Author: Matt Carrico, Director, Product Management
Digital payments have been a boon to the modern business, offering faster and more efficient ways to pay vendors and receive money. However, if you’re only using your digital payment platform to electronically send and receive payments, you may be missing out on some key time- and money-saving attributes.
Here are some common misconceptions about digital business payments and tips for making the most out of your payment solution.
By using a digital payment platform solely to process ACH or ePayments, many businesses are missing out on the additional benefits like automation, check outsourcing and digital storage.
Historically, the payments process has been largely manual. An invoice comes in and the information is typed into the general ledger. Tracking its progress is also manual, often requiring a lot of back and forth to receive approval before the invoice can be sent for final payment.
Your payment platform may have features that automate many of these steps to generate faster results. For example, payment solutions provided by FNBO help tie together much of your process, starting with the invoice. Invoices can be digitally stored within the platform and synced with your general ledger. From there the invoice approval process takes flight, allowing authorities to digitally sign off from anywhere, using almost any device.
Once approval is received, many payment platforms can route the invoice automatically for payment via ACH, check or card. As part of FNBO’s PayMaker solution, for example, physical checks are printed and mailed on your behalf, removing the need for you to print, sign and mail to vendors.
With some payment platforms, accounts receivables can be handled in a similar fashion. Digitizing your invoicing process may allow you to generate and send invoices directly to your customer from your payment portal. For example, with PayMaker, the system tracks invoices and reconciles payments as they enter the company’s bank account. Electronic filing of the invoice may also mean there are no paper copies to worry about, and invoices are always available for easy reference through the application’s document filing system.
Once upon a time, moving to a digital payment platform required a lengthy implementation process, high resource costs and multiple internal changes. After implementation, it was often left to the business to convert vendors from check to ACH or card payments.
Fortunately, this is no longer the case. Many robust payment platforms have companies up and running in a matter of minutes as opposed to days or months, at far lower costs. Some providers, such as FNBO, even help you convert your check payments to ACH or card, drastically reducing your internal workload and strengthening your vendor relationships.
Fraud is another prevalent concern with business payments. Fraudsters are always adapting and looking for ways to access your company’s payment information. Many fraudsters can obtain your account number, address and signature from paper checks or email compromise. Fortunately, security is a strong component of most modern payment platforms. Many digital payment solutions make it possible to pay vendors without sharing identifiable information, safeguarding your accounts and significantly reducing instances of payment fraud. Many solutions also offer the ability to grant various permission controls across the organization to achieve enhanced internal payment or process security.
Many companies embrace electronic payments while remaining married to their old manual payment processes. Recent estimates indicate that this may have a serious impact on your bottom line.
For one thing, companies that rely on manual payment processes are five times slower at making payments when compared to payments made through digital platforms. This can strain vendor relationships and put your company out of the running for negotiated early payment discounts, which could seriously impact cash flow.
Then there is the fact that businesses are required to handle several manual tasks in order to facilitate a payment. These time-consuming tasks may include uploading a positive pay file, ACH file, logging into a separate bill payment system for one-off payments and calling to provide credit card information to pay vendors. Not to mention the process of obtaining the necessary invoice and payment approvals.
On the other hand, automating these tasks allows you to work faster and provides payments in record time. For example, sending checks from a digital platform can take less than a minute compared to manually printing, signing and mailing a check.
If you’re still on the fence about automating your AP and AR processes, consider how your competition is stacking up. According to the B2B Payments Automation Playbook, 27% of companies have already adopted AP automation and 74% plan to do so over the next three years. This includes 49% of middle market firms and 20% of small businesses.
With such a strong trend toward end-to-end digital payments, isn’t it time to start getting the most from your digital payment platform?
About the Author:
Matt Carrico leads FNBO’s effort to help business owners improve their cash flow, as well as their accounts payable and receivable efficiency. Matt has 15 years of sales and strategy experience.