By Julie Lubetkin, VP of Strategic Partners
Between the rigors of growing a customer base, marketing, managing employees, creating partnerships, and planning for the company’s future, business owners often have a very limited pool of time at their disposal. Every iota of their time – plus their employees’ time – should be spent on high-value activities that can support the company’s growth. More sales or customer services. Less administrative work.
Traditionally, bill payment – which includes tracking and processing purchases, sales, receipts and payments - can be a source of high-labor, high-cost time consumption. This is doubly so if you are rooted in paper-based processes. Issuing and reconciling bills can mean sorting through files (or documents to be filed) for contracts and relevant information. Paper-based invoicing, which depends on printing, stuffing, and adding postage to envelopes, can drag an accounts receivable process into long windows of time.
Think about the typical 15-step process for running a check.
1.Employee requests approval on payment.
2.Employee follows up with approvers to review payments.
3.Approvers review requests, discuss discrepancies, and request additional documentation.
4.Employee searches and retrieves files and sends them to approvers.
5.Employee adjusts payments as necessary.
6.Accounting manager checks the approvals before providing final thumbs up on printing the check.
7.Employee sets up accounting system to run checks.
8.Employee retrieves check stock, prepares the printer, performs a test payment run, and corrects misprints.
9.Employee performs the check run.
10.Employee gets signatures on check.
11.Controller reviews checks for accuracy.
12.Employee provides documentation for any controller questions.
13.Employee changes payment amounts in accounting system and re-runs checks as necessary.
14.Employee stuffs, stamps, and mails the envelopes.
15.Employee creates positive pay check issue file to send to the bank to prevent check fraud.
And this process doesn’t even include the post-check run which encompasses addressing payment questions, pulling transaction history, and updating the accounting systems.
Clearly, the entire bill payment process is an area ripe for improvement. The question now is: Is it time to outsource your bill payment?
Outsourcing in general often offers time and cost savings for businesses while taking routine and process-oriented activities off of an owner’s hands. A survey by KPMG found that half of all businesses are expanding their outsourcing activities in order to save time, money, and strategically move their companies into more value-focused activities. Outsourcing often allows in a higher caliber of talent and experience when compared to keeping a function in-house while oftentimes reducing costs and time spent by employees on low-value activities. Moreover, it can also introduce valuable technology that helps improve and automate processes.
Outsourcing your bill payment can yield high-priority benefits for accounts payable, accounts receivable, and cash flow management – especially if a cloud-based technology is incorporated.
For accounts payable, it means you will have the ability to go completely paperless and introduce automation. You’ll be able to schedule your bill payments and upload your bills and paperwork to a centralized, cloud-based repository. Imagine automated notices that remind you of when a payment is due or being able to immediately know the approval and payment status of every bill. It also means you can store contracts with bills for easy access – no more digging through files, no more storing file cabinets.
For accounts receivable, invoices could be mailed or emailed on your company’s behalf. This eliminates the hassles and charges of printing, postage, and mailing. Migrating payments online would give more payment options including online payments, credit card, or PayPal while reducing your filing and trips to the bank. You can quickly see when a client has reviewed an invoice or scheduled a payment; and clients can get automatic reminders as due dates approach. Most importantly, these process enhancements allow you to collect your receivables approximately two to three times faster than paper-based processes.
Outsourcing bill payment gives you the strategic insight into your financial performance needed to successfully run a business. You can eliminate bulky spreadsheets in favor of a cloud-based reporting platform that is always up to date. This information allows you to project receivables, payables, and balances months out, revealing potential problems in advance and helping you rapidly visualize alternatives.
The first step of deciding if outsourcing bill payment is right for you is to determine what your hidden costs are and what potential there is for time and cost savings. This Hidden Cost calculator builds off of your business-specific requirements in order to give you an estimated cost and ROI on outsourcing your bill payment. Input data such as wages, the number of checks processed each month, ACH transactions per month, and the number of bank accounts and payment runs per month. After reviewing the information, it will calculate your current bill payment costs and how much can be saved with outsourcing.
Explore the potential for ROI now to discover what your savings could be.
Also, check out the “Bill Pay + Oursourcing: A Foundation for Future Growth” webinar to learn the benefits of outsourcing and how to sell outsourcing bill payment services to your clients. Live event is scheduled for May 1, 2014 at 1 PM PT. Join us and ask us your questions.