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Guide

Automated Payments Can Improve Your Company's Bottom Line

"Time is Money!" Read about how to improve your businesses productivity by migrating to an automated payments system on the Fresh Insights blog.

"Time is Money" is more than just a cliché when it comes to migrating to an automated payments system, significantly improving a business' capital management productivity.

Yet some companies continue to confront time, cost and efficiency challenges by operating with laborious and cost intensive manual and paper-based processing.

Why? Paper may be to blame, at least in part. The majority of companies - to the tune of 74 percent - receive their invoices in manual format, including paper, PDF, email or fax, according to the ePayables 2013 survey released in May.

While most businesses still use paper checks to process invoices, the use of electronic payments is inching upwards, with 53 percent of payments being made electronically, the survey reported. These include wire transfers, Automated Clearing House (ACH) and commercial card payment transactions.

 

 

 

Automated Payment Benefits

  • Reduced Costs: Cost savings is chief among the benefits offered through automation. The processing of paper checks is time consuming, costly and prone to error. There also are incremental costs, such as printing and mailing, as well reprocessing costs associated with incorrect or outdated account information.
  • Increased Efficiencies: The number of payments that can be processed using automated technology is significantly higher than what can be accomplished by a full-time employee. Additionally, process cycle times are considerably compressed. The shift from tactical responsibilities to higher-level strategic objectives presents opportunities for A/P to add significant value to treasury, providing greater visibility into payables and access to up-to-date and accurate information on a company's liabilities.
  • Fraud Reduction: Checks are the payment form most vulnerable to fraud, impacting 87 percent of companies that participated in the Association for Financial Professionals 2013 Payments, Fraud and Control Survey. With sophisticated security and control features, fraudulent activity becomes much more difficult to conduct. For example, with ACH Positive Pay, a service offered by banks with dedicated treasury management shops, a company sets limits on which ACH debits are automatically authorized for payment, and gets notified each morning of any debits presented to the bank that do not fit that criteria.
  • Improved Accuracy: Error rates can be reduced through immediate validation systems. The manual keying of invoice data is subject to error, raising concerns about the quality and integrity of the data. Optical Character Recognition (OCR) technologies electronically capture invoice details including a customer's account number and payment amount.
  • Greater Visibility and Control: Automating the payment process enhances a company's visibility to cash and, in turn, improves its cash forecasting. A lack of visibility incurs higher per-transaction costs and longer process cycle times, and can result in missed opportunities such as unclaimed early payment discounts.
  • Gaining supplier acceptance is perhaps the greatest hurdle a company faces in migrating to automated payments. Yet this should not be a deterrent. The transition not only allows a company to better and more strategically manage its cash flow, it also translates into improved supplier relationships, enhanced corporate citizenry and beneficial bottom-line results.
 
Consider a collaborative approach between a company and an innovative bank, one with treasury management solutions that seamlessly integrate with your company's internal accounting systems, as crucial to your financial supply chain strategy.
 
 
 Explore how our Treasury Management solutions can create efficiencies for your business.

 

 

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

 

 



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