If you need another reason to embrace electronic payments, here it is: The U.S. Government is now standardizing its operations on e-payments. On March 25, a new executive order was issued to mandate a transition to digital payments for all Federal transactions.
Demanding that all paper check disbursements and receipts be phased out, the requirements take particular aim at reducing costs and fraud. The executive order promotes operational efficiency, citing unnecessary costs, delays, security risks, lost payments, theft, and “the U.S. policy to defend against financial fraud.”
Further justification stems from the fact that in 2024 digitizing paper-based payment records cost the government (and thus taxpayers) $657M. Furthermore, the order states that checks from the Department of Treasury are “16 times more likely to be reported lost or stolen, returned undeliverable, or altered to an electronic funds transfer (EFT).”
Everything from tax returns and benefits payments to vendor payments and intergovernmental payments will be affected. All Federal agencies are expected to make the transition “as soon as practicable.”
The urgent need to “go digital” extends beyond government agencies, of course.
It’s not just about bureaucracy: Transitioning to B2B e-payments
Financial leaders everywhere are concerned about their rising payment costs, and digital transformation is considered a best practice for any company handling business-to-business (B2B) transactions. While technical complexities and cybersecurity concerns can slow migrations, the benefits of aligning accounting operations with e-payment standards often outweigh any near-term inconveniences. Reducing waste in accounts receivable processes are key benefits.
Advantages of e-payments include:
- Efficiency Gains: Reduced manual labor and faster processing times or cash flow
- Cost Savings: Lower overhead costs associated with paper-based payments
- Improved Security: Enhanced protection against errors and fraud
- Enhanced Customer Experiences: Clients typically want more payment options
As younger generations have proven, digital payments are the preferred way of doing business today. Check out the the latest research on GenZ payment habits:
- Digital/mobile wallets and cards dominate, accounting for over 92% of preferred GenZ payment methods
- Traditional payment methods are becoming obsolete, with cash usage hitting a historic low of just 7%
- 68% say a company’s acceptance of new digital payment methods positively influences their perception of the brand
What does it take to convert to e-Payments?
Transitioning to electronic methods for accounts receivable means trading paper checks and cash-in-hand payments for ACH, debit, virtual credit cards, and other digital modalities. To make the cutover, financial leaders need to consider the following questions to judge their preparedness.
Judge your preparedness with these key questions
- What percentage of your existing payments are rendered via paper checks? How long does it take your team to process paper checks? Your answers here can help you scope the size of the issue, establish a sense of urgency, and define goals and objectives for e-payment transformation.
- How will you facilitate e-payments? Do you need a reliable e-payment system or accounts receivable software solutions to facilitate and automate ACH transfers, debit transfers, and virtual card payments? Can you offer your customers a buyer portal enabling them to auto-pay using the digital payment method of their choice? Will you be able to offer automated dispute resolution paths? Technology platforms, network infrastructure, and advanced capabilities are key prerequisites and factors for success. Don’t miss this Buyer’s Guide to AR software.
- What ERP systems and/or invoicing tools should your e-payment system communicate with, gathering data and rapidly updating payment status? Integration is another essential element, as your e-payment platform shouldn’t operate in a silo.
- What security measures and compliance requirements should your e-payment system adopt and uphold? This is essential for fraud prevention, cybersecurity protection, and meeting regulatory standards. Digital lockboxes, encryption, secure authentication methods, as well as regular audits should become core pillars of your digital transformation strategy.
- How will you educate employees, deliver training, and support clients through this transition? Understanding security practices and electronic payment systems will help smooth implementation and foster adoption.
AI and e-payments should work together
AI automation is advancing payment handling processes in entirely new ways, thanks to Generative AI and Agentic AI agents. Here are some ways.
Financial reports are the new tools of yesterday. When AR automation software is built on AI algorithms and large language models, it can answer complex financial questions such as: Which buyers generate negative ROI when accounting for their custom payment processing costs, dispute resolution time, and incremental credit insurance fees? Which process bottlenecks contribute to delays in payments or increase metrics like days-sales-outstanding? Or even, how does our AR performance compare to others in my industry?
Agentic AI capabilities take e-payments to the next level, offering virtual assistants for payment management. For example, Agentic agents can:
- Dynamically respond to buyer behaviors, calibrating payment policies as needed
- Self-optimize payment processes to continually minimize delays
- Offer insights across the full spectrum of payments activity – including payments made outside your corporate e-payment platform
- Read and extract ACH remit data sent from ACH providers
Learn more about how AI is creating an autonomous future for AR, handling everything from e-payments and cash application to collections communications.
Ready to make e-payments the new standard for your company and finance organization? Talk to Billtrust today about innovating your AR process with AI.
FAQ
The U.S. Government has issued an executive order mandating the transition to digital payments for all Federal transactions.
The transition aims to reduce costs, enhance security, and improve operational efficiency by phasing out paper check disbursements and receipts.
All Federal agencies are required to make the transition to electronic payments as soon as practicable, affecting tax returns, benefits payments, vendor payments, and intergovernmental payments.
Electronic payments offer efficiency gains, cost savings, improved security, and enhanced customer experiences by reducing manual labor and processing times.
Businesses should assess their current payment methods, implement reliable e-payment systems, ensure integration with ERP systems, adopt security measures, and provide training and support for employees and clients.