It’s always interesting to watch the faces of millennials when I explain the old 20th century bill pay routine (which frankly remains unchanged for some of the older boomers), whereby one’s bills arrive via snail mail and once per month the designated spouse would handle the chore. That involved getting out the checkbook and going through the bills one by one, writing a check, placing the vouchers and check in the envelope, putting a stamp on the envelope, and then, at some point, putting the stuff in the mailbox. Those really meticulous bill payers would also log the payments into the paper ledger in order to balance the account.
This was pre-Check 21, so all canceled paper checks would also be returned with the monthly checking account statement. These would be stored in a shoe box for seven years, just in case the IRS wanted you to come in for a cup of coffee and talk things over a few years after filing a tax return.
Then online banking came by with the bill pay functionality, which alleviated the envelope stuffing and stamp licking, but even though one would click on ‘pay’ through the interface, most of the payments continued to be executed by the bank via checks on the back end. Those that were last minute mortgage payers might soon find out that the bank did not actually get the electronic payment the next day, since it was sent out by check and the actual receipt and posting happened a week later.
So this posting in PaymentsSource, written by an AP automation exec, provides an interesting corollary since even though there are more e-payments solutions than ever before, there remains a potpourri of manual and hybrid processes in accounts payable departments across U.S. industry.
‘Paying all your suppliers electronically makes sense—in theory. At a high level, doing so is a simple enough task—you enable your AP team to make all their payments through electronic means. Then you have yourself a cost-generating solution…But to your AP team—the people at ground level—there’s much more behind the process than sending payments. They also must track sent payments, follow up on uncashed checks, handle fraudulent cases, and work with suppliers who are missing payments for one reason or another.’
The author gives an on-the-ground look at AP personnel pain points that keep full automation at bay. Things like supplier enablement become headaches for the folks who are rather busy paying the invoices and tracking for mistakes etc. Tracking payments and handling errors tend to dominate daily workloads, leaving little time for filling out ACH forms or getting suppliers to accept card.
The point of the posting is that the cavalry has arrived—something Mercator Advisory Group has been advising folks for years—and AP departments can offload the awful stuff and find new ways to contribute to a company’s bottom line. Making things more electronic does not mean that checks immediately go away, since just like in the consumer hybrid, checks will still go out, but someone else can manage them. Like we always say, time to automate.
‘AP teams have been laboring under manual work and partially automated processes for so long; it’s hard to imagine someone taking all that work off their plate. And sometimes, it’s hard to imagine what AP jobs will look like when the payment process becomes automated. We don’t often see companies cut staff. Instead, we have found that companies reduce their staff growth rate, and that existing staff moves onto higher-value work.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
