How to Overcome the Struggle of Multiple Account Reconciliations
How does a company end up with dozens, or even hundreds of
bank accounts? It’s not an uncommon situation for a large
enterprise, especially in industries such as hospitality, construction, or healthcare, where there are multiple locations and business entities under one umbrella. Or, maybe the company has grown by acquiring other companies, as is common in high tech, and they centralize accounts payable but retain the separate bank accounts. According to the 2019 AFP Payments Fraud and Control Survey, 83% of companies with over a billion dollars in revenue have more than five payment accounts, and 46% have more than
No matter what the reason, making payments from multiple bank
accounts creates a lot of complexity in AP. It makes cash management difficult, increases the risk of errors and fraud, and
creates an ongoing nightmare when it comes to reconciliation.
Fortunately, new payments automation technology can help
address the challenges of making payments from multiple
Multiplying by Four
Most companies are contending with four different payment
workflows—check, card, ACH and wire, or five if you’re doing
international payments. Basically, you can multiply the number of bank accounts by four or five, and that’s how many processes you
have to manage.
But at least those processes are pretty standard. A check is a
check; a card is a card; NACHA sets the standard for an ACH file;
and a wire is a form fill on a bank portal. With payments
automation technology, you can wrap all of those workflows
together in a single dashboard. Payment is intelligently routed
from each account by the most advantageous means—you no
longer have to care what type of payment the vendor accepts. It’s
all taken care of for you.
Exponentially More Convoluted
The big win though, is on the back end, when it comes time to true
up the payments leaving each account with the general ledger. The
dirty little secret, known only to accounts payable professionals, is
that there is no standard for a reconciliation file—or even a
requirement to send one.
Each bank and card provider can send it in a different format, with
different information, or not at all. That makes reconciling
payments data with the accounting or ERP system—or multiple
accounting or ERP systems—exponentially more convoluted. It’s no longer X number of payment types times Y number of bank
accounts. It’s a different procedure for almost every type of
payment and/or bank or payment provider.
That amount of complexity and manual work inevitably leads to a
higher error rate. And, it opens you up to more instances of fraud.
According to the AFP survey, 72% of organizations with $1 billion or more in revenues and more than 100 payment accounts
experienced attempted or actual payment fraud.
Since daily reconciliation is cited the top defense against fraud at
companies of all sizes, consistently receiving standardized, easy-to-
digest reconciliation reports would help mitigate the fraud risk
associated with multiple payment accounts.
Filling the Data Gaps
Now there’s an opportunity to partner with Fintech companies in
order to help with that transfer of data. Up until recently, the only
way to reconcile multiple accounts was by throwing a lot of people
at the problem, or by bringing in a shared services provider.
Fintech business payments providers are leveraging the cloud,
APIs and online supplier networks to fill the gaps in workflow
automation and data transfer that have been left by banks and
traditional financial services firms.
You can easily make payments—including international
payments—from multiple bank accounts, and push a standardized
reconciliation report back to each, all in one easy process. Some
payment platforms can even push card rebates back into the right
This is all possible when your payment provider stores payment,
bank, and vendor data in one cloud platform, and can use
technology to automatically match all the data up, pour it into a
uniform report, and push it back out to the payee. That’s
impossible when you’re working directly with lots of different
banks and payment providers, because no one entity has visibility
into all of the data.
There are a lot of reasons why it makes sense for a company to
have multiple payment accounts, but nobody thinks much about
the pain it’s going to cause in accounts payable. It’s one of those
hidden back office problems banks and traditional financial service
providers have never been able to solve, so accounts payable
professionals have found a way to live with it. Nowadays though,
there are ways to live without it.
Mike Fortmann is the Vice President of Sales, Southwest Region at
Nvoicepay. He is an accomplished payment industry expert with more than five years experience in delivering scalable payment solutions.