Onboarding And on Board: Tackling the Twin Challenges of Eliminating Check Payments

Buzz about the future of business-to-business payments is understandable. Everyone rightly wants to know how artificial intelligence, real-time payments, and other emerging initiatives will integrate into their everyday business payments.

However, over 40% of business payments are still made via check, according to research from PYMNTS.com. A further 50% of accounts payable (AP) staff cannot get approval, funding, or time to embrace innovative technology. It is challenging enough to try to tackle the same for current technology and best practices.

That was the message that Bottomline’s Evan Hall, Director of Vendor Enrollment Success and Strategy, heard from AP teams at the Institute of Financial Management Spring Expo. Hall heard firsthand about the challenges of overcoming checks and vendors reluctant to enroll in digital payment methods.

Dave Choate: Following on from the recent IOFM event. What event takeaways piqued your interest?

Evan Hall: Two big things I heard that should not surprise me but still astonish me when I do:

The first is that so many checks are still being sent. I asked in our panel, “Are you automated today?” The answer was “yes, but we still have large check stacks.” That begs the question, why? Why are you sending checks if you have virtual cards and ACH (Automated Clearing House)?

That led to the other surprise: Folks are having a tough time getting buy-in from suppliers. That could relate to security concerns about sending bank information over unsecure insecure channels, or it could be that these teams need more time and scale to reach out to vendors and encourage them to accept electronic payments. They make one or two outreach attempts, but perhaps lack the energy, effort, and time to chase again when dealing with other competing priorities. It comes down to “it’s not ideal, but we know we can issue the check.”

Dave Choate: So, checks continue to be a major challenge, even for companies you’d think would be fully automated by 2024. Can you talk more about what you heard at IOFM?

For a couple of organizations, they were sending checks to individual sole proprietors or contractors, which are a trickier fit for B2B payment networks.  In most use cases, however, the why for payment networks is obvious, as they can provide speed, security, and efficiency opportunities checks cannot.

One AP person shared that their chief financial officer is wholeheartedly against moving to digital. It seems that the resistance from management stems from their reluctance, rather than any unwillingness on the part of the AP team to embrace change.  

She said the CFO (Chief Financial Officer) likes the physical stack of checks on his desk. He likes to physically see them; he likes to hand sign every single one of them. They send 1,000-2,000 checks per week, and he’s signing them.

Dave Choate: That’s wild!

Evan Hall: It is! I would argue this choice is neither efficient nor cost effective and, in fact, offers less control. When you are handling that many approvals on their own, it’s difficult to focus on big-picture concerns for the business. It is also difficult to give each payment the time and attention it might deserve. This employee was saying, “We know that the world is transforming. We know there is so much value and so many benefits associated with digital payments. But we don’t know what to do.”

The panelists offered some talking points to help her reframe the discussion. By automating their payments process the CFO will likely gain more visibility and control. Selecting a best-in-class technology partner, and one who understands your goals, will ensure he remains the quote-unquote “check signer,” even if the payment type changes. Choosing the right approval workflow will deliver the proper levels of control while still offering process efficiency.

Other feedback we received was that there are still people on the payables side who are, frankly, behind the times. They are not quite ready to move forward with new innovations. AI (Artificial Intelligence) is a perfect example of that, for sure—and that may be an awareness issue or a case of misinformation. It’s on those of us in the industry to explain how companies can achieve the best outcomes for their business while keeping some of that old school feel they want to hold on to.

Dave Choate: You also mentioned vendor onboarding as another significant challenge. How can businesses overcome the scale, energy and effort needed to do that?

Evan Hall: If companies do not have the bandwidth to dedicate even one person to a 40-hour week of contacting suppliers to get them to accept an electronic payment method, you need a solution partner with a proven track record of success at doing that outreach for you. You want them to act as an extension of your AP team so you can focus on delivering prompt payments, taking advantage of early payment discounts, and freeing up the team to focus on other major priorities.

Dave Choate: That makes sense. Say you’re sold: What should a company look for in terms of vendor onboarding from a potential partner?

Evan Hall: You want a well-established partner with a track record of success and a well-defined process of onboarding vendors. So, a partner that not only can share how they have been successful and, most importantly, why.

It’s one thing for a partner to say they enroll X percentage of suppliers into a digital payment method. Can they tell you how that’s done? Is it a spray and pray process with a call center, burning through your vendors and your goodwill? Or is it a solution with a well-crafted strategy and the people and tools to do it right?

There are real potential cost-savings in getting as many suppliers enrolled and ready to receive ACH and virtual card payments as possible. So, I would recommend outsourcing supplier onboarding but also understanding, from start-to-finish, how well their approach can work for your business.

Dave Choate: Let’s end on a big-picture note: What’s one thing you’d say to any business that wants to get serious about the switch to digital payment types and automated processes?

Evan Hall: Let’s make it two things.

One, it’s a partnership and a collaboration with whatever solution you choose. While it will never be completely hands-off, it makes sense to hand off the difficult, time-consuming work to a partner. Showing great interest and involvement in the program's adoption will maximize its success and potential.

Second, understand this will take time to happen. You need to set the parameters for your partners, understand which vendors you want to switch to and what payment type, and provide all the info your partner needs for outreach. Add a dash of patience and understanding and you’ll find you achieve success faster.

The time is ripe for a change to digital payments, and it’s encouraging to see so many businesses eager to do this. It’s all about doing it in a way that ensures you achieve the very best outcomes for your AP team and the company.