Most monetary transactions around the world have moved online. There are many ways to move funds that have replaced cash and checks. In the United States, trillions of dollars per year move from various accounts without anyone seeing a dime of it. Did you know that most businesses still use paper checks and credit cards to make payments to other businesses?
It should surprise you that 51 percent of American businesses still write a paper check to pay their bills to suppliers and partners. B2B payments are vital to every business sector of the American economy, and they are still writing each other checks.
It won’t be this way forever. Numbers from the third quarter of 2021 say that over 18 billion dollars changed hands in onlineB2B payment processing. Business owners and operators are finally coming around to doing more business online. For a long time, many businesses have had no problem taking payment from customers via debit and credit cards. However, many of them were hesitant to make the jump to virtual payments between vendors and suppliers.
The trending numbers suggest that we are on the precipice of that being a thing of the past. Here are the three biggest reasons why businesses are starting to embrace electronic funds transfers:
1. Lower costs.
A survey by the Association for Financial Professionals found that 45 percent of respondent businesses said that the cost of paper checks has caused them to move their payments online. Checks cost money. As does postage and other stationery supplies. Those costs add up. In our current economic climate, businesses are trying to save as much money as possible. Businesses also commonly use credit cards to make B2B payments, and that definitely won’t save them any money. Everyone knows how much credit card companies make from fees. The least expensive way is for businesses to pay each other using transactions that use the Automated Clearing House (ACH) system.
2. Keeps cash flowing faster.
Using the ACH system to send payments to other businesses is certainly better than the old “check is in the mail” method. Direct payments are faster than checks sent through regular mail. Your business can take care of their debts in a timelier manner and your business partners will love having more cash in their pockets. There is also more accountability. You can check and see if the money has been sent instead of just waiting for the check to come in the mail.
One of the old arguments that businesses would use against making payments online was the security of the system. This is truly a myth, especially using the ACH system. ACH payments are conducted only by fully accredited American banks and lending institutions. It is much easier for someone to steal a check from the mail or try to defraud your company in dozens of other ways than getting into this system. Online wire transfers are the safest method of making business-to-business payments.