Originally published in Financial Operations magazine, Spring 2015 issue.
These days, when it comes to accounts receivable, change is the only constant. In 2013, 50 percent of B2B remittances were made by check—a 75 percent decrease from 2004. With automated AR, mobile purchasing, and web transactions all on the rise, the payments industry is seeing lots of change, and it’s not going to stop any time soon.
Customers love the convenience of paying bills online, banking with their mobile devices, and being able to quickly and accurately track their payment records. Companies have responded by offering multiple payment methods and channels, building and investing in separate platforms to make sure they meet their customers’ needs. The problem, of course, is that the resulting solutions are siloed, requiring increased training, oversight and manual reconciliations that cost time and money and are prone to error.
It’s a big problem. According to a 2014 study by ACI Worldwide and Wiese Research Associates, more than half of U.S. businesses use siloed electronic bill presentment and payment (EBPP) solutions—costing them $1 billion each year. So how can you stop spending money on manual work and start giving your business a competitive edge? By consolidating your platforms and processing payments in the cloud.
Simplify Your Systems
When you automate processes, you can shift resources from manual oversight and reconciliation to data analysis—leaving humans to do the work we’re best at: interpreting data; identifying challenges and inefficiencies; and building strategies that deliver solutions. Let the computers do the highly repetitive, manual stuff. That’s where the value of automation can be easily implemented.
Straight through processing (payment acceptance, processing and posting in a single pass) helps you create consistency and efficiency in process rules and workflows, regardless of what payment method was used—once you’re on one system, it shouldn’t matter whether the payment was in cash, check, ACH, credit card, or mobile payment. You’ve got one “go-to” platform and repository for streamlined oversight and management of all payments across your entire business. Being on one integrated receivables platform also delivers enhanced reporting and reconciliation since all payments are running through a unified interface.
Consolidating all your payment methods and channels onto one platform saves you costs by eliminating manual work, but it also does something much more valuable. By combining all those data streams into one system, you can incorporate data analysis into your environment, turning a cost center into a strategy engine that can give you real-time visibility into your receivables stream. By analyzing your remittances, you can find ways to improve your processes, make your company more profitable, and understand the factors that led to success—or not—for any given time period. Knowledge is power, after all. Better yet: the data is free. You’ve had it all along—you just haven’t had the ability to sift through it for the good stuff.
Streamlining your platforms also helps you gain in flexibility—particularly if your business operates overseas, or has unpredictable surges in cash flow. For example, one FTNI customer once had over 25 different banking relationships, each with different processes for check scanning and reconciliation. At the end of each month, they had to manually reconcile it all. It was a headache until they moved to straight through processing on one integrated receivables platform. As a result, they’ve been able to significantly consolidate those banking relationships down to less than six—reducing complexity and ultimately processing and posting payments faster. The customer can see what’s being processed and posted across their entire business in real time, and they can manage their system centrally.
Secure Your Data with the Cloud (Yes, the Cloud)
With cloud computing, straight through processing is now an affordable and effective reality—but concerns about security and complexity may be stopping you from adopting the very technologies that can help you take your security to the next level.
The fact is, moving to the cloud is not the threat you might imagine it to be. In fact, it may actually increase the security of your data, by putting it in the hands of security experts. Cloud providers hire security experts who are up to date on industry certifications like PCI and HIPAA compliance. They have to be: security is not a part-time job for them. What’s more, they don’t have just one or two security experts on staff, they build dedicated security teams. And they can help you move to a truly secure payment model without spending tens (or even hundreds) of thousands of dollars. You can make the move on your own timeline, giving your customers time to adopt the new platform as they like. And because cloud computing utilizes flexible pay-as-you-go pricing, you can make changes as the market demands (and your business grows) without large upfront costs and the delays of purchasing, implementing and maintaining hardware.
Partner with a Pro
When you’re looking for a payments partner who can help you transition your receivables processing to the cloud, look for expertise in the payments industry first. By establishing expertise in payments, your new partner will be intimately aware of all the applicable compliance requirements. You don’t want a vendor who’s going to use your company to cut their teeth on PCI compliance. You want someone with the ability to do large-scale processing who has all the certifications for your market and has best practice security measures in place to further protect your critical data. And, if you think you might expand, make sure you’re working with a company who can handle your growing needs. You want a partner who has the capacity to keep up with your growth and the insight to help you navigate the ever-changing payments landscape.
Look for a vendor who partners with a reputable cloud hosting provider, as well. You’re not just looking for a payments provider; you’re making sure that whoever they’re running on has security built in as opposed to bolted on. Look for someone who takes security as seriously as you do. For example, at FTNI, everything we do is subjected to the same security standards as our credit-card processing (PCI)—in other words, it meets the toughest standards in the industry. Another vendor might have a different level of security when it comes to personally identifiable data (PII). There’s no such thing as your data being too secure. With all the advances in security, there’s a lot to consider when you’re faced with deciding what measures will best suit your business. Partnering with proven providers who can bring expertise in both payments and cloud security can help you understand how your business benefits from the latest security protocols, such as end-to-end encryption, multi-factor authentication, and multi-layered security at the hosting level.
For example, end-to-end encryption (E2EE) is one of the most talked about proactive security measures right now. At its core, E2EE ensures that all payment data remains encrypted not only when in transit (i.e., from initial entry into your payment system interface all the way through processing and posting), but also while payment data is at rest (i.e., after payments have posted and are stored via archiving requirements). Be sure to find a partner who will help ensure that you’re leveraging this and other best practices to ensure the highest security standards are in place to protect your payments data.
Move at Your Own Pace
Cloud-based payment processing easily adapts to your schedule and unique business needs. Because you don’t have to buy and configure hardware, you can start with the highest-leverage projects to address immediate business needs and easily add additional functionality in the future.
If you’re still leery of moving all your payment processing to the cloud, you can space out your deployments as business needs arise. Start where your current pain is. Are you looking to accept online payments? Are mobile payments your next frontier? You don’t have to eat the proverbial elephant in one bite. By moving to a single, cloud-based receivables processing platform, you can address your current needs while also building the foundation for the strategic consolidation of your legacy systems and processes. You can develop new business process as the need for them grows, mapping them to the next stage of development as you—and your customers—are ready.
The Bottom Line: The Cloud’s the Thing
There’s never been a better time to start taking advantage of the new technologies that are driving B2B payments processing. We’ve moved from paper-based invoices and manual reconciliation to electronic invoices, credit cards, ACH payments, and now, online and mobile payments. With all these new ways to pay, it’s easy to get mired in platform chaos—but doing so comes with increased costs and opportunity loss. Find a partner to help with the technology and get your business onto one platform. Do that, and you’ll lower your costs and strengthen your decision-making process with sweet, free data.