US Bank study projects continued AP migration to e-payments

More than 280 AP officers spanning 15 industries participated in the summertime 2010 survey conducted by U.S. Bank, International Accounts Payable Professionals (IAPP) and APQC.

Nearly 65 percent of those surveyed reported reduced paper check usage in 2010 compared to the year before. For organizations exceeding $5 billion in revenue, it's even more pronounced - three out of four report declining paper check use.

"While the survey indicates e-payment is growing across the board, the larger the organization, the more likely it is to be happening," said Kurt Adams, senior vice president of strategy and program management for U.S. Bank Corporate Payment Systems. "With manual paper checks contributing to the challenges many AP departments face, it's no surprise that organizations are looking toward electronic payments to address their pain points."

The trend is only going to accelerate, according to the survey's projections. Respondents said they plan to nearly double the use of purchasing cards, automated clearing house (ACH) and electronic funds transfer (EFT) in the next three years. Paper checks could constitute less than 31 percent of payments by 2014. Again, the largest organizations are moving the fastest: they anticipate only 13 percent paper payment by that time.

The e-payment migration might be happening even faster but for three points of perceived resistance reported by survey respondents:

* Internal concerns over cost of conversion and capability of staff to handle it. This exists to some extent on all levels but is more pronounced in smaller organizations.
* Differing views on the efficiency of paper checks. Top managers are more likely to believe that existing check systems work well. Lower level folks? Not so much.
* Supplier resistance to accepting electronic payment -- cited by 84 percent.

Many believe that such resistance will crumble in coming years as financial institutions and payment providers step up recruitment of suppl su suppliers for e-payment. Recruiting should become easier as more suppliers who've made the switch report increased efficiency in their accounts receivables processes through improved cash flow, expedited cash application and the elimination of costly credit approvals and late payment collections.

"Electronic payments have emerged as an alternative means of conducting business, offering numerous tangible benefits for buyers and sellers alike," said Mark Brousseau, vice president of research and business development for IAPP-IARP-TAWPI. "The universal migration to e-payment makes perfect sense, as does the projection of greater momentum over the next three years, given the increasing pressure companies face to reduce costs and improve agility."