Government agencies are continuing to transition away from traditional invoices and physical payments to digital ones. The change is happening not just within the United States government, but in leading European nations as well. They’re doing so because data and experience confirms that digital transactions benefit government organizations and the citizens they serve.
Digital Payments are More Secure
Researchers have found that simply replacing cash payments with digital ones can bolster security enough to reduce financial crimes by 10 percent. One key reason is that digital payments are easier to monitor. Digital traceability reduces the chance for payment error, intentional misappropriation, or outright fraud. Each payment leaves an electronic trail that can be quickly tracked but also indefinitely saved. That has obvious advantages versus trying to preserve volumes of paper documentation. Physical payment records, for example, have to be stored in a safe, climate-controlled environment−otherwise they may deteriorate or be misplaced and lost.
Digital Payments are Faster
Unlike payments by check or cash, digital payments are virtually instantaneous. Whether a government agency is receiving or providing a payment this shortens the billing cycle. It also improves services to recipients of payments for such things as Medicare, Social Security, or government wages. Electronic payments give citizens and other payers convenient online payment and credit card options, too, which boosts collection rates. When a payment is made or received, a transaction confirmation is immediately generated. If a refund is warranted, digitized payments make that process fast and secure.
Digital Payments Save Money
Since digital payments are less labor intensive, they are more cost effective. One study found that businesses can save around two cents on every dollar received just by switching to digital payments. Visa commissioned its own economic study, focused on quantifying the impact of digital payments versus cash payments in 100 cities worldwide. The results showed that digital payments can generate net benefits of nearly $500 billion a year. That kind of bottom line savings is one of the reasons why the U.S. Treasury has been pushing for a digital transformation to electronic invoices and payments.
Digital Payments Make Audits Easier
Digitized transactions also make it significantly easier to perform audits, share the data with authorized parties like accountants, and generate insightful and customizable financial reports. Those features help support greater accountability and transparency, which are important responsibilities for any government agency. Benefits like those convinced the United States Office of Management and Budget to ask all agencies within its control to shift to digital invoices. The policy decision from that high profile institution indicates that more government organizations will likely follow in their footsteps, regarding both invoices and payments.
Digital Payments May Soon Be Mandatory
Evidence continues to accumulate on the side of the ledger supporting digital payments versus physical ones within governmental agencies. It’s easy to see how momentum is trending in that direction, and why digital payments will likely soon become the norm. Of course digital payments reduce paper consumption, which is often required of government agencies and is better for the environment. Forward-thinking agencies may want to get ahead of the curve in terms of implementing digital payments. They’ll save time, money, and labor and avoid being forced to implement such a big change while on a mandatory deadline.