The case for paying your vendors through different methods
I’m a true believer that, in an ideal world, paying your suppliers should not be complicated a thing at all. It should literally be a process where you send the money in an easy way and everyone is happy about it
Unfortunately, if you have ever managed your supplier’s payments, you know this is NOT true. There is always a problem, a unique situation with a specific vendor, an incentive to pay one way or the other, and, above all, a way to complicate your day more than expected.
Currently there are several payment methods in the US. All have different costs and operating needs, and all can be beneficial depending on your needs and your vendor needs.
While some vendors (many more than you think) still prefer checks, there are others that are tired and would like to receive payments electronically. For those who want to receive their payments electronically, there are also different payment types such as ACH, Wire transfer and Virtual Cards.
With all these options, how do you choose? Is it mainly what your vendor wants?
While this is usually the case, there are times where is more beneficial for you to pay in a certain way. For example, Virtual Cards have the ability to give you cash back. If your suppliers accept it, then this is by far your best option.
Also if your supplier needs a fast payment, maybe Wire Transfer can be the best, although this costs a bit more on your side. Ultimately, while ACH is a great way of sending money, it also has reconciliation issues, particularly for companies that receive many payments each day from their customers
Would you like to learn more about the different payment types and how you can optimize them?
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