Payment Technologies Continue To Evolve - Don't Miss These Opportunities!
In subtle and not-so-subtle ways, how companies receive payments from their customers has changed drastically during the past decade. The trend is generally away from traditional payment streams – such as cash and checks – and toward various forms of electronic payments. For businesses of all sizes, embracing these trends can improve cash flow and simultaneously reduce risks. So read on, and in this article, you will learn about the opportunities provided by evolving payment technologies.
The Challenge Of Traditional Inbound Payment Methodolgies
Traditionally, vendors often mail invoices to their customers. Then, they wait for customers to pay their bills, usually by sending a check to the vendor. Upon receiving a payment, a team member must record it and post it to the correct account. Further, in the absence of mobile banking app, someone must go to the bank to deposit the customer’s check.
Mailed Invoices And Payments Add Up To Ten Days To Collection Cycles
One challenge with legacy means of processing payments is the lag time involved in sending invoices via the postal service. Generally, it takes one to five business days – depending upon the distance traveled – for a mailed invoice to reach its destination. Further, you should allow up to five additional days for the customer’s check to arrive via return mail. In sum, depending upon the mail can add up to ten days to your collection cycle.
Traditional Payment Receipt And Processing Increases Fraud Risk
Another challenge associated with traditional payment receipt and processing routines is the risk of theft and fraud. For example, in conventional payment processing environments, it could be possible for team members to steal inbound payments. Then, to cover up their crimes, they could issue credit memos to post against customers’ accounts. This action, of course, gives the illusion that a customer paid their bill and team members posted it appropriately to their account. Unfortunately, the only parties who profit in this scenario are team members committing fraud against their employer.
Of course, the two issues outlined above are not the only ones to contemplate when considering traditional payment receipt methodologies. Among additional risks are those listed below.
- Posting a payment to the wrong customer account.
- Payments lost or delayed in the mail.
- Payments rejected for insufficient funds.
Suffice to say, collecting and posting payments from customers can be risky and messy, and that we should seek better, more efficient methods for this task.
Paying Vendors Can Prove Problematic Also
In addition to inbound payments, payment risk extends to outbound payments made to vendors and contractors. Among the risks and issues associated with these disbursements are the following.
- Ensuring the receipt of appropriate approvals before paying the bill.
- Confirming that the taxpayer identification number is on file for proper Form 1099 reporting.
- Validating the details of the payment match the vendor’s bill in all material aspects.
- Preventing duplicate payment of a bill.
- Integrating a bill payment service with accounting applications to ensure seamless transaction processing.
Emerging Payment Technologies Offer Options
No doubt, we have all experienced first-hand many of the emerging trends in payment technologies. Among these are the following.
- Reduced dependency upon cash and checks in favor of alternative payment methodologies, such as debit and credit card payments.
Increased usage of electronic payment processing outside of traditional banking structures. This category includes the rise of payment platforms such as PayPal, Venmo, Apple Pay, Google Pay, Stripe, and Square.
The rise of companies such as Kabbage and Bill.com, providing alternatives to traditional banking services and environments.
And, of course, the ongoing evolution of cryptocurrency as another potential alternative to traditional banking environments.
Automating Payment Receipts From Customers
Many options exist for automating receiving payments from customers. Among them include using QuickBooks Payments services to allow customers to pay invoices via credit or debit card, Apple Pay, or ACH. Upon signing up for the service, you can then email invoices to customers or clients and, when doing so, enable the invoice for electronic payment. Upon receiving your invoice, your customers and clients can click a link to pay the invoice electronically, enter their credit/debit card number or bank account information, and QuickBooks Payments processes their payment into your bank account.
Further, the service posts the receipt of the funds into your books, alleviating you from doing so manually. There are no monthly fees for using this service, although each payment is subject to a transaction charge ranging from 1% to 3.4%, plus $0.25. Nonetheless, for many companies opting for this service reducing fraud risk and improving cash flow is well worth the small expense.
Automating Vendor Payment With Technologies Such As Corpay One
To illustrate the many options available for payment technologies today, consider the options provided by Corpay One. Corpay One offers automation for paying vendor bills. Using Corpay One’s platform, you can automate each of the following actions, reducing risks and improving efficiency along the way.
- Entering the data associated with accounts payable bills. Corpay One scans each accounts payable transaction and extracts all necessary data from the scanned image. This process helps to reduce the risk of incorrectly entering transactional data while simultaneously reducing labor costs.
Approval processes. You can create customized approval processes for each of your accounts payable transactions. This action, of course, reduces the risk of paying for unauthorized purchases. Further, customized and automated workflows automatically route transactions to the appropriate team members for disposition.
Generating payments to vendors. Corpay One allows you to pay vendors via check, ACH, virtual card, or international wire. Importantly, you can make an unlimited number of payments via ACH or check without incurring any transactional fees. Further, there is no monthly subscription charge either. These factors mean that most businesses can take advantage of Corpay One’s feature with no out-of-pocket cost.
Integrating transactions with accounting applications. Corpay One integrates with many popular accounting applications, including QuickBooks Desktop, QuickBooks Online, Xero, Sage Intacct, and FreshBooks. Additionally, you can incorporate Corpay One with many other applications – including Excel – through Zapier. Of course, the advantage of these integrations is to eliminate manual data entry into your accounting application.
Summary
Payment processing – both inbound and outbound – is the core of every company’s cash-flow cycle. Yet, many companies fail to recognize the risks of using legacy workflows and technologies to process customer receipts and vendor payments. Unfortunately, these failures lead to increased fraud and reduced availability of funds, among other consequences. Today, you have tremendous opportunities to replace yesterday’s workflows and technologies with modern tools that can help your business run more efficiently and profitably. These technologies are available for both receiving customer payments and paying vendor bills. Further, the investment required to implement these technologies is minimal – and even zero in some cases – leading to outstanding returns on investment! Therefore, consider how you can take advantage of today’s payment technologies to improve cash flow and reduce risk in your organization.
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