Electronic payments as a risk-reduction tool: Replacing vendor cheques at Day International

The evolution of electronic business-to-business payments in the United States has been subject to delays and detours, primarily because of the success of the banking industry in creating efficient methods of clearing cheques. As a result, the justification for a corporation to change from paper cheques to electronic credits based on lower transaction costs has been weak and uncompelling. In the recent past, corporate treasurers have begun to recognise that financial risks are an increasingly important objective, often over-shadowing the historical interest in minimising expenses associated with interest, banking services and administrative overhead. A case study of Day International demonstrates how one treasurer, motivated by risk rather than cost, was able to effect a timely and comprehensive change in his company’s vendor payments. The company’s success is a model for any treasurer undertaking to convert business-to-business payments to electronic transactions.