30 October, 2018
Disbursements are a large part of doing business in any industry: vendor payments and payroll, customer refunds and other expenditures, all involving payments from companies. Depending on the type of payment, disbursements may be made through paper check, ACH, or other electronic payment methods.
Unfortunately, many of these payments are made through legacy processes that rely on manual tasks, expensive and time-consuming paper checks, and complicated compliance processes - all of which eat up corporate resources.
The Benefits of Using Disbursement Services
A disbursement services partner can help simplify and improve enterprise disbursements, streamlining processes and improving cash flow while reducing costs to directly affect the bottom line.
Disbursement services deal with sending out, or “disbursing” funds. They’re often provided by third-party processors through professional services or a technology platform that simplifies payments.
Disbursement services can save your company money by:
1. Providing Inexpensive Payment Options
Having a variety of payment methods, and understanding the costs associated with each option, is a vital component of cost control. Goldman Sachs released a report entitled, “The Future of Finance: Redefining the Way We Pay,” in which they noted that 50 percent of payments by all U.S. businesses are still made by paper check, even though that has proven to be the most costly option.¹
Another survey found that the median cost for sending a paper check was $3.00, and receiving a paper check is $1.57; while the average cost of sending an ACH transfer was $0.29.²
Knowing the actual cost to the company of each option and selecting a lower-cost payment method, results in direct cost savings for businesses. Lower-cost options may include:
- Instant Payments
- Virtual Cards
- Virtual Accounts
If your business is still relying on paper checks, funds disbursement services could give you the payment selection you need to reduce expenses.
2. Streamlining Processes and Improving Efficiency
Disbursement services also help automate payment processes, so repetitive manual tasks can be completed without direct employee intervention. This increases efficiency and employee productivity, while reducing the potential for delays and errors.
Process streamlining may also include the ability to collect digital signatures to authorize high-value payments, eliminating the need and delay of obtaining a physical signature. Some disbursement platforms combine digital signature functionality with the ability to attach documents or forms and receive notifications when payments move forward.
Disbursement services include this type of functionality specifically to make payments more efficient. If your staff is consistently bogged down with payment processes, there’s a good chance you could improve costs by making more of their time with disbursement services.
3. Fraud Monitoring
The 2017 Payments Fraud and Control Survey found that 75 percent of organizations were subject to check fraud and payments fraud overall is on the rise.³ A disbursement services partner can help to protect your company from payments fraud with real-time monitoring tools that will quickly alert you to any problems.
By helping you identify possible fraud, disbursement services reduce the costs associated with payment problems, leading to potentially significant savings.
Compare Payment Costs with Potential Savings
Disbursement services can greatly reduce costs-per-payment and improve financial processes to save your company money. To determine just how likely it is that disbursement services could help your business, consider how much you’re spending on disbursements now. Include both direct expenses (payment costs) and indirect expenses (employee time and effort) to create your benchmark.
Then, review how disbursement services would affect those costs. If you’re consistently dealing with fraud, disbursement services may help provide you with a proactive monitoring system that lowers expenses. Or, if you’re using high-cost disbursement methods, you may be able to transition to a more cost-effective option.
If you can fit disbursement services into any of your high-cost areas, chances are the investment could save you money in the long run.