When was the last time you paid a personal bill online? It was probably more recently than you mailed a check. While paper checks may be dying for consumers, the majority of business owners are still using them to pay vendors and service providers.
"With the increased use of consumer online bill pay and online banking, more and more payments are going electronic, yet most business payments are made via paper check," said BC Krishna, CEO of online payment solution provider MineralTree. "A 2010 study by the Federal Reserve found that between 2000 and 2009, B2B remittance checks were up 53 percent from 3.9 billion to 6 billion."
So why aren't businesses following suit? Checks are easy, Krishna said. The accounting systems most businesses use aren't tied into their banking system, so business owners find it easier to simply print out checks than re-enter payment information into their bank website.
Bruno Perreault, senior vice president of payments at billing service provider Billtrust, said the potential issues of online payments also deters some business owners.
"There's a perceived concern about security of online payments," Perreault told BusinessNewsDaily. "[Business owners] haven't used them and don't know how, or they're not sure if their vendors accept electronic payments."
However, paper checks are ultimately less secure. Forged signatures, hacked bank accounts and changed amount and payee information are all common problems businesses can face with check payments, Krishna said. When proper security measures such as two-step authentication and payment verification are taken, online payment solutions are more convenient, secure and cost-effective than checks. Most electronic payment software also allows direct integration with banking and accounting systems to make keeping track of payments even easier.
So how can you start taking advantage of online B2B payments? Perreault suggested speaking with your vendors to see if they can bill you electronically to start the process.
"Ask them what payment options they offer to customers," he said. "By and large, there's a way for them to accept payments electronically. When you do it once or twice, you're already set up to do it with one click in the future."
Krishna added, "Businesses don't need to be afraid of changing [their payment system]. Check fraud is increasing, and there are better solutions."