5 Steps to Accelerate ACH Adoption FINAL

21 Pages·2014·3.39 MB·English

5 Steps to Accelerate ACH Adoption
A Guide to Maximizing Automation & Financial Return in AP
Kristin Alexander
Paymode-X team at Bottomline Technologies, Inc.
Agenda
• The Opportunity to Automate
• Checks – Benefits and Disadvantages
• Reasons to Automate
• Barriers to ACH Adoption
• How a Payment Network Works
• Case Study
• 5 Steps to Accelerate ACH Adoption
• Questions?
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The Opportunity – $30 Trillion in B2B Payments
Primary Method for Making Payments
60% Do Not Know
• More than of Other 8%
3%
businesses pay by check Mainly Card
3%
All or Mainly
Mainly ACH Check
• More than 65% receive 26% 60%
payments by check
88%
• of Vendors As a document via email, fax or paper with remittance detial
88%
that needs to be re-keyed
receive their remittance
Through a portal or network 34%
as paper, email or fax,
which require re-keying In a electronic file that is reconciled automatically (no
32%
manual intervention needed)
Some other method 12%
Source: 2012 Federal Reserve Study, Electronic Payments & Remittance Data: Pain Points & Solution
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Reasons to Keep Printing Checks
10. The printer and check handling equipment noise helps me sleep.
9. I love the smell of MICR toner in the morning.
8. I believe if I touch it, it must be correct and fraud free.
7. I have to fill my extra time with something.
6. My receptionist is addicted to stuffing envelopes.
5. I’m a gambler at heart and live for the thrill of check fraud.
4. I have a crush on my forms sales rep.
3. I consider it a personal challenge to get rid of excess profit.
2. I’ve been doing it this way since Moby Dick was a guppy.
1. I can’t sleep at night knowing I didn’t do my part to keep
the USPS in business.
Courtesy of a LinkedIn post from Jim Hutto, Santee Solutions
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What is the impact of a paper process?
No wonder more than 70% of organizations are
struggling to convert to electronic payments!
2013 AFP Electronic Payments Survey Report of Survey Results, November 2013
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The Reality of Checks
Benefits
• Checks require no Vendor involvement
• Remittance data travels with the payment
Disadvantages
Costs to Payer: Costs to Vendor:
• $3.02 Average Processing Cost • Bank Lock Box Fees
• Fraud Protection • Unreliable Cash Forecasting
• Manual Payment Reconciliation • Mail Float Delays
• Escheatment Tracking • Manual Cash Application
• Payment Status Inquiries
• Issuing Duplicate Payments
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Top Six Reasons to Automate
59%
44%
35%
28%
26%
7%
High Late Missed Duplicate Lack of Loss from
processing payments discounts payments payment fraud
costs visibility
Source: PayStreamAdvisors, Electronic Supplier Payments, 2012
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Why does Corporate America Prefer ACH Transactions?
Less costly
Ease of integration with AP
systems
Better data security ACH
P-Card
Supplier acceptance
Wire
Better working capital
management
Better/complete remittance
information
Better fraud protection ability
Convenience, ease of use
Duplicate payment avoidance
Source:
International payments PayStream
Advisors,
Electronic
0% 20% 40% 60% 80%
Supplier
Payments, 2012
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So, What’s Stopping Them from ACH Adoption?
74% 71% 70% 66%
Difficulty convincing Shortage of IT Lack of standard Lack of integration
suppliers to accept resources for format for remittance between e-payment &
electronic payments implementation information accounting system
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What is a payment network?
“Business commerce payments portals, also called “exchanges” or
“trading partner networks,” ease connections between buyers and sellers.”
Source: AFP® PAYMENTS DECISION GUIDE TO Business Commerce Portals
“A Networked economy is a collection of buyers and
suppliers who share common connections.”
Source: Aberdeen, AP Invoice Management in a Networked Economy.
“Value-added services such as onboarding Vendors and maintaining them
in the Vendor masterfile helps us overcome a lack of internal resources.
Further, the provision of information exchange among buyers and Vendors
improves the payments and invoice reconciliation process.” Fay Deevy,
assistant vice-president, cash management & liquidity at Sun Life
Financial.
Source: AFP® PAYMENTS DECISION GUIDE TO Business Commerce Portals
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