Vendors want you to say goodbye to checks.

Fostering good relationships is highly beneficial to the overall health of your business but getting the most out of your vendor payments goes beyond your working relationships. There are ways you can improve your bottom line, better predict your cash flow and receive several other benefits simply by changing the method by which you pay.

While paper checks are still popular forms of payment between businesses (albeit on the decline), they are also the most expensive in both time and money. By simply replacing your check payments with credit card payments - in particular, credit cards designed with small businesses in mind - you can quickly streamline your payment process and earn a few extra perks with the money you would already be spending in the first place.

The cost of writing checks

You’ve likely heard about the true cost of checks. The breakdown of exactly how much you lose on each check depends on your business, but here are a few reasons why checks cost exponentially more than electronic forms of payment:

• The cost of checks themselves – whether you buy a book of checks or get them printed as needed, you’re spending money on an unnecessary item.

• The time it takes to approve and write checks – everything from sitting down and actually writing the check, to verifying the correct amount, to the data entry takes time. You’re likely spending a few hours each week on these tasks that could be better spent elsewhere.

• Envelopes and postage – with postage rates continuously increasing, it costs more year-over-year to send paper checks in the mail. Add the cost of an envelope and postage to every single check payment and it adds up.

• The time it takes to reconcile – once the check finally arrives to its destination, it must be verified by your vendor and deposited in their account. This can take a couple weeks before you can reconcile your payments and truly close out this task.

• Dealing with lost checks in the mail – when unfortunate events happen, you’re on the hook to fix it. Speaking to your vendor takes time. Stopping payment on a check with your bank likely has a fee. And you’ll have to rewrite and resend the check again, effectively doubling your business expense for this single payment.

• Managing vendor relationships – if a check doesn’t clear or arrives late, you’ll likely hear from your vendor first-hand. Managing these issues can eat up more of your work week and possibly impact your working relationship.

Streamline your payments

On the flip side, using a business credit card to pay your vendors can decrease or completely eliminate many of the factors listed above. There’s typically no extra cost to making card payments, unlike checks. You’ll save time and money for every check payment you replace with a credit card. Plus, using credit cards can have substantial long-term benefits for the future of your small business.

Use vendor payments to boost your business credit rating

Business credit has lasting implications on your company’s future; it can influence your insurance premiums, supplier terms, equipment or office lease agreements and even your ability to work with other companies.

Using a business credit card for vendor payments allows you to create business credit independent of your personal credit history. Be sure to make your payments on time, just as you would for a personal credit card, and you’re on your way to establishing good credit for your small business.

Take advantage of credit card rewards and other perks

Why not earn something from purchases you’re already making? Some cards, like Commerce Bank’s Business Rewards Card, offer extra benefits for small businesses that add up to real savings over time in a variety of ways. A traditional rewards card offers points for purchases, which can be redeemed from a catalog of options. You can receive cash back to your bank account, turn your points into gift cards for future business expenses, book business or pleasure travel, or even directly buy items for your office with your points.

Other perks you’ll get from using business credit cards typically include rental car insurance, waivers of liability, interest grace periods and more. Some cards even offer extended payment terms so you can hold on to your cash longer, or customizable options that allow you to pay your balance over time or in full each month. A good business credit card will allow you to choose which options work best for your needs.

There are plenty of reasons to add a small business credit card to your vendor payment lineup. You can profit from a host of features that help manage your company’s cash flow and provide long-term benefits for small businesses. Owners that play their cards right can take serious advantage of card features to leverage better discounts and lower rates in the future.

Also See:

• Replace the hassle of reimbursements with rewards.
• AP payments via straight-through processing provides solution to staggering invoice challenge.