Set New Records for Payables Speed and Efficiency

Submitted by: Wells Fargo

The cheetah. Track and field star Usain Bolt. The bullet train. All hold amazing records for speed.¹ With the U.S. launch of faster payments, your transactions can achieve new milestones in speed and efficiency, too. In November 2017, it took just three seconds for a Real-time Payment to move funds between two U.S. bank accounts.²

In an era when “now” has become the new normal, all types of faster payments — Same Day ACH, Zelle®, push to card, and Real-time Payments — can help you stay relevant with your customers, suppliers, and employees. However, with all the buzz in the market, moving beyond the hype to actual implementation can seem daunting.

Fortunately, it’s not difficult to accelerate your transactions, improve your efficiency, and strengthen your key relationships. Many “faster” methods are easier to deploy than you may expect, and require little technical integration.

Replace checks and boost satisfaction

Accounts payable disbursements make the perfect starting point. One quarter of these payments still occur by paper check, adding operational costs and hampering customer experience. Consumers, in particular, prefer electronic payments, ranking their satisfaction with receiving checks at an abysmal 4.4 out of 100.³
Numerous customer and supplier disbursement opportunities exist, across industries and audience segments:

  • Merchandise returns at retailers
  • Tax refunds by government entities
  • Claims payments from insurance companies
  • Loan proceeds from lenders
  • Settlements from law firms
  • Rebates and incentives from businesses
  • Supplier invoices for just-in-time inventory

Even employees can benefit. Faster payments can speed reimbursements for out-of-pocket expenditures, facilitate bonus compensation, or pay temporary workers at the end of a shift. In the gig economy, companies that hire contract workers find immediate payments differentiate their brands in the market.

Choose the right methods for your organization

A thoughtful planning process will ensure success. Follow these steps to move forward with confidence.

Build your use cases. Start by prioritizing specific audience segments: key suppliers, retail customers, or contract employees, for example. Then, clearly define which transactions will be eligible for faster payments. Creating guidelines upfront — for dollar amounts, approvals, and other parameters — will ensure organizational support and a smooth implementation.

Pinpoint your need for speed. Even within the category, different levels of “faster” exist. For example, Real-time Payments arrive in seconds, while Same Day ACH transactions settle within 24 hours. Review the options available, then match the right speed to your business needs.

Assess your requirements. Evaluate the information needed to execute the payment, the remittance data you want to transmit, and whether these choices require updates to your accounts payable or ERP system.

Zelle transactions, for example, move with only the recipient’s email address or cell phone number, while push to card routes funds with the payee’s debit card number. Same Day ACH requires a bank account and routing number, but uses the same process as traditional ACH transactions. Remittance formats also vary by payment method. Reach out to your bank for complete details and support with technical resources.

Take an agile approach. Whichever method you choose, consider launching with a pilot project. Starting small helps you get up-and-running fast, demonstrate value quickly, and build support for a full-scale rollout.

Lastly, remember that speed is just one part of the equation; audiences today expect both immediate and effortless. To truly transform your payment experience, you may need to adjust your finance processes as well as payment velocity.

For example, what’s required to onboard a new supplier? Does the process take several days and multiple forms? Does payment type default to checks? As you embrace faster payments, take a holistic look from your audience’s perspective. Even small changes will make a substantial impact.

For more information, contact your treasury management representative.

1. Guinness Book of World Records, www.guinnessworldrecords.com/products/books/superlatives/fastest
2. PYMTS.com, “Real-Time Payments Successfully Gets Through Its First Test Drive,” November 14, 2017
3. PYMTS.com, “Disbursements Satisfaction Index,” Q2 2017

 

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