But what exactly is an ePayment?
According to Ardent Partners’ 2014 ePayables report, an electronic payment, or ePayment, includes ACH, wire, card and networks. Of course, this means a paper check is not used whatsoever. Not surprisingly, usage of ePayments remains consistently ahead of electronic invoices on an overall percentage basis because the action is taking by the buying organization, and paying electronically is more cost effective and convenient.
Why are ePayments crucial to your AP automation process?
If you’re the buyer and you’re trying to pay your suppliers earlier, you’ll need to cut down the invoicing cycle removing paper every step of the way--from eInvoicing to ePayment. Without ePayments, you’ll be adding more days to the P2P process, lessening your potential invoice discount by the day.
How do buyers and suppliers benefit from using ePayments?
Lower costs: Removing equipment from the process--paper, ink, printers, etc.--reduces the overall costs of processing payments. A best-in-class company can process one invoice (including eInvoicing and ePayments) for as low as $2.42/invoice, versus all other companies at $17.61/invoice. The cost savings here are significant--if you process 1,000 invoices a month, you’ll be saving at least $15,190!
Higher efficiency: Sending electronic payments cuts down the average duration of the invoice processing cycle. A best-in-class company can process one invoice in as little as 3.7 days, whereas all other companies take 17.1 days to process an invoice. Using the 1,000 invoices/month example, your invoice processing efficiency increases by 13,400 hours per month!
Higher discount capture: If you’re processing invoices 13.4 days faster, you have the potential to capture 13.4 additional days of early payment discounts. Remember, the faster you can pay an invoice, the more of a discount you’ll receive.
Faster access to cash: Having invoices available for early payment means having quicker access to cash, allowing you to better operate your business, including expansion, hiring and increasing production. Plus, businesses who need quicker access to cash are often forced to resort to unfavorable, expensive lending options like factoring or P-cards. Early payment discounting gives your suppliers a better alternative to funding their business.
Higher efficiency: Receiving an electronic payment means not having to wait for the letter to be delivered, then go to the bank and cash a check. The payment is automatically deposited to your account. Also, coupled with a supplier self-services portal, suppliers can see the status of their payment, eliminating the need to call their buyer and ask for an update. Full visibility allows for better efficiency for both parties.