Many factors play into the current state of payments and how they slow down the ability for a business to scale at the rate required to make it in today's market landscape. Here’s why the payments process is the number one challenge facing finance teams.
In this article you will learn about the common challenges being faced by business owners when it comes to their financial operations:
Numerous Payment Types
To start, there are ; are still prevalent, ACH/EFT payments are making an impressions, credit cards are being used, and wire transfer are gaining popularity. But, what does this mean? It means that not only do finance teams have to stay on top of all payments, they have to manage multiple payment types with different costs, workflows, process and delivery times.
It's not uncommon to see a business where Thursday is a day to print and process checks, Tuesday's are for ACH or credit card payments through their bank, while Monday's become the day for wire transfers with form fill outs and chasing down others for approvals.
Approvals are the next headache in the series of events. Many businesses require two or more approvals on checks and wire transfers based on the amount of money being paid out. Whether this is chasing down management for physical signatures on checks or setting up a time to review wire transfers with approvers and getting them to input their 2FA token numbers into their online corporate bank accounts - its time that adds up to being well wasted. Why not have a system to make approvals remotely and on the go, whenever is convenient for the approver.
Reconciliation of Payments
There's a lot of consolidation of information that goes into proper reconciliation, and with current practices, the information is all over the place and it’s not all happening real-time.
With checks, you’re stuck waiting for them to clear and outstanding checks at month’s end, have to be accounted for.
With wire transfers, ACH and EFT payments you're left trying to consolidate information from your bank account to your accounting system with limited visibility into where the payment is at.
This makes it difficult to properly reconcile all your payments, across systems and multiple payment methods. Plus, a payment is only considered closed when it has been successfully received by your vendor and reconciled in your books. But, with so much manual work, the process is slow, error-prone, and neither you or your vendors have visibility into the process and payment status.
Visibility and Reporting on Payments
Payments are becoming a strategic focus area to help finance executives better understand, predict, and forecast their cash flow. But, currently, without the ability to have proper reporting in place to gain the necessary visibility into your business' finances it becomes incredibly difficult to be more strategically focussed.
Interested in learning more about automated payments for small to medium sized businesses? Check out our previous post: The Current State of B2B Payments & Payment Automation Trends.
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