Part 3 of the Series: Going Electronic with Business Payments.
Throughout our ‘Going Electronic with Business Payments Series’, I have been highlighting potential hurdles or aspects of electronic payments functionality that you will want to consider before switching from cheques to an electronic payment solution.
To round out the discussion, I want to share with our readership a few more things to consider before you make the move to electronic:
Payments to large suppliers, Telco’s, utilities, credit cards: With bank electronic funds transfer (EFT) solutions, you will not be able to pay any of the large regular monthly billers. There is a simple reason for this: none of them will give you their bank account information. If they did (and in the past some have tried, only to quickly reverse course), they would have hundreds or thousands of businesses making deposits into their bank account each day. Can you imagine receiving hundreds of emails each day and try reconciling those payments?
Note: Telpay’s system allows businesses to pay large utilities because we already have their bank account information.
Government remittances: Similar to paying utilities, governments would be very reluctant to allow businesses to pay directly to their bank account since payments require the requisite form to accompany the payment.
Note: Telpay’s system allows businesses to pay government remittances – all forms are built into the system and are sent along with the payment.
Single / dual signing authority: If your business requires two signatures on a cheque, what will be the process for managing EFT payments? Many businesses have said that with their bank EFT process, they were not able to satisfactorily mirror their dual signature control.
Note: Telpay has a built-in feature that allows the user to setup a one or two electronic signature requirement (just like their cheques).
Remote payment approval: Many business owners today want the ability to review a payment batch remotely, while away from the office. Will your bank EFT solution give you that functionality? Is that important to your business? Hundreds of clients use Telpay’s remote email approval system, and it is by far the most popular feature of our system. Imagine never having to drive to a client’s office for signatures? Or being able to leave early on a Friday and approving the payments from home or the cottage?
Consider Your Suppliers: Your suppliers are important, will they accept bank EFT? The payment system you choose should be one that makes sense for your suppliers.
Payment notification: Many suppliers don’t respond to requests to send funds directly into their bank account. As mentioned, one of the main reasons is that regular bank EFT payments can be hard to reconcile. When a business receives a payment in their bank account and does not receive payment advice it can be difficult to know which client sent the payment.
Note: Telpay eliminates that problem because our systems automatically send the payment advice via email, fax, or electronic file. With a Telpay payment, if your supplier is missing a payment advice email, they can request to have it re-sent or login online to view a list of payments.
Consolidated payments to suppliers. Many CFOs, controllers, and accountants over the years have said that “while they like getting paid electronically they are weary of giving out bank account information for fear of getting too many single deposits into their bank.” Refer back to the first point about large utilities, the same reasoning holds true for lower volume businesses as well.
Note: Those same accounting leaders disclosed that they preferred EFT payments from Telpay because Telpay consolidates their payments into a single deposit into their bank account each day. This is considerably more preferable than multiple single deposits.
There you have it. All of the pitfalls and issues one should consider before switching from cheques to electronic payments have been documented here.
It is pretty much universally agreed that in a few short years, cheques will be phased out almost entirely. Overall, it’s probably a good thing to phase out cheques (how many personal cheques are you still writing?). Electronic payments will save your business significant dollars over cheque processing. However, make sure you know what is involved and what to expect before making the switch.
That’s why it’s always good to speak with a Telpay representative about your unique situation. In our next issue, watch for our ‘Going Electronic’ checklist. It will help you as you begin to think about your electronic payment strategy.