Head of Banking & Treasury Management Sales and Advisory - Americas
June 9, 2020Posted InBanking and Lending
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An increase in remote working reinforces the case for businesses to consider electronic and automated methods to send and receive payments.
The COVID-19 pandemic – and the resulting isolation measures – have brought about the biggest experiment in working from home ever. Overall, this unprecedented shift is going smoothly. However, it is also forcing corporations to adapt many of their longstanding practices. Managing payables operations – tools and processes implemented by a business to manage their payments and expenses – is one such example.
In a traditional office-based setting, managing payables operations has often relied upon paper-based payment methods. However, with employees working from multiple remote locations, such methods are much less suitable. Signing and mailing out physical checks and letters of authorization and waiting for verbal confirmation callbacks for wire execution are far more difficult, if not impossible, outside of a centralized office system. The logistical delays that can occur – for example, when trying to locate an authorized party to wet-sign a check or confirm wire instructions – can be costly and disruptive.
For businesses looking to optimize payables management in this environment, electronic and automated payment solutions may provide a way forward. Below are various options that businesses might consider:
Typically, concerns from businesses more hesitant to adopt electronic payment methods are centered upon operational risk, including security, controls and storing vendor banking details.
When considering a treasury management provider, it is important to understand its platform’s capabilities. Some important security features to look for include dual-factor authentication, system administration to control user account entitlements (from view-only to dollar limits with executing payments), and dual approval requirements of designated approvers.
Vendor payment management may also be a consideration in how payment is remitted. Checks require basic information such as payee name and address, while ACH or wire transactions require banking information, including an account number. Decisions on where to store payment information – whether in a secure file or within accounting software – is a factor when deciding whether to switch to electronic payments. A platform that allows secure storage of payment information for ACH, wires, and bill payments is ideal.
As financial enterprise systems offer straight-through processing and integration of payment files, direct transmission can also be employed to send ACH, wires, and check files directly to the bank for processing. This is a step further in automating the payment process, which can help streamline and eliminate multiple touchpoints and the need for manual intervention.
Regardless of the method of payment, whether paper-based or electronic, fraud prevention tools such as Check or ACH Positive Pay can help mitigate fraudulent activity on accounts by preventing unauthorized transactions.
While businesses should evaluate various considerations relating to automation and technology, there are cost benefits to moving towards electronic or automated payments. The speed and efficiency can help improve payment processing and free up more time for treasury teams to focus on strategic initiatives to help grow the firm and reduce costs.
Please feel free to contact us if you would like to discuss strategies to help manage your payables operations.Contact us