Accounts payable can be digital and still make room for checks
Paying all your suppliers electronically makes sense—in theory. At a high level, doing so is a simple enough task—you enable your AP team to make all their payments through electronic means. Then you have yourself a cost-generating solution.
But to your AP team—the people at ground level—there's much more behind the process than sending payments. They also must track sent payments, follow up on uncashed checks, handle fraudulent cases, and work with suppliers who are missing payments for one reason or another.
Unfortunately, most electronic payment businesses that tout themselves as solutions only find value at the high-level glance, which is a detriment to your team. For example, while banks and card networks move money electronically, they don't provide much supplier support, which is often needed to take payments across the finish line. In the end, that task often falls to your employees once again.
AP also tends to use the oldest equipment of any team in most companies. They're still running error-prone manual processes, with stacks of checks and invoices on their desks in need of circulation on foot. Process exceptions and one-off requests torment them. Suppliers are calling and emailing, looking for payment. At the same time, AP handles other issues like lost or erroneous invoices, payments landing in the wrong accounts, or which otherwise need attention.
The whole operation is like a house of cards. Even if you know you need to change, nobody wants to touch a single card for fear that the entire thing will fall apart. Asking them to enable suppliers for electronic payments is extra work, and not usually in anybody's job description. It's hard enough to get the regular work done; heaven forbid somebody on the team gets ill, goes out on leave, or quits. They're really under a lot of pressure.
A new generation of payment service providers automates payments in the cloud and offloads much of the support work that AP usually handles instead of focusing on higher-value initiatives. When your process was held together with duct tape and string, it can be hard to imagine confidently handing the work to a service provider.
Suppliers that still need to receive physical checks should still be able to do so. Even if they do, the process remains electronic on the AP side so that customers can issue check payments in the same batch as other electronic payments. Supplier questions are routed to our in-house support team, alleviating another large responsibility from AP.
While suppliers are being enabled, the technical support team should train the accounts payable group that will be using the software in a succinct, one-hour meeting.
In the life of a manual process, AP teams need to fill out bank forms for each ACH batch or access their bank website to make wire payments. Payment automation consolidates those tasks—and more—into a single file from their ERP, which contains all the invoices the company wants to be paid.
On the back end, customers have total visibility into how those suppliers are getting paid, when checks cleared, and when Mastercard payments were issued. They can also track unprocessed Mastercard payments.
Why don't companies pay all of their suppliers electronically? Because it takes a village to do all the work around making payments. It's a rare AP team that can handle these pieces on top of getting payments out the door, let alone have special teams devoted to each area.
AP teams have been laboring under manual work and partially automated processes for so long; it's hard to imagine someone taking all that work off their plate. And sometimes, it's hard to imagine what AP jobs will look like when the payment process becomes automated. We don't often see companies cut staff. Instead, we have found that companies reduce their staff growth rate, and that existing staff moves onto higher-value work.