Payment Technologies

Payment Technologies

The use of a managed service provider for the lifecycle of an expense with payment which is automated and managed.

Payment Automation

Payment automation is not the use of crypto currency or Bitcoin to pay bills. In the context of IT and Telecom expenses it is the use of a managed service provider for the lifecycle of an expense with payment which is automated and managed by the service provider to:

Why Is It Hard to Pay Technology Bills On Time?

Invoice cycles often do not provide sufficient time for enterprises to receive, process, and pay their bills.

A provider may invoice a customer generating an invoice 10 or 15 days after the date on the bill.

In other cases, there may be significant delays applying payments to an account after the payment has been made. These delays are not limited to disbursements by checks. It can even occur with Automated Clearing House (ACH) or other forms of automated payment transfers. The system may only draw information from a virtual lock box once or twice a week.

Clear Signs It Is Time for Payment Automation

Below are some challenges which highlight the need to consider automation.

  1. Late Payment Penalties – Many organizations believe they have negotiated exemptions for late penalties, but often the charges are hidden or reclassified as a “miscellaneous charge” on the invoice?
  2. Over the past 12 months, what was the cost for late payments penalties?
  3. Service Disruptions – How often do you have uncontrolled services disconnects due to incorrect payment amounts applied to the account or late payments?
  4. Over the past 12 months, what was the cost to business for services that were disconnected as a result of late / no payment?
  5. Misapplied Payments – Are payments being applied to the wrong accounts and charges, causing service disruptions and late penalties? (It is not uncommon for providers to deposit checks mailed to the wrong company. Even when the check is made out to a competitor, banks will deposit them.
  6. Frequent Phone Payment – Do you pay invoices over the phone to avoid suspension or late payment?

If any of these problems are occurring, it is time to consider having a managed service provider manage the bill pay process on your behalf. The provider will batch the invoices and send them for approval with a request for the funds which are used to pay the expenses.

Key Questions
  1. How many people handle an invoice from receipt to payment?
  2. Is there a way to monitor each step: who has the invoice, whether it has been approved for payment, paid, and receipt of payment?
  3. Are journal entries manually entered or is there an automatic interface into the Accounts Payable system?
  4. Does your current accounting system offer API integration with your service providers?
  5. Do you have an automated process to track manager sign-off based on the size of the expense with work flow and escalations if the time to pay invoices is close to the due date?

Bill Pay Process

Reporting for AP and Bill Payment– Each week and several times a week for larger firms, the managed service provider will batch the invoices and provide a feed of accounts to be paid. For automatic feed payment, accounts can be paid via ACH, check, credit card or other method. (A check can be sent if desired, but checks may delay payment.)

Daily Reconciliation – All deposits will be reconciled with open invoices.

Payment – Client’s weekly feed is uploaded into the managed service provider’s financial system, and the total is matched to the client’s deposit when the checks are printed.

Double Check – A ‘Positive Pay’ file is provided to Associated Bank daily to ensure that only checks that match the correct check number and amount can be cashed.

Credit Card Payment – In some cases, the solution provider may pay the client’s accounts by credit card.

Automatic Bill Pay Set Up – After it is set up, the managed service provider with oversee payments, and their staff will work to mitigate issues with inaccurate or late payments.

Other Technologies

ETMA members collaborate to offer software and services for managing diverse technologies from expenses to IoT and AI.

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