You may not expect mythology to have any relevance in the numbers-driven, here-and-now world of accounts payable software and services.
But it sure does.
Many myths, false notions, flawed ideas and untrue situations are consistently perpetuated across this industry.
From the expansive list of industry myths, three stand out above the rest because they can be especially influential in leading you down the wrong, or right, paths in your processing of invoices and payments.
We’re going to unpack these three myths here and address the reluctance AP managers and controllers have about letting go of these mistaken beliefs.
We hope to offer new perspectives and ultimately help you make better decisions, be more efficient and grow faster using AP software and services.
Big Myth No. 1: Automated Clearing House (ACH) payments are free
First, let’s level set. Automated Clearing House (ACH) is an online network, capitalizing on AP automation software, for quickly and securely moving money electronically between bank accounts within the United States.
You’re probably aware of this classic example: For you to get paid electronically every two weeks, your company moves funds from its corporate bank account to your personal banking account. That’s more than likely an ACH payment.
Sounds simple. And it usually is. But there’s a perception that these ACH payments are free. Don’t buy into that. Companies need to pay employees, for example, to produce, upload and reconcile ACH payment files.
What does it cost per ACH transaction?
Some ACH payment providers charge a flat fee ranging from $0.20 to $1.50 per transaction, according to Merchant Maverick, a comparison website that reviews small business software and services.
Businesses may also have to pay a separate fee in the range of $5-to-$30 per month just for using ACH. There are other potential charges such as return fees ($2-$5 per return), reversal/chargeback fees ($5-$25 per instance) and batch fees of less than $1.00.
So all this adds up. This is not a free service for businesses.
Comparative costs
The good news is ACH costs are generally lower than other popular payment methods. Vericheck lays out the comparisons. Typically, ACH transactions cost a business under one dollar per transaction depending on the transaction volume and perceived risks.
That’s much less than the typical $3-to-$5 cost per check transactions, which factor in printing, postage and personnel expenses. Costs to process a credit card payment can go much higher than ACH costs.
So, ACH payments are attractive from the standpoint of convenience and cost. Just know they’re not completely devoid of costs. And the more ACH transactions you do, the less you typically pay per transaction.
Why is it important to stop believing this myth that ACH is free?
Your business doesn’t want to get caught off-guard having to pay for ACH transactions you hadn’t anticipated. If that happens, your cashflows could be suddenly and unexpectedly lowered, payments could be delayed and you may exceed the costs you budgeted to make payments.
Avoid all that. Factor in how much your business will have to pay per ACH payment and how many you expect to make over the next month and year. Then you’ll manage your finances much better.
Big Myth No. 2: AP automation is too hard to implement and takes too long
Many AP managers and controllers are concerned about learning how to use new financial software. They’re plenty busy already, so they’re often not inclined to take the time to learn a whole new AP automation system that can seem daunting.
These concerns aren’t necesary. It’s a myth that this technology is difficult to install and use. Finance teams don’t have to buy and integrate expensive new hardware or computer servers. Limited – if any – IT resources are needed.
AP departments can take full advantage of the flexibility and efficiency benefits of cloud computing technology because it uses existing infrastructure. AP software providers take care of whatever integration work is needed.
It usually takes 45 days – or less – to implement AP automation
There’s another related myth: that it takes too long to implement AP automation. Finance pros aren’t enamored with the idea of having to invest lots of their time and effort. They’re under the false impression that it takes three-to-six months to implement AP automation in their corporate systems
That’s mythology. It’s a big exaggeration. It takes about 45 days or less.
The Power of Paperless AP
Why is it important to stop believing these “too hard” and “takes too long” myths?
If you don’t stop believing these narratives, you may continue to postpone automating AP when your business could be gaining benefits from it including faster payments at lower costs and higher customer satisfaction. Your competitors who do automate AP will be able to deliver those benefits.
It’s entirely within reason that your customers will get frustrated with your slower manual systems and leave you for your competitors who use AP automation.
And your employees may grow tired of doing manual, tedious invoice data entry and chasing business leaders down for invoice approvals. What then? They may think seriously about leaving for one of your competitors who automates AP so they can focus on more strategic work and advance their careers faster.
Big Myth No. 3: AP fraud is overstated
For the many finance pros concerned that fraudulent attacks on AP systems are overstated, we’d like to offer a new perspective.
A survey of finance and treasury pros by the Association for Finance Professionals found AP departments are the most susceptible to business email compromise (BEC) fraud, a technique of deceiving corporate workers using misleading emails.
Sixty-one percent report their AP department is most often vulnerable to this type of nefarious activity. An even higher proportion, 65 percent, blame the pandemic for some of the uptick in payments fraud at their companies.
These findings should clear up the misconception that AP systems, specifically, are not especially susceptible to fraud compared with other financial systems and technologies.
Still not convinced?
More than 80 percent of organizations reported being targets of an attempted or actual payments fraud attack in 2020, the second highest percentage on record since 2009.
So no matter what way you want to look at this problem of fraud, and regardless of your concerns that the problem just isn’t that serious, the numbers say otherwise.
Why is disbelieving this myth so important?
Because if you don’t believe fraud is a big threat to AP systems, you’re less likely to take actions to prevent these attacks. That, in turn, will increase the chances fraudsters steal your valuable and sensitive corporate, financial and employee data.
What then? Your business will become more susceptible to losing money and having to spend precious time resolving fraud cases. You won’t, as a result, have as much time to focus on revenue-generating strategic projects. Your business won’t grow as fast as you would like. So believing in the major threat of fraud to your AP system is the first step in solving the problem.
Final thoughts
These are three of the most important myths to watch out for if you’re a finance pro considering a move to AP automation. Why these? Because if you continue to believe them, chances are high you won’t take advantage of the myriad benefits of AP automation such as faster approvals and payments, less manual work and fewer mistakes.
If you continue to believe them, your competitors who take advantage of AP automation will likely become more attractive to do business with, and work for, because they make payments faster and operate more efficiently. You could lose customers and talent.
If you continue to believe them, it will be more difficult for your business to boost productivity, budget more effectively and improve the quality of life for your employees.