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Team members review accounts payable and accounts receivable for business.

Thinking more strategically about accounts payable and accounts receivable departments.

Your company likely has a detailed growth strategy that covers everything from marketing and sales to product development and strategic partnerships.

But do you have a payments strategy?

You might approach Accounts Payable (AP) and Accounts Receivable (AR) as a necessary part of doing business, with little innovation or strategy required. Perhaps you receive a bill, wait 30 days, then mail a check. Or maybe you send out an invoice and hope to get paid as soon as possible. If so, then it might be time for a change. By applying strategic thinking to your accounting processes, you could secure several economic benefits for your business.

What is a payments strategy?

An effective payments strategy involves much more than a decision to wait until the due date to pay bills. Rather, it considers all the factors that can affect when and how payments are made.

If expense reduction is part of your corporate approach, you may want a strategy that takes advantage of early payments discounts or one that replaces costly check payments with electronic options.

If cash flow is a concern, you may want a strategy and financial partner that can help strengthen it. A strategy that places a high priority on revenue share opportunities may lead you to seek vendors who accept virtual card payments.

Risk management when making and receiving payments should also play a major part in your overall corporate strategy. With fraudsters becoming more aggressive and scams becoming more elaborate, having a payments strategy focused on protecting your bottom line should remain top of mind.

Your employees’ time is also extremely valuable. Their days shouldn’t be spent on manual lockbox processes, handling invoice questions from your suppliers, or printing and stuffing checks into envelopes. If a portion of their manual work could be automated or outsourced, their time could be applied to more valuable projects at your company.

So what can your business do to get started?

Evaluating your current payments technology.

An effective payments strategy will likely require you to update some processes and expand the number of ways you make or receive payments.

The technology solutions and systems chosen will be key. There are tools that can help you identify discount opportunities, track payments, automatically create deductions, link payments and remittance automatically, and other protocols to streamline your processes. Your strategy should also include personnel management and training so that your staff understands your strategy focus and what they must do to support it.

As mentioned before, every business should be evaluating solutions to minimize risk in how they make and send payments. Most banks offer automated fraud detection through Positive Pay — a service that reviews each check for the correct account and check number based on a business’s previously issued checks. And when it comes to eCommerce, fraud filters might be in place to limit unauthorized transactions, such as a filter that verifies a credit card’s CVV number against the one entered during the checkout process. With fraudsters getting more creative each day, finding the right solution which incorporates these risk management tools should be essential to your payments strategy.

By integrating newer digital payments solutions, you can eliminate many manual tasks, reduce expenses, streamline processes, and minimize your exposure to fraudsters. With the right tools in place, you might find that many of the most time-consuming activities, such as signing up vendors for your new systems or capturing remittance from email attachments, will be done for you.

The power of automation.

When it comes to payments automation, there are a wide range of tools available — from simple to complex — that can help streamline your payables and receivables processes.

But where do you begin?

It all depends on what you want to accomplish. From staff cost and time reductions, to mitigating payments risk and fraud, to full automation of your manual tasks, solutions exist to maximize the efficiency of your processes.

Let’s look at two departments within your business that can benefit the most through automating manual tasks: AP and AR.

Perfecting your payables.

Transitioning from a manual to automated AP system can play a vital role in turning this area of your organization into a profit center. But the most time-consuming part of AP isn’t making the payments. AP employees spend most of their time opening mail, checking invoices, entering them into an accounting system, and tracking down approvals. Then after the payment is made, they must reconcile, file, and store each one.

Imagine if your AP staff could focus less on manual, hours-long processes and instead on high-priority projects. Why not introduce automation where it can make the most impact — your bottom line?

For businesses that want to take full advantage of technology, consider invoice automation, which includes everything from invoice reception to electronic storage. This level of automation has a big impact on your business, even outside your AP department. Employee work hours on manual payment processes, physical storage costs, and time spent auditing are all significantly reduced. And when one of your employees is out of the office, things remain “business as usual” in the department.

Alongside creating employee efficiencies, automated solutions can help in finding a way to make check, ACH, wire, or revenue-generating virtual card payments easier by having a central location to view and manage expenditures while outsourcing manual tasks and minimizing fraud exposure.

At their core, centralized payments solutions, such as Payment Hub, provide a single output file to simplify payments. From this single payments file, suppliers can be securely paid in their preferred method: virtual credit card, ACH, check or wire. Additionally, Payment Hub maintains supplier information and creates a reconciliation file for your organization.

By outsourcing time-consuming supplier payments, your employees can focus on building a strategic, revenue generating AP department while reducing payments fraud at your organization.

Refining your receivables.

We’ve shared how automation can help your business with some challenges in making payments. But how can incoming payments from vendors, customers, and business partners be streamlined?

Like your AP department, your AR processes can become cluttered with manual tasks that can be either automated or outsourced to help make the most of your employees’ work time. In today’s age of connectivity, customers have also grown to expect mobility and flexibility in how they pay their bills. This is why it’s imperative to adopt a payments strategy that provides secure options to your customers without adding complicated processes on top of your AR team’s current workload. The idea of physically mailing remittance is out of the question for larger companies that send thousands of payments per month. And receiving payments through the mail is impractical for billers with customers who make recurring payments. Furthermore, payments need to be PCI, NACHA, and HIPAA compliant based on the nature of the transaction, creating regulatory burdens for your business.

To help meet the evolving demands of the public, online self-service applications like CollectPay Online® (CPO) can help you better engage customers by delivering a consistent and seamless bill payment experience. Through CPO, incoming payments are made through an online portal modeled after your business’s look and feel, in-person, or over the phone using an interactive voice response system or live customer service agent. Compliant payments files are automatically generated for you to capture payments details and update receivable records. Additionally, a robust reporting module is included to help your corporate receivables team electronically stay up-to-date with outstanding payments.

But what if your business wants to create even more efficiencies through automation?

While traditional lockbox models can handle complex business-to-business check payments, an increase of incoming electronic payments creates more work to manually match payments before a completed payment can be posted. Cash application solutions like Integrated Receivables automatically enable end-to-end service automation by electronically capturing remittance extracted directly from email attachments, paper invoices, your business’s customer payments web portal, and other electronic files. Payments and remittances are automatically linked, exceptions and deduction coding are presented, and a single payments file is transmitted to you for posting. Moreover, Integrated Receivables’ unique artificial intelligence engine learns payer behavior to reduce future exception.

Building your strategy.

Businesses have been leveraging new technology to increase productivity since the industrial revolution. Home to many of the most time-consuming jobs, AP and AR departments are often long overdue for a more modern approach. By using technology to automate low-level tasks, employees are finding more time for meaningful strategy, giving organizations lower overhead and more revenue opportunities.

CommercePayments® solutions are provided by Commerce Bank.

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