Many of the costs associated with your receivables are clearly stated on your balance sheet – mailing expenses that include paper, ink and postage, as well as interchange fees for customers’ credit card payments. Similar fees apply to paper and e-checks. Depending on the scale of the business, costs of processing a single check can range anywhere from $4 to $20.
The costs you might not see
Other costs related to billing and taking payments may not be so obvious. You won’t see them on your balance sheet, but they’re there beneath the surface, eating away at your company’s profits. And beyond adding to direct financial costs, they can drag on efficiency, slow down cash flow, undermine morale and expose your firm to a variety of risks.
Of all hidden costs, fraud poses the greatest risk. In a survey of more than 500 treasury and finance professionals, the AFP found that three-quarters (74%) of organizations were targets of payments fraud in 2020. Two-thirds (66%) of fraud attempts involved checks, by far the highest percentage among payment methods. Fraud and the need to guard against it introduce many layers of cost, from direct losses to the need for preventive investments in technology and employee training.
When you manage bill pay the old-fashioned way, your payables personnel spend a lot of time on manual account reconciliation and exception processing. In addition to that direct cost, manually intensive bill processing can create inefficiencies, because the people qualified to perform these services often could be spending their time in more valuable ways. And when employees aren’t used to their full potential and are burdened with manual, repetitive tasks, the result can be poor morale.
An outdated bill pay system can also undermine the consumer experience. Customers expect companies to provide fast and convenient payment options, and they will reconsider their loyalty if they’re forced to deal with outdated processes. A cumbersome payment system may also contribute to delayed or delinquent payments, which can drastically slow your company’s cash flow and restrict future growth opportunities. A recent survey by Quickbooks, found that 89% of businesses say late customer payments have hindered their company’s long-term growth goals.
Reduce costs with a digital process
A digital platform can help streamline your payments process, minimizing the employee time to process each payment—both cutting costs and decreasing the potential for human error. In addition, it can help you encourage customers to use payment options that are less expensive to process than credit cards, such as ACH and Apple Pay® or other choices in the mobile wallet.
Going digital also cuts down opportunities for fraud, by channeling payment processing through more secure channels and away from more vulnerable channels such as checks. It can help reduce friction in your interactions with customers, improving satisfaction and accelerating payments. And if the bill pay platform is integrated with your bank, it may be able to minimize cash-flow lags and fees related to processing payments.
Manual bill pay gives costs myriad places to hide. Switching to a digital platform eliminates the hiding places, so more of your payments can go to your company’s bottom line.