Payments have not, historically, been viewed as tremendously important in most enterprises. This is no longer the case, and in fact payments are quickly taking on more strategic importance across a huge number of organizations; more enterprises have realized that making payments more efficient can provide huge savings, and electronic payments (ePayments) are the gateway to these cost efficiencies.
The new-found strategic focus of payments is not, however, the only reason that ePayments can be a boon to the wider organization. Financial operations in many enterprises have, in general, three classes of concerns—resource-related, system-related, and collaboration-related—all of which ePayments can address and in some cases solve quite handily. Today’s article focuses on the first of these classes, resources, and touches on three key resource-related concerns of current-day financial operations that ePayments can address.
Limited Budgets Restraining Headcount
Accounts payable (AP) teams, much like their counterparts in procurement, are consistently forced to “do more with same” in the aftermath of the 2007 to 2008 financial crisis. With a constrained credit environment, and enterprises subsisting on reduced budgets, it should come as no surprise that one of the most expense categories of spend—headcount—is one of the first budgetary areas to feel the strain.
Without sufficient staff, paper-based payment processes can quickly become unwieldy and slow-moving. Paying via paper check has multiple steps, each of which has the potential for human error to easily derail the entire process. An electronic payment, on the other hand, requires fewer manual touches overall as well as offering the AP team greater control over the payment amount and timing. The fewer human touches there are in a process, naturally the lower probability of errors. This reduces costs and increases process efficiencies, which means that fewer employees can process more payments in less time.
Need to Reduce Non-Core Manual Tasks
Processing a paper check through the entirety of the payment workflow is a significant amount of work. There is printing the check (or creating a check-run file), getting approval for the check, placing the check in an envelope, and ensuring it is sent out in the mail. Even if all of those steps are done properly, without any errors, there is still no way of knowing when the payment will arrive at the supplier’s offices or if the supplier will process the payment in a timely manner.
This list of tasks related to processing a paper check is cumbersome and time-consuming on the best of days. This does not even begin to consider how open to fraud the paper check is as a financial vehicle. With ePayments, the AP team is able to schedule a payment, control the amount precisely, and ensure that the supplier has received the payment all through the same interface. While an approved and scheduled payment may still take some time to be reconciled on the supplier side, there are almost no manual tasks on the buyer side. This lack of manual tasks thus means that AP teams are able to focus on tasks that have a more strategic impact in the business.
Risk Issues around Vendor Compliance
Keeping track of all the potential risk factors is an arduous process difficult to complete manually. There are compliance issues around things such as gathering W9 forms, cross-border currency exchange, international payment regulations, and so on. Electronic payment solutions can help track all these challenges in one automated solution, which can allow for the AP team to see at a glance any compliance issues or risks associated with the payment process. This can significantly help with resource challenges, as it is a time-consuming task at best to keep up with compliance risks without an automated solution to assist.
Final Thoughts
Electronic payments can provide significant benefits to the enterprise, including tremendous savings, but more than that providing the opportunity for enterprises to put in place the final piece of a holistic invoicing process that is almost completely automated. A well-deployed ePayment solution can also address the resource concerns that plague current-day financial operations. From a lower budget that constrains headcount to tracking vendor compliance risks, ePayments provide numerous advantages to the enterprise willing to deploy such a solution.
Check out these related articles for more:
Mind the Measurement “Gap” in ePayments
The Value of Better, “Deeper” Remittance Information in ePayments
Why Haven’t ePayments Completely Replaced Paper Checks?
Business Networks and ePayments: Transforming the B2B Commerce Landscape
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