You Need More Than Traditional Online Bill Payments: Enter Digital Business Payments
What works well for individuals doesn’t always work well for companies. A handheld mixer is fine for baking a cake at home, but it won’t help much for a company that has to bake and ship 1,000 cupcakes a day.
The same concept is true for traditional business payments online. While individuals may log in to a bank portal to easily make a payment, companies require more.
Simply put—business needs are more complex than consumer needs. Companies require oversight, visibility into activities, audit trails and more to protect their accounts payable processes from errors, misuse or fraud.
Let’s dig deeper into the differences.
For the purposes of this article, we rely on these definitions:
Traditional online bill payments—Traditional online bill payment refers to electronic payment methods that don’t fit the needs of most companies. These options include those created for consumers to pay personal bills via a vendor or bank website. They also consist of bank online bill payment products that have added patchwork functionality to consumer bill payment options or complicated and expensive treasury tools geared for large businesses but marketed to SMBs.
Digital business payments—Digital business payments take the convenience of traditional online bill payments and combine it with features that truly support a company’s accounts payable processes. In addition to allowing companies to pay via ACH, EFT transfer, credit cards and other means, online payment systems for small or midsize businesses offer automation, document management, approval workflows, audit trails and more.
Companies need more than traditional online bill payments for the accounts payable process.
Traditional online bill payments work great for consumers, but AP professionals should be wary of using them for their companies. Here’s why.
More people are involved in AP for business.
Traditional online bill payment methods allow consumers to pay electronically, but don’t provide the framework to solicit review and approval from multiple stakeholders.
Businesses often need multiple people to weigh in. Accountants recommend that businesses follow a separation of duties to prevent fraud. The separation normally deconstructs the accounts payable process into different tasks for each type of collaborator. For example, the person entering the bill shouldn’t also pay the bill.
Varying levels of user access are needed for businesses.
Not only does a typical business require more than one person to review and pay, but each person needs different levels of access. One person may need to review the amount, but shouldn’t have access to the bank account to release payment.
Digital business payment systems enable companies to set permissions-based access so that the appropriate people can contribute to the approval process. This is a feature that traditional online bill payments cannot provide.
Businesses have payment guidelines to enforce.
Generally, consumers have fewer restrictions when they want to make a payment. They may consider their budget or upcoming expenses, but generally there are no written guidelines around what to pay, whom to pay and what amount. Traditional online bill payment systems reflect this structure. You simply put an amount in and press pay.
Companies, however, have precise guidelines around accounts payable that spur mandated workflows. The workflow changes depending on factors such as the vendor, amount, department and who must review it. Digital business payment solutions can accommodate and automate this workflow, ensuring each bill runs through the appropriate process based on each company’s guidelines.
These top three reasons also indicate the importance of AP automation, which can run these processes through a series of email reminders, notifications and other checks.
Businesses need a consolidated platform to hold AP-related documents and payments.
When an individual makes a payment via traditional platforms, they refer to the invoice they get in their mail or email. If they notice an abnormal amount, they may pull past payments or seek more details. This works well for one person or household. But not for a business that pays many bills each month.
To complicate the process, vendors often request that companies pay them via different payment methods. For example, some may want credit card payments while others ask for payments via ACH. As a result, payments are scattered across multiple systems owned by multiple banks or vendors, impairing overall insight into AP.
With a digital business payments solution, a user can pull up the bill from any device and click through to view contracts, payment history and queries around previous bills. It’s all in one place and easy to find. Additionally, a company’s AP activities and documents are consolidated into one system—a feature not provided with traditional online bill payment systems. The consolidation creates an agnostic platform that translates to enormous gains in efficiency and visibility for AP.
AP transparency is imperative for businesses, their auditors and their vendors.
Traditional online bill payments can’t provide the level of transparency needed for today’s companies. As discussed, the traditional online bill payment systems simply allow the release of payments without enforcing or tracking a review process. Businesses need to know where a bill is in the review process, when it is scheduled to be paid, who released payment and how these payments will affect cash flow. When vendors call, companies should be able to access digital business payment systems to answer their questions and estimate date of payment. If a business is undergoing an audit, the auditor needs to reconcile bills with payments, canceled checks and more—again, something that a traditional online bill payment system can’t provide.
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