Treasury management
June 9, 2020

Optimizing your payables management amid the COVID-19 pandemic

June 9, 2020
Michael Zinkowski
Head of Banking & Treasury Management Sales and Advisory - NAM
man checking laptop

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:

  • Automated Clearing House (ACH) payments: a batch settlement process for US based payments via the ACH network allow for multiple payments in one file whether for payroll, employee reimbursements, or vendor payments. Same-day processing for ACH items is now also available for more urgent payments. Increasingly, vendors are open to receiving payment via ACH, which can be executed online or via direct transmission.
  • Bill payments can be used for smaller vendor payments in situations where the vendors bank account information may not be available. This is typically timelier and more cost effective than using a check.
  • Online wires: whether freeform, template or a batch can be executed online or via direct transmission. Internal control capabilities can offer treasury teams more seamless execution, instead of relying on bank procedures with callbacks and authorization letters.
  • Check print: a print and mail with remittance information solution allows for file upload and execution without the requisite investment in technology, real estate or upgrades. Outsourcing the check printing process can help reduce costs and increase operational efficiencies.

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 platforms 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.


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