- Initiatives to digitize payments are popular in the U.S., as they help reduce operational costs and risk while streamlining processes and compliance and monitoring company spend, according to a recent survey of financial executives, conducted by global payments company WEX.
- Half of the 501 U.S. respondents had already implemented an "electronic payables initiative" as of the survey, while another 49% had an initiative underway or were considering one, the survey found.
- When asked to name the top factors hindering an electronic payables strategy, more than half of respondents said interoperability with ERP systems was a challenge; just over 40% said they suffered a lack of IT resources; and roughly 35% said suppliers were reluctant to fund virtual card payments.
Dunder Mifflin made a big bet in 2002: To save the paper company from the onslaught of big box chains, the supplier would bring its systems online, in a truly integrated business-to-business platform dubbed "Infinity."
Ryan Howard, the company's Vice President of Sales, called it a "floor to ceiling streamlining of our business model." The project, he argued, was as majestic as its name.
In the end, the project failed due to fraud (spoiler alert: this story is taken from The Office, Season 4). But the episode is a reminder of a different time when the benefits of online commerce were far from clear, yet the difficulties of digitizing systems and processes were very real.
Now, the WEX survey shows the world has warmed up to digital solutions, even if it is still struggling to adopt them.
From U.S. to Asia to Europe, more than 80% of businesses are considering an electronic payables initiative. But old habits die hard. Even in the regions with high digital penetration, the survey found checks remain the most common forms of business payments. The survey found 59% of payments to suppliers are made by check in the U.S.
Checks, after all, are secure, and the survey notes safety is a top priority when it comes to money for many businesses.
However, the study also revealed companies see great benefits from digital payment initiatives, including supplier relationship management.
"To maintain a strong relationship between buyer and supplier," the report said, "it's essential to establish a mutually beneficial payments platform and process." In fact, one strategy many businesses employ is offering an early payment discount to suppliers and vendors, facilitated by their digital portal.
In the recent wave of retail bankruptcies, payments to suppliers emerged as one of the top indicators of financial risk. The lack of payments, meanwhile, contributed to Toys R Us' eventual downfall. A consistent payment strategy helps both suppliers and their business partners.