To refresh your memory, in Part 1, we looked at the differences between ACH Payments and wires, as well as when you should use one versus the other, and why. If you missed it, just click that link and take a look.
Now we are going to shift to a more specific concern for businesses today – how a company can make bill payments electronically and remove the need to send a paper check (hello, check fraud protection). This can help your organization’s cash flow.
Electronic bill pay (banks often refer to this service as simply Bill Pay) is a process that allows companies to pay their bills electronically, rather than through the mail. This is popular with businesses because it saves them time, money, and paper.
To give you an idea, the exact cost varies, but it’s said that the cost of merely sending a payment via mail can cost up to $5 per bill (factoring in time, postage, ink, waiting, etc.). This is a solution for businesses to avoid having to write checks, make trips to the bank and purchase the supplies necessary to create and send those checks… again, all saving you time and money.
(*side note – Accountix also provides Bill Pay as a complete service connected to a company’s Accounts Payable (AP), but that is a slightly different story. You can take a look at this article if you want to learn more.)
Common situations when a business may pay bills electronically include:
Benefits of “Bill Pay”:
Similar to the other electronic forms of payment, the same core benefits apply (audit, fraud, and cash flow), with some special and additional features:
Businesses use this form of electronic money movement every day. No actual cash or check is exchanged. Some businesses may charge a fee if you pay with a credit card (thus, ACH Payments could be an option).
While it is common for businesses to pay vendors and bills using a credit card first, and then via check if a credit card is not accepted… we would encourage you to look at paying via credit card first, and then via ACH or Bill Pay as a secondary option (instead of using a check).
We all know the common situations for using a credit card. It’s for any business expense, any time.
(*side note – In order to keep accounting more clear, do your best to separate all business and personal charges. Be diligent about not using your business credit card for personal expenses.)
Some benefits of using a credit card:
So – now that we have broken down various payment options (wires, ACH, electronic bill pay, and using credit cards) hopefully this sheds light on electronic money movement, and you feel more comfortable with those forms of payment.
Overall, the common themes for why EMM is beneficial for a business are audit trails, reducing check fraud, and improving cash flow.
Have more questions or want to brainstorm? We can help!