Like the consumers who seem to be one step ahead of business when it comes to digital, MNC treasurers are getting tired of writing checks. For that small vendor in a remote part of the globe who the company only needs to pay once, a paper check reveals why it is fast fading from use: it’s slow, relies on an unreliable delivery system and costs money to use. It’s nuisance payment.
Yet despite the cost of check printing and mailing and manually tracking check payments, companies are still writing checks. That’s because there are challenges that some companies either cannot or do not have the tome to work around. One is the reluctance by consumers to give out bank account information; another is businesses don’t want the burden of securely storing that account info. But new ways of disbursing cash without that bank account info have been cropping up over the past few years.
One of those Bank of America Merrill Lynch’s Digital Disbursements, which it launched in late 2014 using a network called clearXchange. The company is a consortium of five banks that facilitates business-to-customer (and customer-to-customer) payments, using only email addresses and mobile numbers. The service is specifically targeted to companies looking to get rid of the costs and complexities of paper checks or channeling a small one-off payment through the company’s treasury management system. As one member of The NeuGroup’s Assistant Treasurers Group of Thirty peer group recently said, “if I want to make a small payment electronically, I have to put the vendor in my SAP system.”
But BofA Merrill’s product can ease that pain. With it, MNCs can more easily and cheaply make a range of payments to consumers, including paying rebates, insurance claims, refunding overpayments or that one time a local contractor was hired to fix the wiring at the new office Addis Ababa.
And the money that could be saved by going digital is not insignificant. According to BofA Merrill, citing a study by Aite Group, companies that go digital could reduce end-to-end disbursement costs by as much as 75 percent compared to using physical checks, which in turn could save them more than $1 billion annually.
For treasurers working in leaner and leaner departments, more than the money it’s the time saved.