Financial managers in today's payments environment already understand many of the benefits afforded by emerging online bill pay services for businesses. They have likely utilized consumer bill pay services and see the opportunity to add efficiency and control to their company's financial operations.
Yet, many businesses still operate using a traditional bill payment system, which consumes their employees' time and can put their company at risk for fraud. As banks begin taking a more holistic approach to payments, it will be crucial for companies to examine their bill pay scheme and determine if online bill pay is right for their business.
Pitfalls of Traditional Manual Bill Payment
The emergence of business bill pay--commonly referred to as "commercial online bill pay"--can be traced to the realization among growing businesses that they need a better, more efficient way of paying bills than the decades-old process of writing and mailing checks.
Writing and mailing checks to make business payments is not only time consuming, but also increasingly expensive, as it requires companies to buy and store check stock and envelopes while also paying for postage at an ever-escalating cost.
Plus, paying by check offers little control over when payments settle and when funds are debited from a company's account since mail delivery times can fluctuate.
Reconciling paper payments is also challenging. When businesses mail a payment, confirmation of receipt often requires a phone call to the vendor. It's either that or wait until the end of the month and confirm receipt when the company's bank statement arrives. Furthermore, issuing paper checks to pay bills presents a significant fraud risk, easily outdistancing all forms of electronic payment.
Most small and middle-market businesses are looking to grow. Indeed, in the 2011 Year-End Economic Report, issued by the National Small Business Association, 47 percent of small business owners said they expect growth opportunities in the coming year while 56 percent projected an increase in revenues. When growth is achieved--and companies add more payees and payments get bigger--the inefficiency, cost and risk related to paper bill payments all get magnified.
Online Bill Pay--For Businesses
Fortunately, there is now a better, automated way to initiate and manage commercial bill payments. Banks now offer commercial online bill pay services that enable companies to pay their bills in a secure, encrypted environment....