Making the (paper) cut.

• Author: Hammermaster, Greg
• Position: Treasury

When it comes to enjoying the efficiencies, cost-savings and security of electronic payments, the U.S. is lagging behind its Canadian and European counterparts. The industry research firm Aberdeen Group found disbursements by paper checks in the U.S. still account for 70 percent or more by major suppliers, as compared to approximately 5 percent in such countries as Germany, the Netherlands and Switzerland.

This is especially ironic in a country that has had, since the beginning, one of the highest levels of Internet access on the globe. So what's the holdup, and is now the time for change?

Increasing Cash Flow

A recently published payments report by Aberdeen--Global Payments: Maximizing Cash Flow with Electronic Payments and Process Automation--finds that leading companies are optimizing payment processes to increase cash flow. Electronic payments and process automation are helping these companies streamline and accelerate finance processes, reduce operating costs and improve visibility, control and efficiency to provide a foundation for increased profits.

Nasreen Quibria, senior analyst at Aberdeen and author of the third annual report, says, "Despite the reign of the paper check and manual-based processes in business-to-business transactions in the U.S. and many parts of the world, economic and efficiency gains from automating the financial supply chain--from invoicing through payment settlement--are key motivators for demand and supply to align.

"While the adoption of electronic payment vehicles requires businesses to alter their payment behavior and restructure their financial processes, companies that can make the shift will gain competitive advantage," she notes.

In its survey of more than 160 companies worldwide, Aberdeen found that companies are focused on maximizing cash flow and taking a holistic approach to transactions--examining the flow of funds into Accounts Receivable and out from Accounts Payable.

Systems Interoperability Creates Value

Aberdeen also found that businesses adopting electronic channels have been able to achieve a 16-percent decrease in AR processing costs and a 14-percent decrease in AP costs, year over year. In a tight economy, these are numbers that companies should not ignore.

The payments report also shows the value that systems interoperability with electronic payment networks has for both buyers and suppliers. This interoperability is critical toward achieving three major payments objectives for every...