Remittance, Beyond The Tradition

Financial institutions have to compete against FinTech upstarts, with an eye on keeping merchants happy when it comes to remittances. Eliminating some of the manual processes relieves paperwork and legwork, according to Rick Stadel, managing director at ProfitStars.

Businesses live and die by their cash flow. And cash flow lives or dies by the correct reconciliation and posting of payments.

Jack Henry announced earlier this month that its ProfitStars division launched a fully hosted version of its remittance solution, RemitPlus Express. The firm has said that it helps firms handle large volumes of checks, especially as they deal with recurring payments.

In an interview with PYMNTS, Rick Stadel, managing director at ProfitStars, said that, among the specific challenges faced by financial institutions, “we have seen the challenges being two-pronged, both for the financial institution, as well as the merchants they serve.”

“Financial institutions are looking to define and expand and, in some cases, create a comprehensive treasury management offering.” But, he added, “they need to ensure they establish a trusted merchant engagement that goes beyond providing loans, lines of credit and deposit services.”

“They may also find that they are competing against other financial institutions at the community, national and regional levels and want to stay competitive in the merchant space.” And increasingly, he said, traditional finance firms must compete with FinTech upstarts.

Merchant pain points are twofold, said the executive. “First, there are multiple manual processes depending upon the payment source. These sources include mail, walk-in payments and various files and formats.” Each of those sources can have information conduits ranging from bar codes to machine print fields. Across all of these varying degrees of information and ways to bring that information to users, he said, many merchants want to work within secure cloud-based solutions.

Streamlining processes also becomes paramount for financial institutions, merchants and anyone working with numerous payments needing attention through a short timeframe, stated Stadel. In one concrete example, he said, a city had been processing 30,000 water payments a month. Prior to implementing his firm’s solution, he said, the city employed four full-time staff members to process the payments, but afterwards, the workload was reduced to a “manageable size, only requiring a single employee two to three hours a day to process that day’s payments … The remaining staff was [utilized] in other areas, recognizing savings and efficiency.”

Pointing to another benefit, Stadel said shortening the reconciliation process leads to improved cash flow, and financial institutions receive their deposits more quickly. “More expedient and reliable information on the accounts receivable side allows the merchant to maintain a close eye on their supply chain and funding needs.”

“Having validated and consolidated account records allows the merchant to make strategic business decisions based on their outstanding receivables. And as we all know,” he added, “cash flow is king.”