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How Remote Work Lends Itself to Reshaping the Back Office

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Archives, Banking, Global Trade Daily, Special Reports

How Remote Work Lends Itself to Reshaping the Back Office

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The pandemic has been hard on everyone in different ways, and though the end is in sight, we’re not there yet. But, as we close in on a year and a half of working from home, we can look back with some perspective and perhaps a little pride at how we’ve adapted and changed. During this time, many people and organizations have discovered that they’re much more nimble, creative and resilient than they previously imagined.

I can see that in the accounts payable organizations with whom I have worked. The dual challenges of figuring out how to get payments out the door in a different way and learning to work remotely have been daunting, but people have figured out ways to get the job done.

Perhaps more than any other function, AP used to be a strictly in-the-office job, mainly because of all the paper processes they had in place. Invoices come in the mail. They have to be opened and keyed into accounting systems. Some companies have machines and OCRs (Optical Character Recognition) to help with this process, but many still follow manual processes. Checks must be printed, stuffed into envelopes, and run through a postage meter before they’re mailed. Security and controls are often paper-based, too—safes are kept for blank check stock and sensitive information.

It seems incredible to think that a year and a half ago, that was business as usual for the vast majority of organizations, and not many had plans to change. But change they have.

A New Way of Thinking

Nobody had a plan for sustained remote work. They may have had a short-term disaster recovery plan—for one or two people to work offsite or cover for the absence of a key employee. But nobody had a plan for the entire AP team to be out of the office indefinitely.

The initial struggle was to be able to continue processing payments on time. People brought their laptops home, but not their whole setup. They kept sending skeleton crews to the office to handle the paper processes. The thought was that we’d have to stick it out for a short period. We all know how that turned out.

Around the latter part of April 2020, we started to see people planning for the longer term. Companies set people up with home offices and all the security and connectivity they needed. They had to figure out new ways to communicate and collaborate. They had to figure out how to be productive at home, in many cases while juggling childcare and homeschooling.

At the same time, they started switching vendors to ACH payments in earnest. According to recent data from Nacha, the National Automated Clearinghouse, B2B ACH payments to vendors jumped a whopping 11 percent in 2020. They had to figure out new processes and new ways to keep information secure. Both of those are heavy lifts, which is a big part of the reason paper has persisted for so long.

It has been challenging to say the least, but I think that AP teams should be proud of how they’ve adapted.

Where to go from Here

Probably not back to the office—at least not five days a week. According to a recent report by Upwork, roughly one in four Americans will be working remotely in 2021. By 2025, 36.2 million Americans are expected to be working remotely, an 87% increase from pre-pandemic levels. A survey by the Pew Research Center found that given the option, more than half of employees say they want to keep working from home even after the pandemic abates.

Employers are becoming comfortable with the idea and are even finding some advantages, including access to a much larger talent pool and the ability to offer flexible work hours as a benefit. That could help AP to address the long-standing talent shortage.

The more significant opportunity, though, is to continue to think differently. I would be surprised if very many AP departments decide to return to the paper processes of old. The biggest reason people stuck with those for so long was that they were “working.” It’s hard to say that now. It’s also hard to say that accounts payable work can only be done in the office because we’ve been doing it outside the office for a year. The considerable delay in payment processing that some people expected never materialized. AP had to find a better way, and they did.

Moving Forward

They shouldn’t stop there. AP organizations should seize the moment to bring in technology partners to automate the entire payment workflow, address the growing fraud and security risks associated with ACH payments, and ensure the resiliency of payment workflows in a remote work world. They should be looking to automate invoice ingestion and processing and integrate into other transactional systems, eliminating manual work once and for all.

Nobody likes being forced to change, and that’s been perhaps one of the most difficult aspects of the experience we’ve all been living through for the past year. Now that AP teams have proven they have the resiliency and the ability to handle all the change that was thrust upon them, they should seize the opportunity to become drivers of change and key players in leading their organizations into the future.

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Kim Lockett is Vice President of Customer Success and Services for Nvoicepay, a FLEETCOR company. She has more than 30 years of experience in payments, with a heavy focus on back-office operations and customer engagement. Prior to Nvoicepay, Kim held operations management and leadership positions with Comdata, Crestmark Bank, and Regions Bank.

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Archives, Banking, Global Trade Daily

Virtually Fraud-Proof: Why Now is the Time to Grow Your Virtual Card Program

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One of the business stories coming out of the last year is the dramatic growth of electronic supplier payments. In Q4, Nacha, National Automated Clearinghouse, reported a 15 percent year-over-year increase in B2B ACH payments. The unfortunate sidebar to that story is the rise in ACH payment fraud. In all likelihood, we’ll see a corresponding 15 percent increase in B2B ACH fraud— possibly more, since remote working restrictions left many organizations vulnerable to attack.

As organizations work to improve their defenses against ACH fraud, they should also ramp up their use of virtual cards as much as possible since that is the most secure way to pay suppliers. Supplier objections to fees have always acted as the barrier between the status quo and advanced payment options. With the way the B2B payments landscape is changing, and in light of rising fraud, it may be worth revisiting those conversations with suppliers. Or, for some companies, possibly initiating that conversation for the very first time.

Not the Same as Plastic

Despite its decade-long presence, I still meet a good percentage of people who have never heard of virtual cards—or if they have, they don’t know how they work. Many companies today use a plastic card to pay their suppliers. Alternatively, they use purchasing cards when they purchase supplies. Those physical cards often get lost or stolen. The number can also be stolen even without possessing the actual card.

Virtual cards use the same networks as plastic cards, but they offer several layers of protection that make them fraud-resistant. They are sometimes called single-use cards because the 16-digit number provided can only be used once. That alone is significant. It’s simply not as attractive to fraudsters to steal single-use information. It’s far more appealing to get a regular card number or hack into a supplier system to divert ACH payments. Those are scalable, repeatable types of fraud, if you will.

When it comes to single-use cards, the card number is associated with an amount and a merchant ID number. Each piece of information must match the details provided for transactions to go through. This strict requirement makes single-use virtual cards very difficult to take advantage of.

Really, the most susceptible virtual card risk is employee misuse. You can even eliminate that risk by using virtual cards through a payment services provider—they usually have an indemnification process in place.

Fast, Guaranteed Funds

The big fraud protection benefit is obviously on the buying side, with the buyer receiving a rebate, which helps to defray AP costs. But what about benefits on the supplier side?

Prior to joining Nvoicepay, I sold into accounts receivable. The big concern there is to collect and reconcile payments as quickly as possible. Virtual cards can help on both counts. Virtual card funds reach their designated accounts in 24 hours from the time the payment is approved while checks and ACHs can take up to 10 and two days, respectfully. There’s value in being able to offer AR teams quick payments.

What’s more, these are guaranteed funds. Once they run the card, the funds are theirs. This isn’t always the case for ACH and check payments, which can fail or bounce. Wire payments are the only other payment type that is guaranteed, but they’re expensive to issue and time-consuming to set up, which is why they’re not usually used domestically.

When it comes to reconciliation, plastic cards are hard to reconcile at scale, but virtual cards can be wrapped into a technology solution like the one I used to sell, which automates those processes.

A More Nuanced View

When it comes to fees, there’s still a misconception that accepting virtual card is expensive for suppliers. I do think 2020 acted as a tipping point where suppliers are looking at fees in a more nuanced way. Fast, guaranteed funds are nothing to sneeze at in an environment where many of their customers might be struggling.

Suppose you scale your program and set up a portal for suppliers to receive virtual card payments. In that case, you can receive level two and level three discounted processing. That can often significantly minimize your fees. I’ve seen instances where fees went from 2.5 percent to 1 percent.

Volume and payment size are components of those discounts—if you make large volume payments, you might get a better overall rate and better rates on smaller payments. But access to data is another component. The additional data associated with virtual cards helps issuers mitigate fraud risk. Other data is transmitted with the payment—data that can be used for economic analysis and even for marketing.

It appears that in 2020, COVID-19 did more to move companies off checks and onto electronic supplier payments than all the sales and change management efforts of the preceding decade combined. While the initial response was to adopt ACH payments, companies maturing their electronic payment programs will find virtual card a strategic component that promotes fraud protection and supplier support.

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Kristin Cardinali is Vice President of Regional Sales at Nvoicepay, a FLEETCOR company. Her experience in sales and sales leadership spans 16 years, and includes positions held with companies like Capital One and Billtrust. With Nvoicepay, she delivers scalable payment solutions to mid-market and enterprise companies. Kristin has received several accolades, including Sales Rep of the Year & Quarter, and multiple President’s Awards.

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Archives, Banking, Global Trade Daily

Digital Technology for your Financial Reconciliation

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Businesses today have a clear need for a financial reconciliation management system that is fast, streamlined, and audit ready. Volatility and disruptions are the order of the day at the markets and the 2020 pandemic has added to the mix, resulting in a state of confusion.

In most businesses, the financial reconciliation process is a manual and a recurring task – a series of interconnected and complex processes that require the reconciliation process to be managed across general ledgers, sub-ledgers, and bank accounts. Limited resources, siloed data, and error-prone spreadsheets add to the complexity that compromise accuracy, control, and transparency – making the financial close process highly inefficient.

Today businesses need to:

Close faster

Eliminate unnecessary status update meetings to manually review account balances before closing the accounting cycle.

Streamline and centralize the close process

Get rid of error-prone spreadsheets and track reconciliation progress in real-time while identifying bottlenecks in the close process.

Be audit-ready

Achieve an accurate reconciliation that is fast, reduces risks and costs, and ensures regulatory compliance with a clear audit trail.

Improving agility and accuracy of financial processes requires better use of data and automation. There are significant tangible benefits to implementing modern technology that helps increase speed and agility, while ensuring accuracy and freeing up time for strategic and transformation efforts.

It is a known fact in the industry that companies spend too much time reconciling reports that are output by different systems. Furthermore, the reports need to be reconciled across all functions, including accounting, trades, stocks, commissions, and more.

To meet the existing challenge, there is a clear requirement for a solution that collects, blends, and analyzes data from disparate systems automatically. All manual reconciliation activities need to be replaced with a simple and seamless solution that will identify and avoid fraudulent activities as well as eliminate manual/system integration errors in journals.

This is why there are significant and tangible benefits to implementing modern technology that helps increase speed and agility while ensuring accuracy and freeing up time for strategic and transformation efforts.

What needs to be done?

If we are to analyze the problems at the root of it all and suggest a simple and direct solution, that would be automation. By automating repetitive tasks across broker, invoice, and stock reconciliations, users can continuously perform data reconciliation eliminating the risk of manual errors. Businesses need to connect all their disjointed systems and bring data to one place, ensuring that the users have complete access to this data in real-time, on-demand, whenever they need it.

Identify deviations and isolate root causes

Businesses need to streamline and centralize the close process by getting rid of error-prone spreadsheets and track reconciliation progress in real-time while identifying bottlenecks in the close process. They also need to be audit-ready by achieving an accurate reconciliation that is fast, reduces risks and costs, and ensures regulatory compliance with a clear audit trail.

Close faster with automation

As simple as automation sounds, financial reconciliation is inherently complex and layered, and businesses need to close faster by eliminating unnecessary status update meetings to manually review account balances before closing the accounting cycle. This includes:

-Broker reconciliation: Helps match trades from transaction or ledger systems with broker statements as well as identify breaks and differences between systems, modules, and reports. with ease. Replacing manual reconciliation activities reduces end-of-day/month time pressure.

-Invoice and stock reconciliation: The process includes streamlining reconciliations and increasing control by matching payments, adjustments, receipts, contracts, stocks, and commissions. Avoiding errors, monitoring breaks and breaches across entities while automating complex grouping and calculations to reconcile trades, stocks, commissions, across disparate systems

Ensure transparency through a foundation of connected data

It’s common for traders, risk managers, finance specialists, and supply chain managers to spend inordinate amounts of time reconciling reports that are output by different systems. The time they spend manually reconciling reports could be better spent analyzing data to help make better decisions.

Despite having multiple tools and systems, organizations, both large and small across multiple industries, still struggle with a very manual, time-consuming, and tedious process of a day end and a month-end close. An automated solution could save huge amounts of resource power, reduce manual errors, and bring in tremendous process efficiencies.

Way forward

The faster pace in the industry today means that the businesses need to gain a more comprehensive and accurate view of the business. A single source of truth, greater visibility, and control over operations and risks essentially allow the business to gain from improved collaboration, data accuracy, and consistency throughout the organization. How fast can you move to automated and continuous financial reconciliation? In days? minutes? This is the question that needs to be answered.

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Learn how a leading sugar company reduced monthly reconciliation time from 15 days to a few minutes

For more details reach out to an Eka expert by writing to info@eka1.com

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Archives, Banking, Global Trade Daily, Software

Here are the Top Tips for Preventing ACH Credit Fraud

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Forced to work from home during COVID-19, accounts payable departments have accelerated plans to move away from paper checks and pay more of their suppliers by ACH. That, in turn, accelerated another trend: fraud. Through social engineering, fraud attacks on ACH credits are most commonly known as Business Email Compromises or BECs.

According to the 2020 AFP Payments and Fraud Control Survey Report, for the first time, in 2019, BEC schemes were the most common type of fraud attack experienced, with 75 percent of organizations experiencing an attack and 54 percent of those reporting financial losses. ACH credits—outgoing payments from buyer to supplier—were targeted in 37 percent of BEC schemes.

The problem has only gotten worse in 2020. In the September edition of their Fraud in the Wake of COVID-19 Benchmarking Report, the ACFE reports that 90 percent of respondents have seen an increase in cyber fraud frequency from July through August. This included BECs.

Three-quarters of respondents said that preventing and detecting fraud has become more difficult in the current environment, and more than 90 percent expect attacks to increase. Organizations are under siege, and nearly one-third have received no guidance from banking partners about mitigating ACH credit risks.

What can organizations do?

Defeating BECs requires a multi-pronged approach. Ongoing anti-fraud training is important because these emails are getting more convincing every day. Fraudsters have become experts in user data and A/B testing, which reduces elements that alert their victims of illegitimate changes to their accounts. Strong internal controls are also important and network security, which prevents parties from gaining access to internal systems.

Here are four ways to help reduce your risk of ACH credit fraud.

1. Handle with Care

Thwarting ACH credit fraud is all about handling supplier banking data securely, which accounts payable must have on hand to transmit their payment file to the bank. This data is often stored in the ERP system, or sometimes on an Excel spreadsheet, where AP staff has been recorded during supplier onboarding. Sometimes it’s stored when a supplier updates their information. Fraudulent change requests are one of the most frequent avenues of attack.

Let’s say you’ve got a new person in accounts payable who isn’t fully trained yet. This person gets an email from a supplier, asking to update their bank account information.

Your new hire, eager to please, fulfills the request, inputting a new routing number and bank account, unaware that a million-dollar payment to that supplier is going out the next day. Nobody realizes what’s happened until two weeks later when the real supplier calls, asking for payment.

By then, it’s too late to reel ACH payments back in. You can call the FBI and the bank. They may try to help you, but if the thieves are sophisticated enough, they’ve already moved the money to offshore accounts, and it’s completely gone.

2. Secure Information

You should never use an unsecured email for banking information updates, although a surprising number of companies still do. It’s too easy for a hacker to intercept one of those emails and use the information within it for their own means. If they get contact or bank account information, they can pose as legitimate suppliers and circumvent internal controls. Some businesses even keep information in spreadsheets or their ERPs, but systems like those aren’t designed to store data securely.

Some companies allow suppliers to update their own information in supplier portals. That might work, provided that companies manage secure portal access and verify all updates. However, if suppliers can log in and update information, it’s likely that hackers can access the same information with very little resistance.

The most sophisticated approach that I’ve seen so far includes a trained procurement team, who verifies and validates all changes that come through.

There are a couple of drawbacks to this approach. It’s a big IT investment with plenty of labor asks. Even then, it’s still prone to internal fraud. At the end of the day, even the best systems will still have their risks. The goal is to minimize them.

3. Look at Fees

Companies often try to shift the risk and time burden to others, with some success. For example, they may choose to pay their suppliers by card., which puts the risk on credit card networks. In cases of card fraud, it’s more likely that payments can be canceled or refunded.

Virtual cards offer even more security because they provide unique numbers, which can only be used by a specified supplier for a specified amount. The big drawback is that not all suppliers accept cards—there are fees to consider.

An organization I’m familiar with pays many of its suppliers with PayPal. Their supplier­­­­—most of them small businesses—are located around the world. AP doesn’t have the time or staff to verify payment information, validate bank accounts, and deal with ongoing updates. As the intermediary, PayPal handles all that and guarantees that the funds go to the right place. But, here again, suppliers pay a hefty fee—in the neighborhood of three percent.

4. Shift the Risk

There really is no perfect system in place, which is why we’re seeing ACH credit fraud rise in tandem with the rise in ACH payments. But there is a perfect way to shift the risk to companies that are built to withstand the verification and validation burdens. Today’s payment automation providers manage supplier information, so individual companies no longer have to spend valuable time on it. It’s similar to handing the reins to IT and procurement departments to lock down the database and institute controls. The difference is that working with a provider removes the time investment and liability.

Think of payment automation providers as a means to outsource risk. Their sole focus is to ensure secure, on-time payments to your suppliers without causing costly overhead. They have perfected the systems and processes for hundreds of thousands of AP departments across the United States, and in ways that businesses would be hard-pressed to replicate.

Businesses used to worry about check fraud above all else. While they still have to pay attention to that aspect, it’s become a low-tech form of fraud that’s easy to understand and plan for. As companies shift to electronic payment means, they’re increasingly experiencing sophisticated cyberattacks, which target much larger sums and are harder to defend against. With such attacks growing, businesses may find that outsourcing professionals is the best defense.

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Josh Cyphers is the President of Nvoicepay, a FLEETCOR Company.  For the past 20 years, Josh has managed successful growth for a variety of companies, from start-ups to Fortune 100 companies.  Prior to Nvoicepay, Josh held leadership roles at Microsoft, Nike, Fiserv, and several growth-stage technology companies.  Josh is a lapsed CPA and has a BS in Economics from Eastern Oregon University.

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Archives, Banking, Global Trade Daily

It’s Time to Revisit the Benefits of Virtual Card

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In the wake of the many changes this year has brought, companies are moving toward making more of their supplier payments electronically. It’s a welcome thing. Check payments have dwindled in consumer life, but across US industries, nearly half of all supplier payments are still made by check. As accounts payable departments went into work from home mode, it became difficult to cut checks. They rushed to set suppliers up for ACH payments, skipping over what might be a better opportunity: paying them by virtual card.

Not every supplier accepts virtual cards, however. Before you set your suppliers up for ACH, you should at least ask about cards—there are compelling benefits for both buyers and suppliers with that option. For suppliers, getting paid by card is the fastest way to get their money in the bank. On the buyer’s side, virtual cards are the most secure payment method, and they can also generate rebates. To get the promised rebates, you need to find the right card program for your business and have a solid plan for continually enabling suppliers. For most companies, it makes sense to consider virtual cards in the broader context of automating the entire payment process.

To be clear, I’m not talking about p-cards. P-cards are a physical card that AP uses to pay suppliers over the phone. Virtual cards are 16-digit “card” numbers issued to a named supplier for a specified amount. These “v-cards” can’t be processed by anyone other than the supplier, or for anything larger than the authorized amount. And, if somehow a fraudulent transaction should occur, virtual card issuers offer the same protections as they do with plastic cards. When it comes to check and ACH payments, money that falls into fraudulent hands can be challenging to get back. Card processes are more traceable and are, therefore, easier to reverse.

There are Challenges of Maintaining In-House Processes

It’s possible for your team to own their own card payment processes instead of handing the reins over to a payment automation partner. But the work required often dissuades companies from doing so.

One of the main reasons checks have persisted as the top payment type in the business world is the minimal setup required. This makes checks an attractive payment method on paper, especially for companies who do business with thousands of suppliers. But the actual process is more labor-intensive because each check must be approved, printed, signed, and mailed—a process that can take days for some companies.

On the reverse side, card payments require an enablement component. Someone must reach out to each supplier to confirm their payment preference. The up-front work often prevents decision-makers from pulling the trigger on implementing such a system. Ironically, many companies turn to ACH or wire as an alternate solution, but these are even costlier and more time-consuming. For these payment types, companies must collect supplier bank account information. Then they must validate store them securely, and maintain tight, protective controls on them.

For smaller companies that are more focused on generating an additional revenue stream, a standalone virtual card program can be a decent option. The caveat is that without a strong enablement effort, any projected rebate may have to be invested back into your process to maintain it.

Standalone Programs Aren’t Permanent Solutions

An independent program works well when companies are highly integrated between their ERP system and their bank. In these scenarios, the company usually has most of their suppliers set up to receive ACH payments, simplifying the reconciliation process.  However, adding more payment automation over the top of existing automation would be redundant, closing the door on additional revenue that might be generated from a card program down the road.

Larger companies should look at comprehensive payment automation solutions with virtual card embedded into them, even if you don’t plan to use them right away.

How Does Payment Automation Resolve These Problems?

Automated solutions wrap all payment types into a single workflow, making it easy to offer several options to suppliers without adding to AP’s daily workload. Because suppliers are continuously enabled for electronic payments via a supplier network, most companies can immediately pay a significant percentage of their suppliers electronically with no effort. Paying by check also becomes as simple as submitting a pay file and approving it. This simplified process cuts out a significant portion of AP’s manual tasks, leaving them more time to focus on higher-level initiatives.

By automating the whole payment process, including enablement, reconciliation, and error resolution, AP teams usually see cost reductions of up to 70 percent. When you add revenue from card payments into the equation, AP can become a profit center.

Card payments still only account for about five percent of B2B payments. There’s a significant opportunity that companies have been missing out on, either because they haven’t researched virtual cards, don’t want to do the supplier outreach, or haven’t found a partner that can help them make it work. Due to processing fees, not every supplier will accept card payments. Still, a surprising number—around 20 percent of suppliers, in my experience—will say yes if they’re asked.

Now that cash flow is king, companies are shifting to accommodate more ACH enablement outreach. While you’re reaching out to your suppliers, it may be worth your time simply asking if they would accept card payments. Wrapping these initiatives into a payment automation solution may enable your AP department to run lean in the cloud indefinitely.

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Kristin is Vice President of Regional Sales at Nvoicepay, a FLEETCOR company. Her experience in sales and sales leadership spans 16 years, and includes positions held with companies like Capital One and Billtrust. With Nvoicepay, she delivers scalable payment solutions to mid-market and enterprise companies. Kristin has received several accolades, including Sales Rep of the Year & Quarter, and multiple President’s Awards.

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Archives, Banking, Global Trade Daily

How Do Electronic Payment Solutions Fulfill Supplier Needs?

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Paying all your suppliers electronically makes sense—in theory. At a high level, doing so is a simple enough task—you enable your AP team to make all their payments through electronic means. Then you have yourself a cost-generating solution. But to your AP team—the people at ground level—there’s much more behind the process than sending payments. They also must track sent payments, follow up on uncashed checks, handle fraudulent cases, and work with suppliers who are missing payments for one reason or another.

Unfortunately, most electronic payment businesses that tout themselves as solutions only find value at the high-level glance, which is a detriment to your team. For example, while banks and card networks move money electronically, they don’t provide much supplier support, which is often needed to take payments across the finish line. In the end, that task often falls to your employees once again.

AP also tends to use the oldest equipment of any team in most companies. They’re still running error-prone manual processes, with stacks of checks and invoices on their desks in need of circulation on foot. Process exceptions and one-off requests torment them. Suppliers are calling and emailing, looking for payment. At the same time, AP handles other issues like lost or erroneous invoices, payments landing in the wrong accounts, or which otherwise need attention.

The whole operation is like a house of cards. Even if you know you need to change, nobody wants to touch a single card for fear that the entire thing will fall apart. Asking them to enable suppliers for electronic payments is extra work, and not usually in anybody’s job description. It’s hard enough to get the regular work done; heaven forbid somebody on the team gets ill, goes out on leave, or quits. They’re really under a lot of pressure.

A new generation of payment service providers automates payments in the cloud and offloads much of the support work that AP usually handles instead of focusing on higher-value initiatives. When your process was held together with duct tape and string, it can be hard to imagine confidently handing the work to a service provider. To understand what’s possible today, let’s look at what payment support services look like at scale here at Nvoicepay.

Supplier Enablement

When our customers sign on with Nvoicepay, our implementation team goes right to work with their AP staff to get supplier lists and instructions for reaching out to them. If any suppliers require special arrangements due to prior agreements with them, we take those into account.

Our customers often pay many of the same suppliers. Because Nvoicepay maintains an extensive network of suppliers—about 800,000 of them—many suppliers are instantly payable without additional work. When suppliers aren’t already in our system, we campaign to get them electronically payable in a fashion that meets their individual needs. We prioritize Mastercard due to the ease of payment for all parties involved. As time goes on, the Nvoicepay team maintains supplier data, keeping up with changes on behalf of our customers.

Suppliers that still need to receive physical checks can do so. Even if they do, the process remains electronic on the AP side so that customers can issue check payments in the same batch as other electronic payments. Supplier questions are routed to our in-house support team, alleviating another large responsibility from AP.

Training and Implementation

While suppliers are being enabled, our technical support team trains the accounts payable group that will be using the software in a succinct, one-hour meeting. We know that AP turnover can be high, so we offer additional training by request to ensure that the customer’s entire team remains up-to-speed.

Our technical support team also works with the implementation team to ensure that the initial configuration caters to each company’s specific needs.

Making Payments

In the life of a manual process, AP teams need to fill out bank forms for each ACH batch or access their bank website to make wire payments. Payment automation consolidates those tasks—and more—into a single file from their ERP, which contains all the invoices the company wants to be paid. Nvoicepay disperses those payments based on each suppliers’ preferred payment type, set up in the enablement step, and continuously maintained.

On the back end, customers have total visibility into how those suppliers are getting paid, when checks cleared, and when Mastercard payments were issued. They can also track unprocessed Mastercard payments.

Payment Modification

Nvoicepay guarantees every payment, and as such, the phone number listed on the remittances is ours. If there’s an issue with a payment, your suppliers call our payment support team directly, and we work through any questions they may have. Our software also includes a form that alerts our Payment Modification team of the need to resolve errors, refunds, reissues, or stop-payments. We turn those requests around quickly, as quickly as a customer could call their bank and do it themselves. We take as good care of our customers’ suppliers as they would. No matter where an error occurs, we work to resolve it and to keep our customers informed throughout the process.

If a supplier reaches out to their customer directly, the customers also have visibility into our system. They can handle those one-off events without trouble.

Card Retention

Many AP groups have dealt with card programs that promised significant rebates but didn’t deliver. Making as many payments as you can by card is what helps you maximize rebates. To aid this, another faction of our operations team—the supplier services group—reaches out to suppliers who haven’t processed their cards after a set time. The team works with suppliers to answer any questions they have about the payment, and to support the processing of as many cards as possible.

Within the supplier services team is a retention group, which assists suppliers who may want to stop accepting card payment. That’s the most beneficial payment method due to the rebate. Still, there can be various issues on the supplier end, such as card fees, or challenges with remittance or reconciliation. The retention group learns what the supplier objections are to card. If we can’t work through them, we enable a different payment type.

While most suppliers can process virtual cards through their terminal once they receive the remittance, others have set requirements or separate terminals that require specialized processes. In those cases, our group called AP Concierge will either call the supplier directly to make payments or pay through their terminal. Our internal goal is to have less than three percent of unprocessed cards monthly. After 60 days, unprocessed payments must be refunded to the customer, which creates unnecessary work.

Embracing True Support

Why don’t companies pay all of their suppliers electronically? Because it takes a village to do all the work around making payments! Nvoicepay’s dedicated teams support every piece of the payment process because we know that’s what it takes. It’s a rare AP team that can handle these pieces on top of getting payments out the door, let alone have special teams devoted to each area.

AP teams have been laboring under manual work and partially automated processes for so long; it’s hard to imagine someone taking all that work off their plate. But that’s precisely what we do.

And sometimes, it’s hard to imagine what AP jobs will look like when the payment process becomes automated. We don’t often see companies cut staff when they bring in Nvoicepay. Instead, we have found that companies reduce their staff growth rate, and that existing staff moves onto higher-value work.

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Angela Anastasakis is the SVP of Operations and Customer Success for Nvoicepay, a FLEETCOR company. She has more than 30 years of leadership experience in operations and product support. At Nvoicepay, Angela has been instrumental in leading Operations through rapid growth, while maintaining our 98% support satisfaction rating through outstanding service.

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Archives, Banking, Global Trade Daily

How to Make Important Adjustments to Your Payment Strategy

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The first couple of weeks of sheltering in place regulations saw finance and accounts payable organizations scrambling to set up remote operations and get payments out the door. Most were able to accomplish these goals quite well. Now we’ve moved into the next step–establishing efficient workflows and productive practices. It’s still challenging, however. Companies have to find ways to keep people safe while executing paper-based processes that keep their teams office-bound. For example, many companies still have to go into the office to pick up mail, circulate invoices for approval, and prepare checks for mailing.

They also must consider the best way to move forward and develop strategies for managing their teams through economic uncertainty. The Conference Board, a non-partisan economic think tank, recently sketched out three possible scenarios. Their best-case scenario predicts a 3.6% decline in US GDP for 2020, while the worst case would see a 7.4% decline. In other words, nobody knows what the next six to 12 months are going to look like.

That means AP needs to focus on conserving cash while keeping operations moving. They can expect more calls from suppliers since Accounts Receivable teams typically ramp up their efforts in tough times. They need to prioritize payments and capture early pay discounts. Procurement is going to reach out to try and renegotiate prices or terms. Treasury is going to be very interested in the timing of payments and managing working capital. It’s on the AP team’s shoulders to make sure they’re engaging with these teams and coordinating efforts.

At the same time, they’ve got to consider the efficiency and the productivity of their own team as we continue to work remotely. Among other things, that means coming up with a strategy for shifting to electronic payments at scale.

Many organizations have had this goal for a long time, but, depending on the research you look at, around 40 percent of business payments still issue by check. This number is down from a decade ago, but still problematic in a remote work environment. So why don’t businesses pay more of their suppliers electronically? Well, as everyone who rushed to shift suppliers to ACH payments when shelter at home orders took effect has learned, you can’t just flip a switch and move all your suppliers.

It’s easy enough to find a bank to handle ACH transactions for you. It also sounds a lot cheaper upfront than checks—if you only look at transaction processing costs, which are usually well below $1.

But with ACH, you have to enable your suppliers one by one, and then store and update their data securely. That becomes a fixed cost because there’s a constant churn of suppliers and their bank data–changes usually around once every four years per supplier. You should also expect to manage exceptions that arise with ACH file submissions and more nuanced supplier questions.

Thinking ACH is cheap or straightforward is one of the biggest misconceptions holding companies back from paying electronically. That’s not to say you shouldn’t make ACH payments. That said, they should be part of a holistic strategy that addresses the entire payments workflow, encompassing all forms of payment, including international wire payments.

What does that look like?

Card first

If you’re going to reach out to suppliers to enable them for electronic payments, you should first ask them to accept payment by credit card.

Virtual cards–sometimes known as single-use ghost accounts or SUGAs–are not as well-known as they should be in finance and accounting circles. Still, they can be an incredibly valuable part of your payment strategy. Unlike P-cards or company-issued credit cards, virtual cards exist to pay suppliers easily. Each card has a unique number that can only be used by the assigned recipient in the designated amount. That provides AP with substantial control and makes it one of the most secure, fraud-proof payment methods. You also should expect to receive rebates to offset some of your AP costs.

The main challenges are enablement and outreach, which don’t require significant effort on the part of AP teams since virtual card payment and remittance are relatively straightforward for suppliers. All that’s left is to structure your rebate program to support your team’s efforts and then some.

ACH for most

If a supplier declines to accept card, which often happens due to the interchange fee, your second request should be to enable them for ACH. Most vendors will say yes to this; in fact, they’d prefer it to check. Just be sure you have a realistic appreciation of the true ACH payment operating costs, including enablement and data management, as well as fraud support.

Check for holdouts

While the number is dwindling, there are some suppliers with a ride-or-die mentality who won’t accept anything but checks. For these suppliers, an outsourced payment provider can do a print check from an electronic file, so your team doesn’t have to handle all the paper.

Your payment strategy should include automating the payment workflow. Fintech ePayment providers wrap these disparate workflows into one interface so that all AP has to do is click “pay.” Then their payments will issue to their suppliers in the method they elected to receive. Because these platforms are in the cloud, payments can be approved and scheduled remotely, with visibility for multiple team members.

Heightened fraud protection

Your payment strategy should also include fraud protection. The pandemic, the move to remote work, and challenging economic conditions have created a perfect storm for a rise in all types of crime, including payment fraud. It’s essential to have strong internal controls, especially now that sensitive information is residing in your teams’ homes and on their personal networks. Preventing theft is a key component of cash management.

It used to be that organizations mainly worried about check fraud, and that’s still a problem, but it’s reduced quite a bit thanks to controls such as Positive Pay, Positive Payee, and watermarks on checks. So far, there aren’t similar controls for ACH. As businesses have gravitated towards ACH solutions, such payments have become more of a target for fraudsters. That’s a problem because the funds move faster, making it much harder to recover a fraudulent ACH.

Business Email Compromise (BEC) schemes are the most common type of attack. These involve fraudsters masquerading as suppliers, company executives, or other high-ranking personnel, requesting that funds route to a new, fraudulent bank account. We’re already seeing that the pandemic has provided BEC scammers with new material to convince an overwhelmed AP to comply with these requests.

To protect your team, you need a partner who can support your enablement and fraud protection goals, so your team can stay focused on cash management.

Finance and AP have long intended to go electronic, but the transition has been slow. It’s not just the flip of a switch or the sudden addition of a new payment type. Very few businesses realize how strategic the shift is until after they’ve committed to an update. Many companies that don’t plan accordingly have had to revert to check payments when they realized the actual cost and effort it takes to switch suppliers over. Rather than trying to attack a single pain point, you have to address the whole process from top to bottom.

Now we are going to see an acceleration of this shift with the remote workforce and challenging economic conditions. There is a new imperative, and there is also new technology. Interestingly enough, a lot of the fintechs providing B2B payments technology got their start during the great recession, when the financial system collapsed, and cloud technology was being born. These are now mature companies, ready to “cross the chasm” and transition their partners to 100 percent electronic payments.

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Derek Halpern is the SVP of Sales for Nvoicepay. He has over 20 years of technology sales and leadership experience, including 16 years in the fintech and payments space. Derek’s previous positions include VP of Sales at Billtrust, an AR automation technology company, and Sales Director at TranZero, a payments company. Previously, Derek co-founded a company called ProService Software, which was sold to Solomon Software. Derek became the Western Region Sales Manager for Solomon following the acquisition. Derek earned a BS in Business Management from Pepperdine University.

Josh Cyphers is the Vice President of Product & Strategy for Nvoicepay. For the past 20 years, Josh has managed successful growth for a variety of companies, from start-ups to Fortune 100 companies. Prior to Nvoicepay, Josh was a Senior Manager and Consultant at Microsoft, Vice President of Finance at Visa, and Business Planning and Analysis Manager at Nike. Josh is a lapsed CPA, and has a BS in Economics from Eastern Oregon University.

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8 Ways your AP Process Leaks Spend – and How AI can Prevent it

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Today’s companies put huge efforts into negotiating the best terms with their suppliers. Procurement teams regularly spend weeks or months going back and forth on contract terms and volume discounts to get the most bang for their buck.

Too often, these savings aren’t realized. Suppliers may ignore the negotiated terms when invoicing, and AP teams, faced with a deluge of invoices and limited time to get payments out the door, only sample select transactions and only do basic 2 or 3 way matching of volume and price. This inevitably means costly invoice problems fall through the cracks — from mismatched invoice and contract terms, to unapplied discounts, to completely bogus charges, and more.

Optimizing your AP process may seem like a big undertaking, but it’s much easier than it might seem, and worth the effort. According to The International Association of Contracts and Commercial Management (IACCM), companies that work to improve controls over invoice payment will see a return of more than 4 percent of invoice value.

Even if you’re ready to improve your AP process, one pesky question remains: How do you actually do it? Once upon a time, it would have been necessary to hire more people to check every transaction. But today, technology can provide a crucial and cost-effective assist for overstretched AP teams.

Artificial intelligence (AI) is becoming more and more common in business contexts. Nearly 90 percent of companies planned to increase AI spend in 2019, according to a Deloitte survey. However, the idea of actually using AI may feel a little unrealistic for some. While more and more corporations are automating AP processes, 30 percent of businesses still rely on manual invoice processing, according to The Institute of Finance and Management.

If you’ve already implemented other technologies in your workflow, AI can fit in seamlessly. AI-powered spend automation software integrates with existing expense management, invoice automation, contract management, and ERP systems to augment rather than disrupt your status quo.

8 common (and costly) invoice problems

Here are just a few of the problems AI-powered solutions can help your team avoid during the spend audit process:

1. Fraudulent invoices: When it comes to invoice fraud, if you can dream it, chances are fraudsters have tried it: From inflated invoices, to completely made-up charges, to shell companies, to vendor impersonation, and more.

Too often, the calls are coming from inside the house. The Association of Certified Fraud Examiners (ACFE) found that occupational fraud (fraud committed by employees against employers) resulted in more than $7 billion in total losses in 2018. AI systems with a compliance component can spot risk factors commonly associated with fraud so your team has a chance to review these invoices manually before they’re paid out.

2. Duplicate invoices: Up to two percent of the average company’s invoices a duplicates, according to AuditNet. This may seem like a relatively small number, but for businesses doling out millions or billions on business activities, the figure is far from trivial.

Some vendors might double up charges on purpose, but often duplicate invoices are mistakes (after all, your vendors’ finance teams are overworked too). While some invoice automation systems try to catch these double charges, they usually only succeed if the invoices are labeled with the same number or have the exact same total — which isn’t always the case, particularly if there’s someone scheming behind the scenes.

3. Missing discounts: You fought hard for volume discounts, but how often are you checking invoices to make sure they’re applied? AI-based systems can often  compare contract and invoice terms automatically to make sure you’re not missing out on early payment, loyalty, or quantity discounts. You’ll be notified of any missing discounts so you can remedy the situation before you pay. In the case of early payment discounts, this software notifies you that the invoice should be prioritized to get payment out in ample time.

 4. Mismatched service levels: You signed up for the standard package, but you’re being charged for the premium offering. This type of mismatch is all too easy to overlook amid your monthly deluge of invoices.

The correct AI solution can compare agreed-upon service levels in your contract with every invoice you receive to make sure that this type of costly problem doesn’t fly under the radar. When it comes to physical items, it can ensure you receive all the items you’re being billed for before you pay, by double-checking shipping documents against inventory systems.

5. Double payments: Double payments can happen as a result of vendors submitting duplicate invoices, but the problem can also originate from your own team. Accounting systems hold up an invoice for all sorts of reasons, e.g., it requires further approval or it failed a match. In many cases, an employee might intervene to get the invoice paid manually (to meet a deadline or because they’re being pestered by a supplier or don’t want to damage a relationship). Meanwhile, the invoice is still in your system and when the hold is later cleared up, it’s processed and paid… again.

This is another one of those sources of spend leakage that most companies never become aware of. AI-powered systems constantly cross-check invoices and payments and flag any duplicate payments before you send them out, so the money never leaves the front door.

6. Exorbitant pricing: It can be difficult and time-consuming to keep track of the market rate for all the various services and products your business requires. AI can regularly compare your current costs to thousands of other sources to determine whether your invoices reflect the market rate for the goods or services provided. It can also flag individual invoices where your price exceeds the market rate.

Knowledge is power, and this information helps your business negotiate more effectively with existing suppliers or look to new ones if there’s an opportunity for cost savings without sacrificing quality.

7. Unsatisfactory work activity: When it comes to hiring contractors, there are situations when it’s particularly difficult to understand and assess whether they’re fulfilling their agreed-upon duties, like professional and IT services. AI-based tools can ingest nearly unlimited data to build a profile of what comprises satisfactory work activity — e.g., regular activity in Slack or over email — and highlight changes in the typical patterns. This helps you verify that you’re paying contractors fairly for the work product they’re providing.

8. Overpaying for software: Are you licensed for seven software seats, but only using three? It’s not uncommon for organizations to overpay for software licenses without ever realizing it. AI-based software keeps tabs on your organization’s software usage and compare it to the charges on your monthly invoices to help alert you to savings opportunities.

How AI can help

Implementing a best-in-class AI solution can support a consistent process and add an additional layer of scrutiny. These solutions make it possible to audit 100% of invoice spend prior to payment, automatically and near-instantaneously checking every invoice in your system for risk factors before they’re paid, and flagging the highest risk items for your team to review. This will help your team get ahead of problems and potential leakage, rather than try to recover it afterwards.

Below are the critical requirements for considering an AI solution for AP spend management:

1. Audit 100%, prepayment. Automatically audit 100% of invoices before reimbursement with AI.

2. Understand documents. Instantly scan every line of every invoice to understand charges and track the correct spend category.

3. Enrich with intelligence. Check online sources to identify better prices for similar goods and services.

4. Assess and refine risk. Flag suspicious addresses or billing changes to avoid fraud. Spot duplicate charges from other invoices, other invoice systems, or from expenses.

5. Streamline process. Integrate into your existing AP automation system to audit every invoice in real time to spot errors, waste, and fraud.

Conclusion

The best AI software can help your team regain control over your spend by checking every single transaction to identify high-risk invoices in your pipeline — saving time, streamlining processes, and ultimately reducing spend leakage.

If your AP team’s efforts to find problematic spend feels neverending, you’re not alone — but it doesn’t have to be that way. AI has changed the paradigm for modern finance teams, giving them greater visibility into their AP process and the time they need to address the highest risk issues. Not only can AI transform the way finance teams operate, it also saves them business money by spotting problems consistently and before invoices are paid. By implementing a leading AI solution, your team can audit 100% of spend, make sure that every invoice complies with its contract terms, and ensure you’re receiving every savings opportunity you’re entitled to — all while paying your bills on time.

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Anant Kale founded AppZen in 2012 to bring AI into back offices around the world. As CEO he is responsible for the product vision and execution of the company’s broad mission. Previously he was the VP of Applications at Fujitsu America from 2009-2012, responsible for product management, and delivery of Fujitsu’s applications and infrastructure for enterprise. He has 15+ years of experience in software development. He has an MBA and a BS in Finance and Engineering from Mumbai University.