What kind of bill payer are you? Bill payments for every AP personality.
Defining your bill-paying personality may feel like a pop psychology quiz gone terribly wrong, but knowing the answer can impact your company’s bottom line. AP teams have more bill payment options than ever before, but many continue to struggle with multiple dated, siloed processes and systems that lack transparency and control. Determining the best payment processes for your company starts with a bit of soul-searching. Below are the five most common personalities for paying bills. Which type are you?
1. Check lover.
Simply fills out a check and sends it to the vendor, just like bill payers have been doing for centuries.
Might also like: Vinyl records, fountain pens, and vehicles with manual transmissions.
Pros: It’s an old-school approach. But no judgment here — there’s something inherently satisfying about signing a check with a flourish, sealing an envelope, and sending off a payment (bonus points if you use a wax seal!). Finance departments appreciate the ready-made audit trail. And some vendors insist on check payments, so predictions of the check’s death may be premature. Although the number of B2B payments by check has declined in recent years, one recent PYMNTS study found that 81% of businesses still make some payments by check.
Cons: It’s difficult to track a check once it leaves your hands, leading to uncertainty about when it will be cashed and, therefore, exactly how much cash you have in real time — unless a bill-paying platform gives you the ability to select when you want the check to arrive. There’s also the risk of a check going astray, or ending up in the wrong hands. Checks can be a costly payment method: the cost of check stock, postage, and envelopes are added to the cost of the bills themselves. And they’re notoriously labor intensive, further adding to the cost. All told, the Bank of America has calculated that the cost of a check can range from $4 to $20.
2. ACH aficionado.
Moves funds between bank accounts using the Automated Clearing House (ACH) Network.
Might also like: Apps for listening to music, sharing rides, and controlling the temperature — for the ACH fan, anything that can be done digitally must be better.
Pros: Convenience is the key. It only takes a few seconds to make an ACH payment. This makes ACH a great choice for high-volume bill payments. ACH payments are also secure, since they’re protected by bank-level encryption. And they’re cheaper than most other payment forms like checks and wire transfers.
Cons: An ACH payment is not as instantaneous as it might seem, as it takes time to move the funds. Another big disadvantage is that on some platforms, options for international payments can be limited. There can be a cost associated with ACH payments, with many banks giving a base amount for free, then charging after a certain threshold is reached.
3. Corporate card connoisseur.
On a consolidated AP platform, these savvy bill payers strategically shift payments to software-backed corporate cards in order to earn cash back with each bill payment. In other words, they make money every time they pay a bill.
Might also like: Discounted subscriptions, free trials, anything that saves money and makes life easier.
Pros: Earning cash back is an obvious advantage, but the ROI goes much further. Card payments are quick and easy, and when transactions sync to the general ledger, real-time financials are always available and working capital can be optimized.
Cons: Credit card fraud is rising, which can be a huge hassle to sort out, unless the cards are backed by software with fraud detection features and controls for things like vendor, amount, and date. Overspending on cards is also a potential problem. But in a well-designed card program, cards can be tailored for individual employees, with pre-set limits to guard against overuse. Approval workflows vet spend up front, circumventing any surprises at month end.
4. The wire transfer zealot.
Transfers money electronically through secure networks.
Might also like: Private jets, even when commercial flights are available, laundry delivery services — fans of wire transfer payments don’t mind paying a premium price for convenience and speed.
Pros: Wire transfers are extremely fast, and can be made internationally. They’re a reliable way to move large sums of money quickly (although your bank may have limits on the amount), making them an excellent option for last-minute payments.
Cons: That convenience carries a price, as this is the most expensive option. Another drawback is that wire transfers aren’t reversible, so once the funds have left your company, you won’t be able to get them back. Because of this, it’s important to verify the identity of the recipient before sending a wire transfer.
5. The power payer.
Uses a payment-agnostic platform because they know that, sometimes, a vendor requires a check; other times, ACH payments are the easiest option; sometimes, you need to make an international payment; for some payments, vendor credits are available; and, of course, when there’s flexibility, virtual cards are almost always the best payment method, so whenever possible, bills are paid by the method that earns money through cash back at the same time.
Might also like: Consolidation platforms, James Bond’s best gadgets — anything high-tech that gives a sense of power and control.
Pros: When multiple ways to pay a bill (including vendor credits and international payments) are available and follow the same intuitive workflows, paying bills can be, if not fun, at least not a complete pain. Being able to select payment methods easily as part of an intuitive, holistic process keeps AP teams moving quickly, and allows them to always choose the best payment option.
Cons: Money is still going out the door (there’s not much we can do about that). But it’s also coming in through cash back whenever possible and optimized through the time saved to focus on other activities.
Find out how Airbase fits your unique bill-paying personality — schedule a demo with us.
Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all payments – physical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.
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