This should really come as no surprise

...but times are changing. Part of that change is going to come by means of how we pay for things and no areas are getting transformed as rapidly as personal payments.  Certainly things like Bitcoin, Apple Pay, and the numerous other payment platforms that have sprung to life like Paypal and various others all spell the end or at least the major curtailing of traditional payment methods like checks.  The question that we want to broach today is what does that portend for B2B payments?

We think that the days of checks in the commercial space are also numbered, albeit it will take much longer for that revolution to set than it will in the personal space.  The primary reason for that is that innovation occurs at a much slower rate in the business space than in the personal space due to barriers in adoption, technology, and conformity unfortunately.  Whereas individuals are always looking to make their time more efficient and easy, the uncomfortable truth is that too many businesses can’t be bothered with improving secondary, back office functions that don’t result in some type of strategic or monetary value add.  Additionally, unless there is some major incentive to change, most companies are content to just carry on with the status quo.

It seems that this is a notion that should be challenged for a couple reasons.

 For starters, if your business exists in a high growth industry or is tech centered, then you may already be primed to push the boundaries by having a culture that propels you forward.  Conversely, if you’re in a legacy business that is stable there may be less pressure to do things to the standards of burgeoning companies and as such you can get caught in a rut of complacency.  Ironically, in businesses that are more antiquated and slow growth, you can stand to increase margins by becoming operationally efficient, so really whether it’s a need to scale and push the boundaries or a need to streamline, the benefits and byproducts of automation are the same.  Now with that said, this piece is purposed to center on the payments and in particular using epayments to kill checks.  

This can be facilitated with our without accounts payable software.  Numerous electronic payment providers have systems that you can utilize to automate the payment functions.  There are numerous electronic means to invoke payment whether Wire, ACH, or even virtual payments are invoked.  From our perspective, the latter offers the best alternative to checks because of the reasons we outline over here.  However, any of these means offer advantages to the costs and burden of traditional check printing.  Alternatively, you could participate in various EDI or e-invoicing networks if you are fairly sophisticated, but know that there can be numerous adoption challenges and significant time and capital outlay to get these systems operational.  For this reason, and until there is some kind of a forced government mandate, we believe that these methodologies will always the trail the aforesaid options.

However, our mission is to help businesses come out from under the burden of paper and paper based document processing.  

As such, check payments are on the chopping block and we want to create awareness about the benefits to automating through accounts payable software.  One of the key elements to our vision for streamlined accounts payable invoice processing is to connect the automation and workflow technology to payment invocation and execution.  That is a major advantage to having both your front end invoice processing automated through accounts payable software that is integrated to your actual payment execution.  You can certainly manage this through multiple systems, but from our perspective, if you can tie these two together you can kill multiple birds with one stone so to speak.  

The other key advantages that ratchet up to kill checks as an option in the B2B space are the enhance security, timeliness of payment controls, and complete visibility to the invoice approval, processing, and payment components of the transactions.  Any way you slice it Accounts Payable software offers tremendous value, but we think beyond the operational elements you can literally monetize to make money for your business and to make a substantial difference in how work gets done making it a no-brainer at least for most businesses to evaluate.

Take the road less traveled!

We're super excited to be live and on scene at the Institute of Financial Management's Accounts Payable & Procure To Pay (AP & P2P) Spring Expo here in beautiful, sunny Orlando, FL.

It's a great opportunity for us to showcase our strengths for all the attendees who are looking to improve their accounts payable process and we've already had numerous conversations that have been great!  Many folks have already pursued some level of automation in their AP process, but there's an absolute ton who have not automated their AP invoice processing or even thought about pursuing electronic payments.   Because of this, we're stoked to show people how easy, powerful, and strategic AP can be.

So, if you're at the conference, please stop by booth #416 and give us a visit to see what cloud-based AP automation is all about!

We're registering attendees for our complimentary AP assessment, so they can get benchmarking metrics on their AP process and quantify the gains they can make in this area.  If you haven't benchmarked your process, then please sign up here, as we'd love to do that for you!

We're also raffling off a $50 Amazon Gift Card as part of the conference's passport program and we've got some other cool gifts for you as well if you swing by.

Alright, until later, we'll be seeing you!

-The CloudX Team

Certain myths are cool. 

Consider the unicorn, defined as a mythical animal typically represented as a horse with a single straight horn projecting from its forehead. While that is definitely not something you see everyday, or any day for that matter, that didn’t stop Scotland from naming it their national animal.  Tam o’ Shanters (aka hats) off to them for having the temerity to choose a mythical beast as their national animal.  I mean we in ‘Murica at least have a living animal, one and granted it’s very cool in the bald eagle, but this piece today is not so much about cool animals as it is cool virtual payments technology, and that by means of virtual MasterCard payments.

With the market being relatively unaware (only 18% of market use this technology as of late 2014) of just what electronic Accounts Payable (virtual payments not front end invoice processing) is, we thought it would be appropriate to dispel some myths about virtual MasterCard and bring some light to what’s real and what’s not with this new modicum of payment. 

These myths are not cool:

Myth #1 – Vendors won’t accept it.  – While this may have been true in the past, it is absolutely untrue today. In our experience, about 1/3 of most mid-sized (multi-hundred million dollar revenue) companies already accept virtual MasterCard as a payment mechanism.  This means that it is conceivable that 1/3 of your spend could be routed through this technology cutting wasteful and costly check processing out of the AP equation. Score 1 for the AP department!

Myth #2 – It’s costly! -  Contrary to popular opinion, virtual MasterCard is not a heavy capital investment play. This is great news when broaching the subject with finance leaders, since the projects that have the heftiest price tag tend to be the ones that have the most significant drag. Because these are typically no to minimal up front fee based projects they can often get the go-ahead assuming they’re in alignment with the organizational direction.

Myth # 3 – Virtual MasterCard programs require lots of process change! – Actually they don’t!  Whereas true purchase cards (p-cards) involve lots of changes to established procurement processes and user training, the advantage of virtual cards lie in their simplicity. It simply becomes an extension by which you can pay vendors who accept it as a form of payment. Therefore the only process change, and that would be an addition to some of the process would be paying by an electronic mechanism, which, by the way, is automated once a payment file is generated.  You get the added benefit of not having to run checks as much which Aberdeen Groups says costs upwards of $7 to process, print, and mail per transaction…so there’s that!

Myth # 4 – You have to onboard vendors yourself! – Well, this, as in all things depends on what you get.  Some programs from banks and other major credit card companies leave you to it in terms of getting adoption from your supplier base.  Other card processors devote legions of people and resources to that effort on your behalf.  All things being equal, we prefer the latter.  It means that the change over is seamless and that the AP staff can focus on what they’re good at…getting stuff done, not soliciting and wooing vendors to a new payment means.

Myth #5 – The juice isn’t worth the squeeze! – Meaning, the effort isn’t worth the reward.  Well, again, this depends on whom you’re getting into partnership with.  We’ve discussed this program with customers who have vendor arrangements in the electronic Accounts Payable space, and who run significant volume through their virtual cards (nearly $17MM / year, not too shabby!). However, their rebate for all that spend was only about $70k, which means they were in effect getting only 41 basis points or so on the spend, which is paltry compared to certain virtual MasterCard programs that are established and that pay between 100-125 basis points (1-1.25% of spend through the card).  This means by simply changing the provider, they get to triple their rebate back.  Tell me the CFO wouldn’t be pleased to hear that a shrewd move by a Finance manager yielded a 300% return with zero cost and I’d be shocked!  In fact, few if any improvement initiatives will yield the kind of financial windfall that virtual payments can, and we should know…we’ve helped businesses solve complex Accounts Payable invoice processing and Accounts Receivable remittance processing issues for years.  We believe this to be the goose that lays the golden egg in the finance area, and that with the sustained wins and rebates from these programs, you have the capital to go down the yellow brick road, improving process along the way at your discretion by paying out from the gains.

We hope you found this helpful and encourage you to check out our eBook on why CFO’s are writing off checks…and if you want to hear more about how to bring virtual payments into your organization then check this out and hit us up!