Opinion

Cash in on payment evolution

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Print this page Steve M. Jenkins, Suntrust

Consumers and businesses alike are increasingly using more convenient payment methods. From credit and debit cards to wireless card swipes and recurring electronic payments, these technologies are driving more streamlined payment solutions to the forefront for diverse businesses, large and small. 

Clearly, implementing a payments strategy into your 2010 plans is crucial to a business’ overall success.

Electronic transactions are often the least expensive ways to transfer funds between customers and vendors. After identifying and quantifying program goals, business decision makers should review available technologies to determine how they can help achieve objectives. 

Credit and debit card acceptance is increasingly important in B2B commerce.  Many organizations now rely on purchasing cards to reduce the administrative costs of working with vendors. In order to accept payments, businesses need to be able to accept the cards. Conversely, using purchasing cards within one’s own organization can streamline vendor payments while capturing pertinent information for company financial records and vendor management.

More flexible equipment is also an important component of a payments strategy.  For example, wireless point-of-sale terminals allow businesses to process credit and debit transactions on the go instead of being tied to a traditional store or office setting.  Wireless terminals also reduce the paper trail of customer card information created when card numbers are recorded on paper or keyed in during a transaction. Convenience as well as accuracy can improve the cash flow cycle for your company.

Another convenient payment option involves the use of the Automated Clearing House (ACH) network which allows a business to make authorized funds transfers to and from its bank account — in many cases skipping the paper check process.  Businesses can save time and money collecting and disbursing funds using ACH solutions while enjoying greater control over the timing of those transactions. 

Fraud protection measures of ACH processing are less time-consuming for your staff to monitor and often less expensive than those associated with check processing. Insurance companies, homeowners’ associations, landscaping services and other businesses accepting recurring payments can schedule automatic payments on a prearranged monthly date. Using ACH to accept direct payments can save companies 11.5 cents per payment versus paper checks, according to NACHA - The Electronic Payments Association’s electronicpayments.org.

Still, paper checks remain the most common non-cash payment. Depositing checks more quickly typically means faster access to cash and earlier insufficient funds notifications. Electronic check acceptance (ECA) converts the check payment into electronic form. Funds are cleared through the ACH network and generally deposited in two business days. 

In addition to expediting funds, ECA transactions can reduce processing fees at a company’s financial institution and can be paired with verification systems to prevent acceptance of fraudulent checks. There are restrictions around the size and type of checks that can be converted. Businesses must also follow guidelines for consumer notification and consent for conversion. You should make sure you understand these guidelines and the potential consequences for not following them before moving forward with a check conversion program.

Another approach for streamlining check collections is remote deposit, which allows business owners to scan checks from their home or office and submit them electronically to their financial institution for deposit.  Service companies, home-based businesses and others who receive check payments can gain access to funds without the time and travel of daily bank runs or delays when business demands supersede in-person deposits. 

Remote deposit also extends the hours for same-day crediting of deposits.  Unlike the ECA process, this service does not actually change the payment instrument.  Value is simply moved by check image rather than the actual check.  The implementation process for this service is very easy and none of the restrictions or client notification requirements associated with ECA transactions is necessary.

Finally, finding the right partner is critical to formulating a solid payment strategy. In many cases that experienced resource can be found at a bank or other financial institution. The right partner will readily sit down with senior management to create a customized program that can grow and change with a business’ immediate needs and long-term strategies.

Steve M. Jenkins is first vice president and regional treasury sales manager for Central Virginia and Hampton Roads at SunTrust. He is also a certified cash manager.  Steve can be reached at 804.782.7872 or .(JavaScript must be enabled to view this email address).  SunTrust Bank, Member FDIC.


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