The Current State of Business Bill Payments
If you could move to an entirely paperless bill payment process, would you? According to the 2016 Accounting Trends Client Bill Payment Survey (special report and infographic), more than 60 percent of accountants would welcome that change.
The survey, held in July, took the pulse of 513 accounting and bookkeeping professionals on the current state of business bill payments and what trends to anticipate. They vary in firm size and services, but their collective responses paint an intriguing picture of bill payment.
After taking a deep dive into the results, here are three of my top takeaways.
1. Accountants get the value of paperless bill payment.
When I founded Bill.com, paper ran business bill payments. It touched every part of the process – from invoices to the review cycle to payments. To grow the company, market education was required to help accountants and bookkeepers understand the value of moving to electronic payments in the cloud.
Now a majority of accounting professionals see the benefits of paperless bill payment. When asked if respondents support converting to a paperless bill payment environment, 40 percent said paperless bill payments would make them feel more efficient, and 20 percent said it would make them feel more organized. Comments included “Anything involving paper is cumbersome” and “Paper checks are too time-consuming. It takes longer to pay or get paid.” These sentiments are expressed consistently among the practitioners we speak with every day.
Another area of promise stems from the strong showing of firms that already use electronic payments for a majority of their clients. One-third of the polled accountants said that more than 50 percent of their clients pay bills electronically (an increase from 29 percent in the 2015 survey). Another 15 percent stated that three-quarters or more of their clients pay bills electronically.
2. Tech beats paper when it comes to business bill payments.
Ask an accounting firm where its strongest competitors are. Five or 10 years ago, the firm would probably have named other firms from the same city or region. Now, with the advancement of technology and the virtual operations it enables, competitors can be in the same zip code or on the other side of the country.
This increasingly competitive market drives firms to focus on efficiency. Efficiency allows the firms to bring in more profit while streamlining or maintaining headcount. It supports a virtual work environment where an accounting professional doesn’t have to be at a client’s office to show value.
Traditionally, bill payment in its paper-driven format is a bulky, time-consuming and opaque process. The survey results support this assertion. Twenty-one percent of the respondents who use handwritten checks spend up to 10 hours a month per client on bill payment. An additional 6 percent spend between 11 and 20 hours per month on bill payment.
But shouldn’t computer-printed checks trim time from the process? Not according to the survey. More than 90 percent of large firms spend up to 10 hours a month per client on bill payment when they use computer-printed checks. That means a firm with 150 clients could spend around 600 hours a month on bill payments.
The percentages decrease, however, when firms use cloud-based bill payment technology.
Forty-nine percent of those using cloud technology indicate that it only takes between 1 and 3 hours per client each month for bill payment. Eight percent said they spend less than one hour per client each month.
Clearly, there’s a case to be made that technology can cut the bill payment process by 50 percent or more. Imagine what firms can accomplish with this significant amount of time returned to them.
3. The Link Between Accounts Payable, Paper and Risk
Perhaps the most formidable concern around paper and accounts payable relates to fraud. Paper presents a weak link in the AP process. Employees can steal check stock or create fraudulent payments if an adequate separation of duties is not enforced. Thieves can steal mailed checks. Anyone handling paper-based AP documentation might have the opportunity to create a financial calamity for the firm and its clients.
The survey exposes a legitimate concern for bill payment and fraud. Sixty-six percent of the respondents worry that clients do not have approval controls in place for bill payment, and 65 percent doubt that the appropriate separation of duties is in place.
For larger firms, 94 percent show concern about the appropriate separation of duties, and 94 percent worried about clients’ approval controls. Likewise, a majority of respondents from larger firms (76 percent) said that paper related to AP creates a serious risk.
There are many more insights and rich information, so take the opportunity to explore the survey results yourself. See if your opinions match your peers.
Download the 2016 Accounting Trends Client Bill Payment Survey Special Report and its summary infographic.