Many firms are hunting for solutions to help them optimize their accounts receivable (AR) and accounts payable (AP) processes to meet their new digital needs, but that doesn’t mean that they want to completely abandon a familiar business-to-business (B2B) payment method: paper checks.
In fact, some experts estimate that 40% of all B2B payments in the U.S. are still made via check, meaning they play a critical role for a large share of businesses, as reported in “The Treasurer’s Guide To AR Payment Optimization,” a PYMNTS and CheckAlt collaboration.
Get the report: The Treasurer’s Guide To AR Payment Optimization
What’s more, 81% of businesses still pay other firms via paper checks, making it the most common B2B payment method, even amid companies’ pandemic-driven digitization efforts.
Relying on a Familiar Payment Method
Firms today rely on paper checks for several reasons, including the simple fact that many companies are simply more comfortable doing so. Many companies’ traditional AR and AP processes are designed to accommodate all aspects of paper check payments, making it difficult for some to shift entirely to digital B2B payments.
It can be especially difficult for smaller firms to commit the money and to digitize their B2B payment processes if their suppliers remain unconvinced of electronic methods’ merits. In addition, businesses still view paper checks as a trusted B2B payment method.
So, the paper check remains stubbornly entrenched in daily life, eschewed by consumers but still a mainstay of business payments.
At the same time, companies cite several reasons for wanting to transition away from checks. Cost is the most cited factor. Firms also value improved cash forecasting and settlement speed.
Incorporating Digital Methods into the Mix
Among the companies that remain fond of checks, many are seeking digital solutions that can help them streamline these payments and reduce processing costs rather than completely replace them.
“These businesses should seek an AR vendor that provides speed, accuracy and efficiency in processing check payments, has direct core connections to simplify pushing and pulling payment data through ERPs, such as QuickBooks and RentManager, and can help convert check payments to electronic [ones] with automation and APIs,” CheckAlt chief product and innovation officer Bobby Rahmanian told PYMNTS.
With that kind of help, rather than replacing paper checks entirely, a growing number of businesses are beginning to incorporate digital methods into the mix alongside the check-based options. The current B2B payments environment requires firms to fundamentally rethink their approaches to payments optimization to ensure that their newer digital solutions can coexist with long-established methods like paper checks.