Why It Pays to Assess Your Payments Process

Whether you’re a small business owner, treasurer, or banker tasked with supporting your clients’ financial needs, chances are good that you’ve been thinking about the payments process. You’re probably asking yourself, “Are there ways to reduce costs, save time, or improve quality and access to information?” The simple answer to all of these is “Yes”.

I recently sat with the owner of a long-standing, successful business who had questions about ways to simplify the reconciliation process. While trying to juggle separate reports that showed check deposits and ACH transfers, sometimes with remittance information and sometimes without, the company struggled with cost and timely information. I asked if they had ever considered a Lockbox and the quick response was that they didn’t have a problem getting checks to the bank. It was the perfect opportunity for me to begin a conversation about all the ancillary benefits of integrated receivables; in this case, we focused on Lockbox with data entry.

The goals were laid out in front of me: reduce cost, save time, and improve quality and access to information.

No, a Lockbox is not free, but calculating all of the benefits it can provide and then comparing what those same activities cost today in wages and materials often illustrates that a Lockbox is significantly less expensive than the current process. 

Unquestionably, outsourcing your receivables to a company that provides this service for hundreds or thousands of other businesses will save you a significant amount of time. You can then reallocate the employee hours that were dedicated to this task to other valuable activities (e.g. generating additional revenue.) Also, you can often choose a cutoff time where the daily information you need is guaranteed to be available at the precise time you need access to it.

Improved quality of and access to information—this is the area where a change in your payments process truly has the potential to shine. If you’re working with the right cash management team, they can walk you through an array of options to best customize a solution to improve the quality and speed with which you receive information. Many financial service providers can image your items, key data into a compatible file format, and transmit the information seamlessly into your A/R or other software programs. Some organizations can even merge files from different payment channels, like merchant services, ACH transfers, and wires, into a single file.

For this client, the vote was unanimous. They needed to start making changes.

Whether your organization is large or small, scheduling the time to review your financial processes with your finance staff, your IT resources, and your financial service providers can have a dramatic impact on the way you do business. It pays to assess your payments process!

With 11 years of experience in commercial banking, Ryan Hayward has managed companies of all sizes with various lending needs, including commercial/middle market, real estate, health care, municipal, and asset based lending. In his current role as Corporate Cash Management Officer at Provident Bank, he conducts consultative discussions with businesses to improve the efficiency of their internal financial processes, saving them time and money. Ryan’s greatest strengths lie in his work ethic, analytical skills, communication, and positive attitude. Outside of the office, Ryan is a dad to three boys, an active member of the Monmouth Worship Center, and a volunteer soccer coach for St. Mary’s in Middletown, NJ.