Encouraging business-to-business ACH transfers

From faster transactions to enhanced cash flow management, there are many reasons small business owners are forgoing paper checks in favor of business-to-business automated clearing house, or ACH, transfers. However, many businesses that have taken steps to digitize their payables and receivables remain stymied by vendors and clients who prefer paper transactions.

According to the 2022 Digital Payments Survey by the Association for Financial Professionals, or AFP, 33% of all B2B transactions in North America still occur via paper check. If your customers and vendors are part of this sluggish transition, it may cause you to miss out on the efficiency, traceability and cost savings associated with ACH payments.

The benefits of ACH payments

With business-to-business ACH transfers, funds move directly from one bank account to another. This type of digital payments processing may have a big impact on your bottom line—lowering the transaction fees, labor costs and other expenses associated with writing and mailing checks and manually tracking payments. The potential for costly clerical mistakes is also greatly reduced with digital payments.

And while criminals target all types of B2B payment methods, paper checks continue to be the most vulnerable to fraud. According to the AFP survey, 63% of respondents reported that their organization experienced fraud via paper checks in 2022.

In fact, it's far more difficult for bad actors to tamper with or forge digital payments compared to paper checks. Most digital payment methods provide a clear, traceable record of every transaction, making it easier for you to track and report discrepancies and to identify suspicious activity. Digital payment services are also often protected by robust encryption, helping to safeguard transaction data from start to finish.

The quick nature of ACH payments may also introduce new threats, which underscores the importance of implementing cybersecurity and anti-fraud training for employees.

How to boost business-to-business ACH payments

While ACH receivables can offer a range of benefits, getting customer buy-in may take some work. The following strategies may help accelerate the shift to digital B2B payments while providing value to your partners.

Fully digitize receivables

One of the most effective ways to increase the adoption of digital B2B payments is by offering electronic bill presentment and payment services. Sending electronic invoices with payment links may help create a more streamlined experience for customers. Some platforms might also allow them to set up recurring payments, resulting in a simplified process for both parties.

Incentivize digital payments

Many businesses encourage the adoption of ACH transfers by offering modest discounts or improved terms. Providing small discounts for invoices paid quickly often pays off through improved cash flow and reduced administrative costs.

Simplify enrollment

Complexity hinders adoption. Streamline ACH payment enrollment with dedicated customer support to guide new users, along with intuitive interfaces and clear instructions that demystify the process.

Automate payment reminders

Enable automated payment reminders with online payment links to make it easier for customers to pay past-due invoices and reduce administrative payment chasing.

Educate about cybersecurity

Some customers hold the misconception that digital payments are more susceptible to fraud than paper checks. Address these concerns by emphasizing the security benefits associated with digital payments versus the risks associated with paper checks—for example, encryption and fraud monitoring versus theft and loss.

With business email compromise and vendor impersonation attacks on the rise, this also presents an ideal opportunity for you to share common fraud prevention tips.

The bottom line

The transition from paper checks to digital B2B payments offers clear benefits to small businesses. Taking steps to encourage your customers to also make the transition may help you boost digital ACH receivables and improve your cash flow.