Even in the internet age, companies still make more than 57 percent of all payments through paper-driven processes and checks, according to a survey by SunTrust Banks, Inc. of middle market and small business executives. Not only can these non-electronic processes have a negative impact on a company’s cash flow and balance sheet, but also they can significantly increase exposure to fraud.
 
In fact, 73 percent of organizations have experienced actual or attempted fraud, with non-electronic processes the number one source of fraud according to the 2016 AFP Payments Fraud and Control Survey.
                                                                                                                                                                    
“Ignoring your payments strategy could have a big impact on your bottom line,” said Michael Maza, head of Treasury & Payment Solutions at SunTrust. “Paper transactions open businesses up to the possibility of fraud, and they can also result in missed collections and payments, as well as increased staff time.  Embracing automation today will not only save money in the short-term, but can help position companies for the future. As interest rates begin to climb, the speed of collections will play an even more important role in a company’s financial strategy.”
 
SunTrust suggests businesses consider the following when developing strategies to leverage electronic payments:
 
1. Automate Your Payments First. A payments strategy is at the core of a company’s financial operation, and automating payments can help executives simplify the payments process and better manage working capital and improve capital efficiency. According to Paystream Advisors Research, it can cost 20 times more to process an invoice in a low automation environment than in a highly automated one. Further, companies achieve a 90 percent capture rate of early payment discounts by leveraging automated payments.
 
By introducing payment systems that employ commercial credit card programs, corporate automated clearinghouse functions, electronic data interchange, direct deposit payroll and consolidated payments files, companies can achieve faster funds movement, better tracking, and a higher level security while transferring greater volumes of data, all while freeing up staff resources.
 
2. Automate Your Collections Strategy. Eighty-three percent of businesses accept electronic payments, by far the most preferred method of collecting payments, but only 58 percent of all collections are completed electronically. Companies are looking to push this electronic collections percentage higher.
 
Whether automating high volume-low dollar receipts, processing repetitive collections, creating a website for online billing or outsourcing to a lockbox provider, the right collections strategy can make the most of working capital, increase collections efficiency, reduce the risk of fraud, and help businesses realize substantial savings. With a median cost of $1.50 to receive and process a paper check, a company processing 20,000 checks per month could save $360,000 annually implementing these strategies.
 
3. Use Technology to Reduce Fraud.  The number of organizations that have experienced actual or attempted fraud has increased more than 17.5 percent since 2014, according to the 2016 AFP Payments Fraud and Control Survey. A few of the more effective strategies to safeguard against both paper and electronic fraud include: basic controls such as automatic reconciliation of accounts, blocks and filters on ACH payments or instituting universal payment identification codes.
 
4. Improve Cash Management. Electronic payments data and reports that analyze that data enable executives to more quickly obtain better information and ultimately gain control over their cash management challenges. Access to online banking and cash management tools allow business executives to track collections and payments, monitor activity for fraud and develop a consolidated view of cash positions.
 
Moving to electronic methods provides easy access to transactional data and reporting on demand, and helps companies better understand their cash position and make informed borrowing and investment decisions. This visibility into current and future cash needs can help a business manage capital to fund growth initiatives.
 
“At SunTrust, we help companies link business plans, capital requirements and payments programs to generate smart growth,” said Maza. “We leverage our payments expertise and knowledge of market trends to advise clients on the right strategic mix for their specific needs, ranging from traditional to electronic methods to help them achieve their business objectives.”