October 1st marked the start of the new service standards for USPS First-Class Mail. To counter reliance on air transportation, USPS is opting to use their own trucks for cross-country deliveries. Not only will it cost more to send mail, but delivery will take longer too – up to five days instead of the usual two to three for First Class Mail.
Slow Mail Delivery Means Late Checks
If you’re in an industry that’s still sending out paper checks, then your employees, vendors, and suppliers are feeling the results. For recipients that are more than a 3-hour drive from the office mailing out the check, expect delivery to take longer than usual. If you are a business sending out paper check payments, expect complaints.
The Cost of Checks and Late Payments
Some businesses are experiencing delays of weeks or even months for check payments to arrive. According to a report from the Hackett Group, Inc. published in the Wall Street Journal, in early 2021 companies typically took around 58 days to make their supplier payments. The lengthy manual processes of check payments are a part of that problem.
A collaboration between PYMNTS and Versapay called The Strategic Role of the CFO surveyed 400 CFOs and found several industries heavily rely on making paper check payments. Commercial real estate makes 34% of B2B payments with checks. Finance and insurance follow with 28%, industrial manufacturing with 26% and technology with 20% of payments by check. These industries would benefit from automating their payments processes.
The average cost of printing a single check is $6. That does not include the time and labor involved in invoicing, routing for signature, and mailing. There is also the cost associated with errors, lost checks, fraud, and processing fees. Considering the delays in mail delivery times, paper checks are going to be even more difficult for businesses to sustain.
On the suppliers’ end, overdue payments are especially detrimental. They disrupt workflow, have a negative effect on cash availability, and put a strain on business relationships. But there are also consequences for companies that consistently make past due payments.
- Late fees
- Delayed receipt of goods
- An unfavorable business reputation
- Reduced negotiating power
AP Automation Saves Time
Businesses from retail stores to utility services are asking their customers to keep the postal delivery service standard changes in mind when expecting packages or paying their bills. They are also advising customers to sign up for online billing or electronic payments to avoid late fees. In other words, it’s time to automate.
Automating your AP process would streamline your company’s accounts payable operations and free you from paper checks and their possible delayed delivery. By eliminating manual processing, you would minimize the risk of human error, have greater efficiency, and spend less time researching processed payments.
The best accounts payable solutions offer options that best suit your unique business requirements, while providing the payment methods your suppliers want. Financial technology that integrates with your ERP or accounting systems allows you control and visibility over your payment program, easier reporting and analysis, and detailed transaction data.
Virtual Cards Have No Delays
While the use of checks in some industries is the way payment has always been done, it doesn’t mean it’s the best way. And it’s certainly not the only way. Virtual cards are a much better alternative.
Electronic credit cards, or virtual cards, are one of the safest ways to make payments. Virtual cards reduce costs, provide increased accuracy, and cut down on time. They are highly secure, which eliminates problems such as check fraud or theft. And because they are not physical cards, you would not have to worry about payments getting lost or delayed in the mail.
Convincing your suppliers to accept virtual cards may not be as difficult as you’d imagine. Many suppliers and vendors already accept virtual card payments even while they continue to accept paper checks. Electronic payments would mean they receive payment faster, which is something they would appreciate while check payments continue to be delayed.
Corporate Spending Innovations (CSI) is a FinTech leader providing innovative payment solutions to world-leading brands across all industries. CSI automates and digitizes B2B payments with a safe and highly secure cloud-based payments platform. For a more efficient way to manage payables, including virtual credit card, B2B Payments Network, ACH, and check, please visit www.corporatespending.com.
CSI is a an Edenred Company, the global leader in payment solutions for the working world.