Viewpost is another tool for companies to transition “long-tail” suppliers paid by check to digital payments.
Many finance teams whose religion is efficiency are eager to convert suppliers that still want to be paid with paper checks into believers in digital payments. But conversation at NeuGroup’s first-ever Working Capital Symposium made it clear there are plenty of challenges standing in the way, even as cutting-edge corporates bring forward-thinking innovation to the payments arena.
- “We’ve tried a number of initiatives to transition suppliers,” one member said. “But the barriers can range from not having the right systems in place to them simply being more comfortable with checks or a lack of digital payment systems.”
- The company has not given up seeking relief for paper check pain. It and some other members have started working with meeting co-sponsor Viewpost, a fintech specializing in transitioning vendors from checks to alternatives that include virtual credit cards, batched ACH payments and other digital forms of payment.
The long tail of paper checks. While most companies’ payments to large-volume suppliers are electronic, payment experts estimate that the smallest 20% of transactions by dollar amount—which members called the “long tail” of suppliers—can often account for up to 80% of the total payments. In other words, a lot of checks for small sums.
- “That last 20% can translate to billions in inefficiencies, and checks are used heavily at that tail end of supplier payments,” said Suneel Chirunomula, EVP and Head of Growth at Viewpost.
- While larger suppliers often transition easily, vendors that only make up a small fraction of the company’s overall spend can take the most effort to convert. “That’s one reason the long tail may be overlooked in corporate payment strategies,” he said.
- But sticking with checks risks both inefficiency and fraud—the latter a key reason companies want to put checks in the figurative shredder. “Unfortunately, something often has to go wrong to highlight when something needs to be fixed,” one member said. Making check delivery more secure by using, say, lockboxes would only add more costs, she added.
Paper cuts. The presenting member said his company first aims to convert its most critical suppliers. “Our focus is on the suppliers we interact with strategically,” he explained. The company has also removed checks as an option when onboarding new vendors.
- For existing suppliers entrenched in check payments, it’s been an ongoing process of negotiation. The member set up a portal for them to submit payment information, but “a lot of the long-tail suppliers never got into the portal to interact with us.”
- “We’ve made progress, but many of the smaller suppliers are static, and converting them takes time and effort,” he added. “It’s such a challenging environment.”
- Another member added, “We’ve found that some suppliers prefer checks because of the detailed remittance information required on them. For us, it comes down to what suppliers are comfortable with, even when electronic options are available.”
How Viewpost bridges the gap. Viewpost says it enables corporates to communicate better about payment options and know exactly what suppliers are comfortable with. Its platform can open the door wider to check alternatives while allowing vendors that prefer checks to keep receiving them. “One of the biggest reasons for friction between how companies pay vendors and how the vendors receive payment is that they’re not always talking to each other,” Mr. Chirunomula said.
- The low-tech solution operates within a company’s current payment framework. “We work alongside the existing procure-to-pay process and offer a network of vendors already accepting digital payments,” he said. Viewpost “intercepts” checks that its customers (i.e., the large corporates buying from vendors) write and contacts the seller through digital messages and phone calls to determine payment preference.
- “When a check is about to be cut, we engage the vendor directly to see if they want to convert it to a digital payment.” This hands-on approach not only reduces processing times and fraud risks but also improves supplier relationships by honoring payment preferences.
- Hundreds of thousands of suppliers are already on the network, which securely stores payment preferences and information.
- “Years ago, last-mile delivery transformed the e-commerce experience,” Mr. Chirunomula said. “We’re the last mile for check payments on behalf of buyers, giving suppliers the nudge they need to go digital.”
