Managing cash flow is the most critical metric for business success. A key element to consider when effectively managing cash flow is accounts payable. The amount you owe others is just as important as the amount they owe you. A valuable tool helping businesses achieve positive cash flow is Electronic Accounts Payable or EAP.
What is EAP?
An alternative payment solution to checks and ACH, EAP provides a streamlined and secure process which reduces costs and can generate significant revenue. With EAP, businesses can pay invoices for goods and services directly from a payment file generated from an existing accounting system. The essence of EAP is a dynamically-adjustable spending limit that is assigned to match the amount of each transaction. Therefore, after the transaction is completed, there is no available line of credit on the account.
Benefits of EAP
EAP reduces the cost and financial risk associated with check payment activity. Depending on when a payment is made, EAP can significantly improve working capital by increasing float, the length of time between the date a purchase occurs and the date the payment is made. EAP reduces financial risk associated with plastic cards as the account numbers are typically tied to a credit limit designed to support a single transaction, rather than multiple. Plus, with organizational demand for specific transaction data, an EAP transaction can satisfy whatever data requirements are needed. In the case of single-use cards, the card numbers themselves can be matched to purchase order numbers to facilitate easier transaction reconciliation.
By the Numbers
Conducted every three years by RPMG, the EAP survey shows a significant increase in growth, utilization, spend and more.
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