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Mandating Electronic Payments to Suppliers

Introduction

Since the 1980s, when considering improvements to the Accounts Payable process [1], companies around the world successfully deployed solutions that evaluate Accounts Payable as one component of the Procure-to-Pay process. This yielded improved efficiencies between functional areas and often eliminated the need for invoices entirely with pay-on-receipt processes.  However, when it comes to making the payment, while the global norm is 100% electronic, for many in the United States printing and mailing paper checks continues as a common method for how payments are processed.

iPollingTM Results Review

Recently, Peeriosity’s iPollingTM technology was used to better understand the performance of member companies in making electronic payments, and what approaches were used to increase the percentage of electronic payments [2] made.  While year-to-year progress has been made by member companies, only 30% of reporting companies have more than 80% of their U.S. payments made electronically, with 22% of the companies at less than 50%.  Here are the details: 

iPolling: percentage of your company's accounts payable that the payments are made electronically | Mandating Electronic Payments

While the eventual benefit may be significant to both the company and the supplier, only 44% of companies have some type of mandate in place, with 56% of the companies reporting that they do not have any type of mandate to require electronic payments.

iPolling: best description of the status of mandating that suppliers at your company | Mandating Electronic Payments

Here are a few of the comments from Peeriosity members related to this poll:

Closing Summary

While making payments by check isn’t necessarily a broken process, since the U.S. Postal Services is highly automated and reliable for the delivery of machine-generated checks [4], the process takes time, typically two to three days in transit, and is costly.  Even though the benefits of electronic payments can be significant for both the company and their suppliers, for U.S.-related payments, challenges remain for reaching compliance rates for electronic payments for over 90% or more of payment transactions, with only 17% of companies indicating that they have achieved this milestone.  The good news is that companies continue to make progress, in part by increasingly mandating compliance with suppliers, where possible.

What is your ACH rate for U.S. payments?  Do you mandate?  What options are you considering for reducing paper checks for U.S.-based payments?

Who are your peers and how are you collaborating with them?

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 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.

Peeriosity members are invited to log into www.peeriosity.com [5] to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here [6].