Tear the Paper Check, Best Thing for Your Business

There’s no denying that the payment world has gone digital. From ordering on websites to paying friends when going out for dinner, we don’t think twice about making digital payments these days. For many, however, our business lives have not yet caught up with our personal lives. While online payments for business are on the rise, by most accounts, many companies still pay by paper check even though it takes longer and costs more.

There are multiple reasons why businesses still pay by paper checks. Some companies often have a false sense of security with the physical presence of a paper check or have the perception that paper checks are guaranteed money. Others may not understand how digital business payments work, or worry the payment will not be posted correctly in the absence of the check stub, or actively embrace the idea of “if it isn’t broken, don’t fix it.”

If you don’t fully understand electronic payments (or epayments) and how it has evolved to better handle business payments and remittance details, you’re not alone. Continuing our series on digital business payments, we’re discussing why you should be interested in online payment systems for businesses of all sizes, what they are, and how you can get started.

Five Benefits of Online Payments for Business

The benefits of digital business payments far outweigh the hassle, inefficiency, and ambiguity of paper check payments.

1. Digital business payments save you time. It is much faster for you to make a digital payment than to process paper checks. Think of the labor involved with reviewing and approving a bill, cutting a check, getting it signed, and mailing it with the correct invoice. The process takes some companies weeks or even months to complete. An epayment moves the entire cycle to the cloud. A long, complicated process is cut down to a few, auditable clicks. In fact, online payments for business cut the time associated with bill approval by 50 percent and collect money two to three times faster than paper check-based payments.  

2. Digital business payments give you more control. Imagine being able to track every step of a paper check payment, including each person who touches it within the company and outside of it—every postal worker, everyone at the vendor’s office, even the teller at the bank where it’s deposited. Then imagine knowing the exact moment the paper check will be cashed. That’s impossible for a paper check, but that’s just what you get with online payments for business. You select when the money leaves your bank account. The entire process is completely trackable from payer to payee. At any moment, you can determine the status of that payment. There’s no guesswork, only precise documentation of bill review, payment, and receipt. Bonus: This control supports healthy cash flow management. You’re no longer guessing when a check might be cashed or trying to keep track of outstanding payments. As Vanessa Kruze, CPA, founder and CEO of Kruze Consulting, explains: “Having all your future bills in a single system helps businesses get a single view into what their cash outflows will be. A business using paper checks can’t easily keep track of upcoming bills and their due dates—but online payment systems like Bill.com can automatically give you a view into your upcoming expenses and help you grasp what needs to get paid and when.”

3. Digital business payments offer much more information than paper checks. While a check gives you an amount and date, the payee, and memos/notes, an epayment gives you all the remittance information of the transaction. That means invoices, invoice numbers, statements of work, and exact date and time stamping. It shows who approved the payment and who made the payment. Finally, digital business payments automatically sync with accounting software, so information is never entered twice. This transparency makes paying and reconciling payments much simpler.

4. Digital business payments bring more convenience. With online payment systems for small businesses, you can pay electronically from any internet-enabled computer or mobile device. On the road for work? You can review a bill, payment history, and vendor contract from the backseat of a Lyft/Uber or use your smartphone to pay a vendor while you wait for your flight. Payments won’t be held up, protecting your company from late fees and disgruntled vendors. Accepting digital payments is easier as well since vendors can authorize business payments to land directly in their bank accounts.

5. Digital business payments streamline international payments. You can pay vendors in local currencies, reducing the complexities of conversion rates. It can even save you money. An international wire through a bank may run $50. A digital business payment solution can process the same payment for a fraction of the cost.

What Are Digital Business Payments?

Now that we have your attention, let’s talk about what digital business payments are. Incorporating epayments into your business is an easy exercise. Here’s what you need to know to get started.

A digital business payment is any payment made through digital or electronic means, rather than via more traditional methods like exchanging cash or paper checks. In an online payment for business, both the sender and the recipient use electronic means to transfer and accept the money being paid.

Personal digital payments through apps like Venmo and Zelle are estimated to reach a total of $180 billion in 2019. Businesses, though, continue to lag when it comes to adopting epayments. How much so? In one survey, Bill.com asked SMB owners to choose their top three payment methods. Paper checks came out on top at 86 percent.

Fortunately, these numbers are improving.

Bill.com annually processes over $62 billion in digital payments for more than three million payers and payees. Of companies who opt for digital business payments, 73 percent report receiving payments two to three times faster, while 82 percent say they process business payments in half the time they previously spent (survey).

Types of Digital Business Payments

When it comes to epayments, lots of terms and combinations of letters are loosely thrown around, but less often explained. These small business payment options are plentiful and include:

• Credit cards. Credit card payments have been around for years, and are probably the most familiar form of electronic business payments. Credit cards provide one of the fastest payments options but also one of the most expensive options for the receiver.

• EFT. EFT stands for electronic funds transfer, which is just what it sounds like—transferring funds electronically from one bank to another without any paper money changing hands. EFT payments include many types of financial transfers including direct deposits (like payroll), debit payments, wire transfers, and ACH payments.

• ACH. ACH payments are digital payments made through the Automated Clearing House network, a secure system for bank-to-bank transfers. A typical ACH transfer takes anywhere from a few hours to a few days to clear. Therefore these transactions do not happen in “real time” as some might think. These are faster and involve less manual labor than paper checks and incur lower fees than credit cards.

• eChecks. An eCheck is simply the electronic version of a paper check, which causes a bank-to-bank transfer of funds via the ACH network. Funds may take 2-5 days to clear.  

• Virtual cards. A virtual card is a 16-digit one-time-use credit card token that functions as a proxy for a physical credit card with a perpetual number. Virtual cards offer a layer of protection and security to card payments because the card number/token can be used only once and it also specifies the amount of the payment and expiration date. It is typically distributed to the vendor via an email, which can also contain relevant remittance information about the invoices being paid.

How to Get Started with Online Payments for Business

Now that you’re up to speed on digital business payments, let’s explore how you can start using them in your business. Bill.com, an online payments system, allows you to automate the way you approve and pay bills both domestically and internationally, send invoices, and get paid faster. It provides the financial controls, audit trail and visibility into all the payments going in or out of your company so you always know where your money is, anytime, anywhere. It integrates with accounting software such as QuickBooks Online, Xero, Sage Intacct, and Oracle NetSuite to eliminate double data entry and ensure accuracy. You can cut the time spent on processing bills by 50 percent and get paid up two to three times faster.

Save time and stay in control using Bill.com digital payments. Sign up for a risk-free trial of Bill.com today.

We will continue our examination of digital business payments next week by looking at how they differ from consumer digital payments. Subscribe to the Bill.com blog and you’ll get a notification when it is live.