What Is Electronic Payment, and Why Does it Matter in 2022?

The accounting process is already full of long and repetitive processes, so it can be especially beneficial to automate it. Electronic payments, in particular, have many benefits over traditional payments:

• Don't hesitate to adopt automation: In more than half of accounting, automation has a positive impact on the growth of your company and the efficiency of your team. According to recent research, accounting automation software/technology pays for itself within 6 to 18 months and saves an average of one hour per day (per employee!). 
• Safety isn't an issue: Many business owners hesitate to take the leap because they're comfortable with that which they’re familiar and suspicious of changes (especially when it comes to financial safety). However, electronic payments are actually much safer and secure than cash payments — not to mention there's less risk of theft since you don't have to take extraordinary measures to deposit into your business account. 
• Kaizen is here to help: Transitioning into automation can be challenging if you partner with the wrong company. Fortunately, Kaizen is a trusted expert in the industry committed to making the transition as easy as possible for you. This means we do everything from beginning to end to get you back to doing what you do best!

Here's a deep dive into electronic payments and what to expect in 2022. 

IMPROVE YOUR PAYMENT PROCESS

All of your hard work can go down the drain when profit is lost or stolen. In business, protecting your profits is essential to the success of your company. After all, who wants to work for free? Fortunately, you can improve your payment process by switching from cash payment to electronic payment. 

Here are four of the many reasons to get started with electronic payment.

Payment Security

Electronic payments offer more security than paper and eliminate the growing risks of check fraud. NACHA reports that check fraud was a big issue in 2020, with 66% of accounting professionals reporting check fraud activity. Despite this number being down by almost 10% from 2019 (74%), the figure is still staggeringly high.

The reason for the decline is that organizations are using fewer checks in their B2B transactions as well as increasing the use of electronic payments as a consequence of staff working remotely. This insight only supports the need for companies to make the switch to bring that percentage down even further. 

Fast Payment

As opposed to traditional payment, mailing time, and cashing requirements, electronic payments are instantaneous. You also don't have to worry about being in a certain location by a certain time to get your money transferred where it needs to go. Instead, you can transfer payments any time, no matter your location. 

You also remove much of the manual work of sending payments. Since every business has many payments to make daily, it can take hours manually sorting through who needs to be paid, for what, and at what time. Electronic payments make the process quicker and easier.

Reduced Costs

Time isn't the only thing you'll save with electronic payments — you can save on costs as well! All the hours of manual labor that go into sending out payments at certain times and in specific locations can add up quickly. In accounting, the average salary per hour ranges from $25 to $30. This means that if one employee eliminates one hour of their day each business day completing payment-related tasks, you can save between $6,525 and $7,830 (based on 261 business days) by eliminating cash and checks. 

And that's just labor costs. With electronic payments, you'll also save on mailing (envelopes, stamps, etc.), paper, and printing.

Data Organization

Electronic payment data is much easier to organize and access quickly versus manual payment records, which take time and resources to manage and organize. The cost of organizing your data via paper can get pretty hefty.

To name a few:

• Just one five-drawer filing cabinet can cost $880 per year.
• Per inch of paper documents you need can cost up to $11 per year.
• Every time a document is received and then refiled, 10 minutes of employee time is wasted.
• The average office worker makes over 50 trips per week to the fax machine, copier, and printer.
• At least 3% of files are misfiled, and about 1 out of 20 documents are lost.
  
  

ELECTRONIC PAYMENT IN 2022

Electronic payments have been around for decades, following digital popularity and online shopping. However, electronic payments have become increasingly important to invest in over the past few years.

Now it's no longer just 'nice to have,' but rather essential to moving forward since eCommerce became the top way to shop over brick-and-mortar stores, and cash is becoming more and more obsolete by the year. 

Why switch to electronic payment now?

1. Cashless Future:

People are going away from cash more and more, especially since the pandemic. Not only have some businesses already switched to being cashless to prevent the spread of COVID, but customers don't want to touch it, either. Research has found that 61% of people use less cash due to hygiene fears associated with handling money.

Jodie Kelley, CEO of Electronic Transactions Association, told CNBC, "Over the past six to eight months, we've seen the use of cash decline even further, and that's a trend I think that we're going to see continue."

She added, "When the pandemic hit, people really started paying attention to how literally they were spending money, and people found that they didn't want to touch cash and exchange cash."

2. Rise of E-Commerce:

If your business has any plans to operate in the e-commerce realm (which you should consider because it is growing rapidly), electronic payment is necessary to proceed. With the substantial rise in e-commerce, it's likely that businesses soon won't have the option but to adapt to survive the times. 

According to UNCTAD, global e-commerce jumped to $26.7 trillion following the pandemic, up by 4% from reports in 2018. Shamika Sirimanne, UNCTAD's director of technology and logistics, said in the report, "These statistics show the growing importance of online activities.”

Most Accountants Say They're Not Future-Ready

According to recent research, 92% of accountants feel they're not future-ready. This is likely because technological advancements are growing rapidly, and businesses are slow to make the leap and adapt. This can be an advantage for your business.

With the help of Kaizen, you can become part of the 8% that are confident about their future! By adopting automation and electronic payments, you can prepare your company and accounting team for the changes that are guaranteed to come, while getting ahead of your competition.