The benefits of electronic payments through the ACH are numerous. In fact, many organizations get so excited when they start one, that they sometimes have to be reined in. Your firm will spend a lot of time selecting the right ACH service, but will reap the benefits of the program only when you convert most of your payments to this method. Make sure your e-payment program is successfully adopted by following the strategy discussed below.
Step 1. Don’t run before you can walk. Begin by figuring out how many suppliers you can comfortably convert from paper to electronic payment in a given month. There’s a good reason to do this. If the response to your first offering is overwhelming, you may not be able to process everyone who expresses interest in a timely manner. The worst thing you could do for your new electronic initiative is not deliver what you promised.
Step 2. Start slow with a test group. These should be suppliers that either are already accepting payments electronically and/or those with whom you have a really good relationship — those vendors that won’t be turned off if the first pass doesn’t go as smoothly as you’d like. Vendors that have solicited you to pay them electronically make excellent candidates for your test group.
Step 3. Roll out your program. Once you’ve figured out what you can reasonably handle and your processes are working smoothly, send out a mass mailing to targeted suppliers you want to pay electronically. You might, for example, exclude those suppliers you prefer to pay using the purchase card (p-card). Not everyone you solicit will accept your electronic invitation. So, if you can handle 100 conversions a month, send your initial solicitation to 200 or 300. Keep running your monthly solicitations until you have gone through your entire targeted market.
Step 4. Get on the phone. Once you’ve finished your initial campaign, you are ready to take the next, more aggressive, step. You’ll need to go after the laggards who did not have the good sense to sign up for your electronic payment initiative. Begin by outlining all the benefits of receiving payments electronically. Once you have the list firmly in hand, pick up the phone and start calling.
Step 5. Get creative. If you can’t get in the front door, try climbing in through a window. The next time one of your nonparticipating vendors calls looking for a payment that was needed yesterday, take advantage of this opportunity. Even if the delay is entirely your company’s fault, suggest that you can pay electronically today or tomorrow (whatever your schedule allows) but will not be able to draw a check and mail it until ___. Point out that given mail time, it might take a week or more until the vendor has the funds in its account but if you pay electronically it can have good funds the next day.
Step 6. Realize the door is never completely closed. After six months or perhaps even a year, revisit the issue with those who have not signed up. More often than not you will find that a vendor who didn’t have the capability when it was first suggested has now upgraded and you’ll be able to enroll a portion of this group.
Step 7. Take a hardball approach. This tactic won’t work in every situation (especially if you are dealing with some 800-pound gorilla suppliers), but it will work on occasion. Levy a fee on those vendors who refuse to be paid electronically. Charge them $25 for every check you cut to them. (Note: Depending on the relationship you are trying to foster with your suppliers, this may not be a tactic you and your firm chose to employ).
Electronic payments are the wave of the future. Isn’t it time you get started?