For Senior Living Facilities, Payment Automation Is the Next Move Toward Greater Profitability
Senior living and memory care facilities are focused on the needs of their residents, but the ability to support a pleasant living environment is dependent upon a profitable cost structure. This is where inefficient manual bill payment processes can really take a toll.
Fortunately, advancements in payment automation make it possible for senior living and memory care facilities to streamline payment cycles and gain tighter control over bill payments and cost streams. Here are the most important benefits of payment automation for senior living facilities.
Understanding the Payment Process Challenge
While living in a senior living community, residents typically make monthly payments to the facility in the same way they would pay rent or a mortgage, with one difference. Most senior living facilities send out paper invoices to initiate payment, leading to bottlenecks that add unprofitable weight to the receivables process.
The challenge begins with the paper invoice. Paper invoices must be printed and distributed manually, adding extra time and employee tasks to accounts receivables. The more facilities an entity is operating, the more arduous the task becomes.
When residents receive these invoices, they most commonly pay by check because the invoice doesn’t give them a more convenient way to pay. This elicits a manual reconciliation process in which payment must be matched to the invoice and the amounts checked, before being submitted to the bank for payment.
From there, checks, on average take two business days to clear, and it can be up to 5 days before the bank receives the funds and can make them available to the senior living facility. That also doesn’t account for mail delays, which impact important business payments. Added AR days can drag down profitability and even push the facility into shortfalls, depending on the length of time it takes residents to make payments.
In addition to a longer accounts receivable cycle, making check payments to vendors also creates tension on facilities’ payables. 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. In addition, manual payments often are physically routed through multiple individuals for approval each month, which can be tedious and difficult if employees are working in different locations.
By adopting an automated payment solution, senior living and memory care facilities can reduce or eliminate many of the bottlenecks associated with manual payment processes, making it easier and more secure to pay and get paid.
The Advantages of an Automated Payment Solution
Automated payment solutions pull accounts receivables and accounts payables into one fluid and seamless process. Improvements begin with electronic invoicing.
Electronic invoices hold many advantages for both seniors and the facility. First, residents are able to make electronic payments via ACH or credit card via an easy-to-use online payment portal. While many seniors are accustomed to making paper check payments, electronic payments offer many advantages.
The first is security. Paper checks sent via the mail can easily be lost or stolen. If stolen, the criminal has access to the resident’s bank account information and can use those details to commit a number of fraudulent activities. According to the Postal Inspection Service, reports of mail theft have risen 600% in the last 3 years.
With electronic payments, data is encrypted, making it harder for fraudsters to gain access to critical banking information. Electronic payments are also easier for seniors. ACH and credit card payments can be set up on a reoccurring basis, allowing for simpler and more seamless personal accounting, eliminating the stress of worrying about making payments on time. Likewise, credit card payments make it possible for seniors to pay quickly and easily, with the added bonus of cash back or other rewards when using cards offering such benefits.
Invoice processing is also streamlined as top-level automated payment solutions support branded invoices that can be generated automatically and auto sent to multiple individuals on a reoccurring basis. When payment comes in, automation also comes into play, reconciling the invoice and payment before filing documents in a digital vault.
Greater transparency is another byproduct of automated payment solutions. If a child is handling parent finances, for example, it becomes simple for the individual to log onto the payment portal and view billing and payment history.
When it comes to payables, electronic payments offer accounting teams a streamlined workflow. Employees no longer have to physically route checks for approval or mail checks out each month. Automating payables tasks allows facilities to work faster and make 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.
Automated payment systems also simplify the financial environment for entities that manage or maintain multiple facilities, by providing a single portal to handle billing for all residential communities. Set up is quick and simple, requiring only a few minutes on average, quickly putting senior living and memory care facilities on track for streamlined financial management.
Best of all, automated payment solutions help businesses get paid up to 2 times faster, improving profitability and providing a basis for more sound operational performance.
About PayMaker by FNBO
PayMaker makes it easy for businesses to manage their accounts payable and accounts receivable tasks from any location. With PayMaker, you’ll be able to pay and get paid with speed, efficiency and security. PayMaker can scale to the needs of your business whether you simply want to make a quick payment, or if your payment process is more complex and involves multiple employees.
Interested in getting started? Sign up for a free trial of PayMaker by FNBO today.
About the Authors
Oscar is the Vice President of Healthcare Banking at FNBO, where he joined in 2007 and has held numerous commercial banking positions. He grew up in Mexico City where he attained his Bachelor's in Economics and interned at the Central Bank. He then moved to Spain and obtained his Master's in Banking and Finance, and finally moved to the United States and received his MBA with a concentration in corporate finance.
Matthew 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.
Jasmine performs the role of Corporate Treasury Services Senior Advisor at FNBO. She enjoys the balance and measure of each client’s unique treasury management processes. In doing this, she focuses on uncovering inefficiencies so as to apply relevant solutions that complement her client’s overall business strategy.
The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.