In today’s digital age, small and medium businesses are increasingly making the change to electronic payments to save both time and money. Chances are you may have heard of ACH transfers or ACH payments, but you may not understand precisely what those terms mean. If you’re wondering how incorporating ACH payments into your accounts payable software can save your business money, you’re not alone.
ACH payments are electronic funds transfers made through the Automated Clearing House network, which is a secure system for transferring payments between U.S. banks. ACH transfers are faster and more cost-effective than traditional paper checks. Here are just some of the reasons why many businesses are making the switch to using ACH transfers as the preferred way to make digital payments to their vendors.
ACH transfers cost less than other electronic payments.
ACH transfers are easier on the wallet. ACH processors typically charge a flat fee, which comes out much lower overall than the percentage fees commonly associated with other forms of electronic payment.
ACH payments offer greater fraud protection.
In addition to causing endless headaches and jeopardizing your company’s future, fraud usually comes with a considerable price tag.
One of the most significant benefits of ACH payments is that they are highly secure transactions (certainly far more so than paper checks). When you process ACH transfers through centralized accounts payable software like Bill.com, you have complete transparency into all your bill payments, as well as the ability to restrict access to certain kinds of information.
ACH payments, combined with cloud-based accounting software, offer significantly enhanced security over traditional bill payment methods, allowing you to minimize the risk of costly and damaging fraudulent activity.
Avoid making late payments and get paid on time.
With ACH payments via Bill.com, you can set up automatic, recurring payments, schedule payments in advance or pay immediately. The same is true for AR. Setting up invoices and payments is as simple as a click, and then you never have to think about it again.
For extra assurance, Bill.com will alert you when due dates are coming up. That means you never have to worry about late payments and the interest or late charges that come with them (like you do when you opt for manual payments). With AutoPay, you can also rest easy knowing that you’ll automatically be paid on time every month, and not be staring down a cash shortfall.
Improve your bargaining power with better payment options.
Many vendors prefer ACH payments because they’re fast, efficient, and secure. Plus, they are sent directly to a vendor’s banking account so there’s no waiting for a check in the mail. When you offer vendors payment via ACH transfers, you’re offering increased assurances that they’ll be paid on time, every time. Removing the uncertainty and expense that comes with paper checks or other forms of electronic payment puts you in a position to negotiate better payment terms with your vendors, saving you money in the long run.
Stop wasting time tracking down payments.
Late payments mean angry phone calls from vendors wondering where their money is. With Bill.com, you’ll no longer have to waste precious time following up on invoices and chasing down payments. The accounts payable software does the work for you, automatically sending payment status updates so suppliers know exactly when the money will show up in their accounts.
Significantly reduce your back-office expenditures.
Few businesses truly realize just how much time and money goes into paying bills with paper checks. A company that employs three people to process checks and sends out 500 checks each month spends on average $2,045 each month (or $24,540 each year) on bill payment after you add up labor costs, bank fees, supplies, and postage. In contrast, that company would only spend on average $140 per month (or $1,680 per year) if they opted instead for electronic payments.
No matter how you look at it, electronic payments offer significant savings over traditional paper checks. ACH transfers are the most convenient and economic of the digital payment options out there. Start switching your vendors to ACH payments today, and you’ll quickly see the savings add up.