Making the decision to switch to electronic payments is an easy one (on paper, anyway). Manual payments are costly, inefficient and highly susceptible to fraud. Even worse? They ultimately hold your organization back from the success you could be achieving. Actually making the switch, however? That’s a whole other matter and is often the point at which organizations fall down in their efforts to actually realize the benefits of a streamlined electronic payments system. That’s where a payment network can be of service.
Payment networks are designed to address the top four obstacles in electronic payment adoption:
- Difficulty convincing suppliers to accept electronic payments
- Shortage of IT resources for implementation
- Lack of a standard format for remittance information
- Lack of integration between electronic payments and financial systems
Organizations that leverage a payment network not only eliminate the costs and inefficiencies of making paper-based payments, but are also able to deliver operational and business benefits to their trading partners, making it a truly win-win situation.
As with any type of partnership or technology solution, however, it’s important to recognize that not all options are created equally. Payment networks might seem to all be cut from the same mold, but the reality is, they come in many different shapes and sizes and finding one that suits the needs of your organization will require a little bit of due diligence.
To get you started on your path, here are a few questions you should ask a potential payment network partner:
1.How many of our vendors are already enrolled in your network?
In this case, size does matter, and the size of a potential partner’s network is a clear indicator of their stability and success in working with the vendor community. The bigger the network, the more likely your vendors are already enrolled and the easier it will be for your organization to hit the ground running.
2. Do you provide vendor on boarding and enablement services?
Enrolling vendors into an electronic payments program is perhaps the most challenging aspect of reducing paper checks. A good vendor enrollment team can take the workload off of your team, eliminating the need for AP or other teams to sell vendors on the benefits of getting paid electronically, gather bank account information, and keep it up to date. If a payment network you're investigating says they offer these on boarding services, ask for details about their approach, such as how they'll prioritize outreach to vendors, communicate results back to you, and ensure success over the long term.
3. Will you authenticate and maintain all vendor bank account information?
Maintaining vendor bank details is not only a tremendously onerous process, it’s also at high risk for error leaving your organization exposed to fraud risk. Most accounts payable departments simply don't have a scalable or cost-effective way to ensure that bank accounts provided by vendors are legitimate, and many simply trust that vendors are doing the right thing. A good partner will be up to the challenge of vendor bank account authentication and maintenance. They'll ensure that payments reach the right vendor, every time. Ask payment network providers what their process is for validating that bank details provided by vendors are accurate, how often they confirm accuracy, whether any additional security services are offered such as OFAC and AML checks, and where/how vendor bank details are securely stored.
For four more great questions you should make sure to ask a potential payment network partner, check out “7 Questions to Ask a Potential Payment Network Partner.”