Back in 2011, the U.S. Department of Treasury mandated the implementation of electronic invoicing in support of President Barack Obama’s campaign to cut waste. In the case of the federal government, this executive order reduced the cost of invoicing by as much as 50 percent, or roughly $450 million per year.
There is more, the average cost compared to $4.72 for an automated clearinghouse payment and $3.96 for a commercial card payment. Ouch!
While EAP has grown in the past two years, primarily within the middle market, government and nonprofit segments, the majority of organizations in the U.S. still pay by check.
To better understand what companies need to know in order to optimize payments to their vendors and reap the rewards of significant costs, we asked David Disque, Chief Operations Officer at CSI globalVcard what companies must know in order to give up paper and reduce costs.
Here are 7 steps to consider
STEP 1: Finding the EAP Server that’s right for you
Before making a decision, companies should keep in mind that it’s not just their team and infrastructure they have to be worried about. It is crucial to remember that a new payments system will directly affect all of the vendors in the payments process. Make sure to review the step-by-step process of your payables to ensure that each step is mirrored in the electronic environment. Always have safeguards against errors, validation of all payments, and error checking tools to prevent duplicate payments.
STEP 2: Fully understand all facets of your payment process
This includes accountability and tracking of payments to internal check reference numbers, along with robust reporting that includes outstanding or aging payments, declines, force postings, reconciliations and missed opportunity reporting. Additionally, the card management platform should be fully integrated to allow management of cards referenced by check number, invoice number, vendor name and/or other key characteristics related to the payments processed in a real-time environment.
STEP 3: Full payment details must be included in each invoice
Your vendors should receive a detailed remittance for each payment, just as they currently do, and your authorized team members should have the ability to view the detailed activity online, 24/7. Ask your potential EAP provider to see a copy of what will be generated and look for all the details you currently need. EAP should not compromise any of your existing accounting, tracking or reconciliation needs. Critical components may include contact information, credit card payment details, remittance details, ERP preference numbers and vendor contact information.
STEP 4: Integration with existing ERP and accounting systems
If customization is not included in the EAP provider’s solutions, substantial hidden costs may surface to include extensive internal or external programming costs. Ensure that the provider has knowledge of your existing systems, the various modules that may be needed, and a proven track record of success for other clients with similar needs.
STEP 5: Ensure multi payments options
Not all of your vendors will be willing to accept credit card payments. Some will resist the change and/or prefer the status quo of their current payment methods such as paper checks. A single EAP provider that can facilitate multiple payments types will ease your workload. Ideally, you will be able to upload your payables batch files just as you normally do, with confidence that your chosen EAP can swiftly and accurately fulfill multiple vendor payments types.
STEP 6: Ensure accountability over the vendor enablement process
The thought of moving hundreds, or even thousands, of vendors to a new payment method is one of the primary reasons that companies remain reluctant to making the switch to EAP. And for good reason. There’s a lot of heavy lifting involved: regular and effective communication, education, training, and transitioning and data collection. Look for an EAP provider that will handle all this for you, and be sure to inquire about the costs involved. While CSI includes vendor enablement in its solutions at no additional charge, this is not always the case. Vendor setup fees and ongoing maintenance costs are commonplace, so it’s important to understand this upfront.
STEP 7: Look for a partner not a provider
Your payables will change over time, and so must your EAP solution. Look for a partner rather than a provider – a company that is genuinely interested in your success. Questions to ask include: Is there dedicated account management assigned to your account? Is the assigned relationship manager someone who is intimately familiar with your account and as importantly, your industry? How often are they there to immediately answer the phone, help you troubleshoot and conduct regular reviews with your team to help identify any missed or new growth opportunities? This type of value cannot be provided if your plea for help rings a call center attendant with no prior knowledge of your account needs.