#KillTheCheque: Moving B2B Payments From Cheques To Digital Pt. 1
In 2004, 81 percent businesses used cheques for B2B payments. By 2007, that number fell to 74 percent. In 2016, this number was below 50 percent. Why have businesses stopped using cheques? The reason is electronic payments, such as prepaid.
Nearly 80 percent of companies are transitioning their B2B payments from paper cheques to electronic payments, according to the Association for Financial Professionals. 81 percent of executives believe digital transformation is a competitive opportunity. From 2000 to 2012, the number of cheques paid declined by more than 50 percent as payments through cards, direct deposit and other services more than tripled.
Payment processing inefficiencies cost businesses between $3 billion and $6 billion annually, according to 2018 research by Payments Canada and Ernst & Young, Migrating to electronic payment options could save Canadian Businesses approximately 41 percent in B2B transactions. Reports show that cheques can account for 25 percent of outgoing payments.
A Deloitte study on B2B payments found that there are major benefits of having a card-based payment solution from the buyer’s perspective, such as reduced processing time. The faster a transactions can be completed, the faster a company can manage its reconciliations. 74 percent of respondents stated that “using a payment card for B2B purchases reduced the number of approvals required, thereby streamlining the purchase process.” 68 percent of companies reduced administration costs by using payment cards.
However, while cheque usage has been drastically decreasing in the last few years–the amount of cheques being written decreased 41 percent from 2008 to 2018–commercial cheques remain prominent in payments for rent, payments to governments and B2B payments.
As in most businesses, everybody thinks about revenue-generation, but few think about the benefits of cost avoidance, automation, and efficiency, which are dramatic when compared to electronic payments. In the case of older businesses, where people have been writing cheques forever, they just don’t think about it. The old axiom, “If it works, why fix it” truly applies here. While in younger companies, where technology is part of their DNA, people are more likely to think, “There has to be a better way of doing this.” With today’s technology, there is.
It’s time to move to digital payments. By modernizing business payments, companies reap the benefits of reduced costs and more. Inside our new ebook, “Transitioning to Electronic Payments for Canadian Businesses,” we #KillTheCheque and show you the benefits of switching from cheques to electronic payments, as well as the Top 5 Benefits of Outsourcing Your B2B Payments.
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