Controllers Council recently held a panel discussion on How to Optimize B2B Payments for Your Business, sponsored by BILL.
BILL is the leader in financial automation software for small and mid-size businesses. Our expert panelists are Angus Maclaurin and Joe Fleischer. Angus Maclaurin is a director of product marketing at BILL focused on payments. He has an MBA from the University of California Berkeley and a BA from Harvard University. Joe Fleischer is a webinar content marketing manager at BILL.
Following are key takeaways to this discussion. If you are interested in learning more, view the full webinar archive video here.
How to develop a comprehensive payment strategy
One of the things to just start with is, checks are still one of the primary ways. Looking at stats, in the last couple of years, we have 90% of businesses that are still using check. Even for us, the largest number of actual payments are still being made by check. And it’s honestly, it’s a tough habit to break. I’m guilty of this. If the landscaper comes by, it’s easy to just write out a paper check. And so just given the number of businesses that are starting with that, you’re still seeing that be one of the big ones.
That said, you’re seeing ACH grow a lot over the last five years. Part of this was just things like COVID and having more distributed teams. You can’t necessarily have approvals and easily be able to sign checks if the person who’s doing the signature and the person who’s sending out the check are in different places. You’re seeing a lot more of that shift. And then, well, I made the comment earlier about how checks are still the number one number of payments in terms of actual payment volume. It’s not even close. ACH is much higher. I’ve seen even examples of it being about four times as much in terms of payment volume are going through ACH. You’re seeing a shift as checks are still there, but a rapid rise around ACH. And you’re seeing a rise around credit card.
And part of this is just, you still have less than 50% of businesses that accept cards. While credit cards are great on one side, from the AP side, if you can get float, make payments later, you have rewards. But you also see some limitations around this. One is, this may not be integrated into your AP solution and so you’ve got some payments going out through credit card and then some payments going out through either check or ACH. And so being able to see all those in one place is one challenge.
Key aspects of the strategy, including cost, speed, and risk
To minimize costs and risks while optimizing speed when determining which payment methods to use, a company should consider the following:
- True costs of processing payments
- Cash flow sensitivity
- Fraud and risk concerns
- Vendor relationships
What payment methods make sense in different scenarios?
Decisions about which payment methods to use should factor in vendors’ policies and openness to adapting them, vendors’ fees and incentives, and vendors’ payment terms.
We’ve done surveys ourselves to ask, “Do you talk to your customer when you’re creating which payment methods you’re going to accept?” And 60% say, “Nope, this is what we accept. There’s no working back and forth.” For the other 40%, there can be openness to working with your customer to say, “Okay, this is the way. You want to pay this way we can see if there’s something we can do.”
And what you’ll see is there is an openness, depending on the vendor, on this. We will call up certain vendors to see, understand credit card acceptance and be able to provide more opportunities and options for our AP customers.
Role of automation and streamlining payments
There are many ways that SMBs can apply advances in automation to manage payments, streamline approval workflows, and accelerate reconciliation. These ways include:
- Simplify invoice processing.
- Streamline workflows for reviewing and approving payments.
- Identify opportunities to optimize cash flow when considering payment options.
- Sync data about payables and receivables with accounting and/or ERP software.
To view the complete webcast, download full webinar here.
ABOUT THE SPONSOR:
BILL (NYSE: BILL) is a leader in financial automation software for small and midsize businesses (SMBs). As a champion of SMBs, we are dedicated to automating the future of finance so businesses can thrive. Hundreds of thousands of businesses trust BILL solutions to manage financial workflows, including payables, receivables, and spend and expense management. With BILL, businesses are connected to a network of millions of members, so they can pay or get paid faster. Through our automated solutions, we help SMBs simplify and control their finances, so they can confidently manage their businesses, and succeed on their terms. BILL is a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers. BILL is headquartered in San Jose, California. For more information, visit bill.com.