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The AR Pro’s Guide to Selecting the Right Payment Solution

May 21, 2021

Imagine an accounts receivable environment where digital payments and remittance data seamlessly flow to your enterprise resource planning (ERP) application ✔️ fast ✔️ accurately ✔️ touch-free.

This dream seems out of reach to most accounts receivable professionals.

In fact, half of businesses are less than satisfied with their current electronic payments and receivables processes, the Institute of Finance and Management (IOFM) reports.

Many businesses describe themselves as “dissatisfied” with their current accounts receivable processes.

The problem is especially big for suppliers that receive a single electronic payment for lots of open invoices.

Many accounts receivable departments rely completely on manual processes to apply ACH transactions and other paper and electronic payments received from customers across the globe.

It is no surprise that 84% of businesses have a “high” or “moderate” level of interest in finding solutions to automate the accounts receivables process, per the Business Payments Coalition.

But receivable departments must be careful in picking a payments solution. Deploying another loosely integrated payment system to their receivables infrastructure will only make things worse.


What to Look for in a Payments Solution

Here are five key considerations when evaluating electronic payments solutions:

🟠 Accepts Any Payment Type, from Any Channel

Analysts have predicted for years that most of the payments that businesses receive would arrive electronically and be posted straight-through without human operator intervention. Those predictions have not come to pass. Despite the major inroads that electronic payments have made in the United States over the past year, many businesses still rely on standalone systems for processing each payment type, resulting in:

  • data and payment silos
  • unnecessary cost
  • inefficiencies
  • complexity
  • risk

Look for an electronic payment solution with multi-rail capabilities that make it easy to receive and disburse payments in virtually any format, including Real-Time Payment (RTP), Automated Clearing House (ACH) payments, virtual card, cross-border payment, and more. This means that customers can use their preferred payment method to make payments.

Best-in-class payment solutions can even facilitate payments through a payment network.

🟠 Posts Remittance Data Directly to Any ERP

Most accounts receivable departments must manually enter most of the remittance data that they receive from customers (or pay big bucks to a bank lockbox or other third-party to do it on their behalf). This significantly slows:

  • cash application
  • raises costs
  • increases the possibility of keying errors (that could impact customer service)

Making matters worse, the growth of electronic payments has resulted in more businesses receiving more decoupled ACH and wire transfer remittances transmitted via e-mail, which requires suppliers to manually match them to payments. Leading payment solutions facilitate the posting of rich remittance data directly to a supplier’s ERP application, without the need for keying or the potential for processing delays or mis-keyed information. Remittance data flows electronically with the payment, directly from buyers to suppliers.

🟠 Is Embedded in an ERP

Most accounts receivables departments process payments and post receivables using a mix of manual processes and loosely integrated systems, each with their own logins and passwords, account requirements, and proprietary integrations. The result is:

  • high operational overhead
  • lots of rekeying of data
  • poor visibility
  • increased chance of risk

Leading payment solutions have integrated with dozens ERP applications. And embedding payments within legacy software and ERP applications eliminates receivables friction, while greatly streamlining accounts receivable and accounts payable processes.

With an embedded payment solution, accounts receivable and accounts payable professionals can easily make and receive payments from within familiar software and ERP screens.

With just a few clicks, they also can initiate payment via an established payment network.

🟠 Accelerates Cash Flow

Cash flow matters more in times like these. Prioritize finding a solution with a built-in online business directory that enables customers to see your payment preferences and payment terms. A business directory also makes it easy for customers to begin paying you electronically. And the flow of remittance data with payments speeds cash application and reduces unapplied funds. All this will potentially accelerate your cash flow.

🟠 Supports Global Trade and Commerce

Many businesses have financial shared services facilities across several continents. Global trade and commerce requires businesses to find a payments solution that can manage:

  • numerous banks and currencies
  • multiple ERP applications and divisions (with potentially complex parent/child relationships)
  • various file formats and payment methods

Best-in-class payment solutions can do all this.

Automate Your Accounts Receivable Function

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