you do paper processing, you might be missing something important on one of these three fronts. When you take advantage of digital payment methods, automate processes, and better manage your staff’s time, managing cash flow becomes significantly easier.
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Mark Penserini is Vice President, Partner Management at Nvoicepay, a FLEETCOR company. He has more than 25 years of operational and technical experience, specializing in project management in the fields of health, finance and IT.
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