Key Payments Optimization Practices: What to Look For In a Provider
Knowing how to assess your payments strategy for the long-term is a key element to learning the best payments optimization practices.
Treasury and other payments decision-makers need to embrace the reality that the pace of innovation in the payments industry will continue to accelerate. Billers and companies who will be the most successful are the ones who can recognize when the tipping point for their payments operation has arrived.
Know What Questions to Ask
If you are part of your organization’s payments outsourcing review, here are some important questions to bear in mind:
• Do you know your true cost-per-item?
• Do you know all of your TCO component costs including incremental costs due to risk?
• Do you know if your processing risk is low or high? What is your processing risk tolerance?
• Are you at risk from non-compliance, poor exceptions processing or collection lag times?
• How are you defining an indirect cost? Or an incremental cost?
• Does your payments strategy align with your customer’s bill paying habits? How are you incenting payment options for your customers? It is possible that adopting E- or M-payments won’t suit your customer and at the same time increase your risk.
• Have you been able to maintain your legacy systems? Do you have adequate data storage, back-up, and redundancy? Is your legacy system interoperable?
• Are your receivables integrated?
• Is your facility prepared for any disaster?
• Are you utilizing cloud computing to streamline various payments processing functions such as accounts receivable posting?
• What is your 5-year plan for capital expenditures to upgrade aging systems?
• Are you processing multiple payment types and not calculating the risk for each? Are you accumulating unknown risks across your payments function?
• Is your payments process flexible or scalable? Can you implement new software or otherwise enhance your payments process seamlessly? Can your facility accommodate increases or declines in processing volume without sacrificing efficiency or impacting costs?
• Are you utilizing least-cost routing for your remittance processing? Are your payments de-centralized or are you utilizing a hub and spoke method?
• Does corporate treasury have access to real-time business intelligence regarding cost, risk, and compliance?
Components of an Optimized Payments Environment Payments Strategy
Any discussion about payments improvement – whether in-sourcing or outsourcing – begins with a deep understanding of the payments market coupled with establishing common payments improvement goals.
Maximizing efficiency and improving working capital will be a top priority for your organization. To be remain competitive companies can avoid risk, lower costs, gain insight into cash flow, increase funds availability, and improve access to payment information with a comprehensive integrated receivables solutions that would entail sophisticated receivables services for ACH Collections, Retail Lockbox, Wholesale Lockbox, Image Cash Letters, and more recently, the Remote Deposit Capture.
Customizing, integrating and implementing technology platforms and software suites – from state-of-the-art service-oriented architecture (SOA) to private label national lockbox networks with the latest imaging technology – will help you meet your business goals.
Increasingly, the success of your payments operation may hinge on actionable information or business intelligence (BI) that provides enterprise-wide real-time data for better decisioning around costs, risk and compliance but cutting edge BI tools are not the only factor to consider.
Organizations are at risk due to inadequate disaster recovery (DR) plans, aging equipment and outdated legacy systems, poor exceptions handling and management as well as the inability to scale payments processing nationally.
Consumers want choice and convenience when paying bills. So billers need to deliver a payments solution that supports bill payments across a range of payment methods. You are looking for products that settle payments faster with fewer exceptions.
To help manage processing cost, the ability to monitor regulatory and compliance issue can be critical. The important role that IT systems, solutions and support plays in optimizing your payments cannot be overestimated.
Both internal and vendor staff must be knowledgeable and experienced, and have extensive subject-matter expertise. The vendor must have an established industry presence and can provide long-term support for your organization. Internal systems must be aligned with the external systems support function. You are looking for a state-of-art network operations center (NOC) that can deliver continuous systems availability.
And any 5-year payments function strategy would necessarily include a cloud computing processing function.
What to Look for In a Provider
Building an optimal payments environment is an ambitious endeavor and one that few companies can embark on all at once. Instead stakeholders might identify a few key pain points they can address in a shorter timeframe.
Selecting the right payments partner can be the difference between operating the payments function as a loss leader and streamlining it as a profit center.
Six critical areas to grapple with when framing your payments outsourcing review to a payments provider include inventory, service levels, transition planning, communication plans and staff attrition plans.
For more strategies and tips about optimizing payments or outsourcing your payments download, “Building Optimal Bill Payments Environments: Strategies for Managing Payments Types, Compliance and Risk.”