Helping organizations and businesses improve efficiency, reduce costs, and increase security is the ongoing mission behind just about everything we do in Treasury Management at First Business Bank. Each of these three objectives are equally important, but I may currently have a slight bias when it comes to efficiency improvement. In my opinion, it has never been more important to make payments easier and faster for businesses. With a sudden shift in how and where we work, coupled with a tight labor market, any business can benefit from technology that securely streamlines payments.

Optimizing Payments With Integrated Payables

Thankfully, our latest addition to our Treasury Management solution set provides all three of these core advantages for business clients. Our Integrated Payables technology helps companies streamline payment processing while reducing costs and strengthening payment security.

The pandemic influenced more businesses to adopt or to consider implementing digital payments. In fact, 32% of those surveyed for the Association of Finance Professionals’ 2020 Payments survey report the majority of B2B payments are now electronic. Another 60% said their organizations are likely or somewhat likely to convert the majority of B2B payments to suppliers from checks to electronic payments.

While the volume of commercial checks collected by the Federal Reserve has dwindled since a high in 1993 and fell to less than half of what it was 10 years ago, many cite the cost of making changes to internal processes as a “major barrier” to changing over to electronic payments. With our Integrated Payables solution, your payables can actually turn into a revenue generator while eliminating certain transaction costs. By enhancing your disbursement process with Integrated Payables, let’s address in more detail each of the key benefits described above.

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Improving Efficiency

With Integrated Payables, your business consolidates ACH, wire, check, and virtual card vendor payments into a single file that you upload into your online banking platform with First Business Bank. The payment file can also be transmitted directly from your companies’ payables software to the bank, further reducing steps involved. By outsourcing your payment process like this, you streamline your internal processes while we initiate payments for you. We print checks and mail them on your behalf with priority shipping options available as needed. This allows you to initiate a check payment from the convenience of your home office, business office, or anywhere you have a secure connection to Online Banking. We also help behind the scenes by educating your vendors to convert paper check payments to electronic payment methods such as ACH or virtual card. Our supplier enablement team reaches out to your vendors based on your instruction. 

Reducing Costs

As we convert your payments from check to electronic payments, you reduce or eliminate check printing and mailing costs. For instance, the lowest processing cost of a paper check is estimated at $2.05 per check. Processing 3,000 checks per month therefore results in an annual check processing cost of $73,000. This is the minimum!

Imagine if you could cut that in half – without increasing staff. Automated Clearing House (ACH) payments cost about 50 cents each to process. If you convert to 50% ACH, you lower your paper check cost from $73,000 annually to about $46,000 annually.

Another payment solution more companies are taking advantage of is virtual card payments. Simply stated, a virtual card is a single use credit card number that is issued electronically to a vendor for a precise amount with a 16-digit card number, expiration date, and CVV code. Virtual payments allow businesses to keep their banking information private from vendors and suppliers; when the payment is processed, the card number is no longer valid. Virtual cards are secure and remain one of the most cost-effective payments to initiate with little to no transaction costs. In addition, your business can earn revenue with a cash rebate based on the dollar volume processed through virtual card.  When you hear about a company’s finance department earning revenue, this is how they’re accomplishing it — and now your business can, too.

Increasing Security

Last — but certainly not least — we saw an increase overall in fraud affecting businesses over the past year. The Association for Financial Professionals’ “2021 AFP Payments Fraud and Control Survey Report” shows that paper checks continue to rank as the top payment method affected by fraud — 66% of those surveyed reported check fraud activity, which is down from 74% a year earlier. The report attributes a decrease in check fraud to the increase of electronic payments!

Our team is passionate about what we do, and we fully believe that Integrated Payables may be the right solution for many small- and medium-sized businesses that have delayed migrating to electronic payments until now. The way we work and how companies interact with their business partners completely shifted since March of 2020. Talk to your First Business Bank representative about streamlining your business’s payment process.