Editor’s Note: Ardent Partners is excited to announce the launch of its 2015 “State of ePayables” market research survey, available here. All participants of this landmark research survey will receive a complimentary copy of the resulting research report in late May. (While the survey is comprehensive, participants can expect to spend only 15 minutes of their time answering the questions.)
Electronic payments provide significant benefits for buyers, including more control over payment amount, fewer opportunity for manual errors, and more freedom with payment scheduling to name a few. In many discussions of the advantages of ePayments, however, there is little thought given to what suppliers gain from accepting payment in an electronic format.
For suppliers on the receiving end of electronic payments, there is often an unheralded attribute of the payment process: the value and depth (or lack thereof) of remittance information. When a payment is received, it is incumbent on accounts receivable (AR) staffs to accurately (and quickly) reconcile that payment with orders, contracts, and general financial information. Remittance information answers a series of key questions, including who the payment is from, what they are paying for, understanding if the correct amount was paid, etc. Manual miscoding can significantly alter this important financial information.
The rise of ePayments is causing a change in the perception of remittance information such that:
- 95% of all enterprises believe that submitting remittance information together with the electronic payment is valuable to suppliers.
- 91% of all enterprises believe that structured and standardized remittance information is valuable to both buyers and suppliers, and;
- Nearly 90% of all enterprises believe that remittance information that automatically links back to POs and invoices would be valuable.
Many of the barriers to the adoption of ePayments typically involves supplier involvement and acceptance of these electronic methods, processes, and platforms. For some suppliers, there is confusion around the effectiveness of ePayments in transmitting remittance information with payments and how detailed and useful that information is or can be. Deeper remittance information is an area that can improve one key aspect to any organization, whether it is on the buying or selling end: visibility into cash.
Nearly 60% of the finance and AP leaders in Ardent Partners’ most recent ePayments survey believe that better and deeper remittance information is the top “solution” to solving the supplier-as-barrier issue that plagues adoption of electronic payments. As more and more enterprises attempt to gain every intelligence advantage they can, the rise in ePayments adoption will surely continue and be linked to the need and desire to get to the “next level” of financial aptitude.
Final Thoughts
Suppliers have historically been reticent to accept electronic payments for several reasons. One of the most significant is the lack of standardized remittance information, which means their AR staff may have trouble quickly reconciling the received payment with the appropriate invoice. It has thus become clear that one of the key barriers that must be surmounted before ePayments can become more prevalent is in fact the problem of standardizing remittance information. In fact, many buying organizations are convinced that better and deeper remittance information, which provides visibility into cash, will be the top “solution” to smooth the way for ePayment acceptance. Only time will tell if that is true.
Check out these related articles for more:
AP Predictions for 2015: ePayments Will Become the Default
Why Haven’t ePayments Completely Replaced Paper Checks?
Which Technologies Help Achieve ePayments Success?
