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In the business-to-business (B2B) world, checks have long been the preferred method of payment, but the rise of electronic options is changing the payables landscape.
Joey Heinrich
According to the Association for Financial Professionals’ (AFP) 2025 Digital Payments Survey, 76% of organizations plan to update their payments strategy within the next three years. Exploring new payment formats and channels is of particular interest to organizations surveyed, with 72% of survey respondents reporting this as a top priority. The survey also noted a decrease in check usage: checks account for 26% of B2B payments, down from 33% in 2022.
Given the ever-increasing pace of business operations, faster payments are becoming progressively more important to a company’s bottom line. If you’re still using checks, there are several reasons to consider a shift to electronic payment methods such as automated clearing house or commercial cards, which can meet a variety of business spending needs.
Optimize cash flow and reduce costs
Purchasing card usage has climbed steadily for years. While there are numerous reasons for the growing popularity of purchasing cards, increased cash flow is becoming a primary driver. The most direct cash flow benefit of paying by card stems from the extended float period built into the payment structure.
First, the digital systems supporting card programs allow for significantly better data analysis. Real-time spending data can be used to identify expense patterns on a monthly, quarterly or annual basis, which can then be used to schedule payments in advance to ensure on-time payments and to optimize cash flow throughout the year. Beyond preemptively scheduling payments, companies can track expenditures with specific suppliers or spending categories, opening the possibility of using trend information to negotiate better terms with frequent suppliers by shortening payment terms to the supplier while maintaining payment terms to their purchasing card provider.
Finally, commercial card programs also lower administrative costs by allowing companies to consolidate payments and reconcile employee purchases automatically, eliminating the need for time-consuming processes like invoicing and cash advances.
Streamline payments while minimizing risk
Beyond the cash flow implications, commercial cards have other features that can benefit businesses. In addition to rebates and reduced staffing-related expenses, cards also provide cost savings in transaction fees. The median cost of processing a paper check is $3, double the cost of a purchasing card transaction.
In addition, from a risk management perspective, cards are safer than paper checks. Built-in protections such as EMV chips and payment controls that allow administrators to closely monitor and regulate card spending create a fraud risk management infrastructure that is stronger than that of check security systems.
Lastly, card programs create efficiencies within the payment process in a variety of ways that improve both the supplier and employee experiences:
- Payments can be set up in advance and tracked in real time.
- Card programs help to avoid payment-related disputes with suppliers.
- Commercial cards simplify the disbursement of internal expenses.
- Administrators can stay in control by establishing authorization and control parameters for each cardholder.
- Employees don’t need to make out-of-pocket purchases and wait to be reimbursed for business-related expenses.
The efficiency, security and improved cash flow opportunities offered by commercial cards make them a powerful treasury management tool and an increasingly popular payment option. While implementing a commercial card program can be complex, a strong banking partner can provide end-to-end implementation support and can remain a resource as business needs evolve.
Joey Heinrich as senior vice president, commercial payments consultant at UMB.