Things To Consider Before Replacing Cheques With Electronic Payments

asp-electronic-payments

A three part series on “going electronic” with your business payments.

Switching from cheques to electronic payments for most businesses is definitely the way to go. In order for accounting professional to help prospects and clients find the right payment solution, it is important to understand how other electronic payments work in comparison to Telpay.

Over the next three articles, I will reveal many key points of going electronic that I encourage you to share in your sales presentations. In my last article, I will compile everything together to create a checklist, that you can reference to help transition your clients to electronic payments.

Before I begin, let’s clarify: What does it mean to go electronic? I am referring to the solutions that are designed to replace regular cheque or credit card business payments.

Most often, people think of the following payment options:

– Online banking
– Bank electronic funds transfer (EFT)
– Third party electronic payment solutions: Telpay, PayPal, etc.

To keep it simple, I am going to keep the conversation between Telpay and bank solutions. There are other options (i.e PayPal) but most do not work without costly credit cards. Many businesses are encouraging their customers to pay by EFT, to save on the rising costs of credit cards, which is why Telpay is becoming important in the Canadian payments landscape.

So here we go! Below are just a few things to consider prior to “going electronic”:

Collecting supplier’s bank account information. With bank EFT systems, you must contact your suppliers and request their bank account information. I’ve talked with customers that didn’t mind contacting suppliers to collect bank account information (most often these customers worked within large organizations that have the resources to handle the added work load). However, for most small-to-medium size businesses gathering bank account information is a hassle. Why? For one, most businesses are regularly adding new suppliers, so collecting bank account information is a never ending cycle. Furthermore, suppliers often do not respond to repeated requests (I’ll speak more about ‘why suppliers do not respond’ in a later article). Many businesses either give up or wind up with a dual payment process of cheques and electronic payments.

Did you know? Telpay collects the supplier bank account information so you don’t have to.

Managing supplier’s bank account information. Several years ago I spoke with a customer who informed me that they wanted to use Telpay because they didn’t want the responsibility of storing and managing their supplier’s bank account information. There are several problems with managing supplier’s bank account information. First, it requires that it be safely and securely stored so rouge employees are not able to change the receiving bank account to their own. Second, you must ensure that the supplier’s bank account is current (suppliers don’t always tell you when they make a change in their business). Outdated or incorrectly entered bank accounts result in returned payments that can be frustrating to reconcile (see rejected/returned payments).

Telpay’s payment system is secure and trusted. Telpay contacts your suppliers and not only stores and manages your their bank account information, but also builds a relationship with your them.  This is to ensure payments are always sent to the correct bank account and payment information is delivered in exactly the format that they prefer, such as email, fax, efile along with invoices number and customer account numbers, if required.

Rejected/returned payments. I recall an accountant telling me that she will never go back to sending bank EFTs because whenever an EFT payment failed (for example a supplier changed bank account and did not inform them), the bank would credit their account but would not or could not tell them what the credit was for. Since her company was sending a relatively high number of payments each week, they would regularly receive mystery deposits appear into the company bank account.

How Telpay handles  rejected/returned payments. Where possible, Telpay will contact the supplier to resolve the issue directly. If the funds are returned to the customer, Telpay will send an email notification with details of the deposits (supplier name, invoice numbers, etc).

Next issue: What’s the trouble with online banking? Why you can’t pay utilities and telephone communication companies with bank EFT solutions.