Have & Have-Not Companies relative to Outbound Payment Processing
There are three primary schools of thought regarding all forms of disbursements in organizations from anyone responsible for any form of disbursement for any given company:
I know we can do this process better
Change is hard
I don’t have the wherewithal to take on a project to make the process better
There are also three primary drivers for making any changes to the existing process:
We have to make this process more efficient
We have to do it cheaper
Quick! We have to react to a regulation, security issue and/or a competitive threat
"All Hands On Deck!"
Unfortunately there are far more Have-Not companies because they are either inherently resistant to change and innovation, don’t understand the significant benefit of even small improvements to their process or have not been caught in an “all hands on deck” situation because of a regulation change, security issue or competitive threat...yet.
The Haves clearly will have unique experiences, but all share some very common traits. The most important is they have a better foundation and flexibility for not only the current day-to-day but for the future. The Haves are no longer burdened with the high cost of issuing a paper check. Fully loaded cost of issuing a paper check is still in the $15-$25 range for companies that have not improved their process.
"Routing paper approvals? Where's my efficiency!"
The Have-Nots are still physically routing paper for approvals and wet signatures. They are still sending individual payments to the same vendor instead of bulking them into a single payment with the correlating, individual remittance. They have not migrated to electronic payments where they can get the cost of issuing the payment down to pennies. They are not sending vendors electronic remittance that can be imported as files so it is immediately accessible without manually keying in the data. Vendors, like car rental and windshield replacement companies often offer discounts to carriers for providing them data this way.
The Haves are using Positive Pay and Payee Positive Pay to reduce risk. They are using Single Use Accounts (SUA) to issue payments electronically, like a card payment but without the physical card, to vendors like Towing Services, Auto Body shops and Physician offices.
The Have-Nots are still worried about collecting and storing bank account information. The Haves have already seen the benefit of electronic payments to recurring payees and are moving fast to adopt ways to issue payments to the one-off payees. Options like sending payments via cell phone and email, without the need for the carrier to collect and store the bank account info is available now.
"The Disbursement Hub"
The Haves will explain that a key component to being more efficient and reducing the cost to their outbound payment processing is the concept of a disbursement hub. No longer do they need to have each of their back-end originating systems be up-to-date with the current methods of payment or ancillary processing.
Instead the Haves know what the Have-Nots do not. By sending the payment request to their Disbursement Hub, the Haves have better control, better security, better options for issuing their outbound payments. By having these options, tremendous opportunities are available to reduce the costs of issuing the payment and increase the speed of the transaction, increasing positive net promoter/customer satisfaction scores and maintaining strong vendor relationships. Additionally, the Disbursement Hub provides the flexibility to react quickly to adopt new payment methods or handle an “all hands-on-deck” event with greater ease.