Stand around the water cooler in any AP department long enough and you’re bound to hear the buzz surrounding Buyer Initiated Payments (BIP). One of the hot topics in Electronic Supplier Payments right now is leveraging working capital management tools such as BIP and Dynamic Discount Management – both of which allow buyers to time payments and take advantage of early payment discounts.
In the traditional card transaction, the seller/vendor/supplier end is the initiating event that starts the payment process. In BIP, the transaction is initiated by the Buyer. Some in the industry call this Accounts Payable Purchasing Card or AP P-Card or Buyer Push Card. The below graphic shows the increase in P-Card or BIP payments.
Change in Use by Payment Type
The use of paper checks is decreasing as more companies push for ePayments.
BIP provides buyers with a way to “triple-dip” by capturing early payment discounts, while earning card volume rebates and taking advantage of the grace period between purchase and monthly statement date.
Although suppliers are naturally averse to taking on new costs and payment hassles, many have come to see the advantage of accelerated cash flow, even if they have to pay an interchange fee, as buyers, particularly large corporate accounts, stretch out payments. This trend is being helped by the proliferation of easy-to-use, free or low-cost supplier portals that interface with a wide variety of accounting systems.
ePayment solutions including BIP help reduce transaction costs and increase accountability by eliminating opportunities for lost paperwork and giving management a quicker, clearer picture of how a company’s money is being spent, and why.
Electronic payments protect both the buyer and seller, by adding transparency to each transaction and eliminating the need for manual processing of most transactions. Electronic data is easily uploaded to ERP systems on both sides of the transaction, allowing for better planning, cash management and forecasting.
To learn more about BIP and other forms of ePayments, download a complimentary copy of PayStream Advisors 2012 Electronic Supplier Payments: Pushing Forward with Buyer Initiated Payments report.