In our previous post in this series, we looked at how Interac® e-Transfer Bulk Disbursement could help reduce costs and improve customer service through the payables function without much effort or risk. In this post, we look at how receivables can be similarly transformed at many organizations from the high-cost and inflexible process it is today.
To collect revenues for the goods and services it has sold, a business with a non-digital receivables function has to work with paper – and lots of it. First, it has to create a paper invoice for every single one of its customers: printing it, folding and putting it in an envelope, and mailing it. While automation has certainly made this faster and cheaper over the decades, it still costs money and takes time.
Then the business waits. It waits for the invoice to get to the customer. It waits for the customer to open the envelope, write a cheque, fill in the payment form, and put both in the mail. It waits for the cheque to arrive by mail. When it finally does – assuming it didn’t get lost – the business has more work to do: opening the envelope, processing the payment, storing the payment form, and depositing the cheque. And then it waits again, this time for the cheque to clear.
Using paper, it’s a long road from billing date to cash available for use. A long road that has to be funded with credit or working capital, neither of which are free.
Until recently, the main alternative to paper has been Automated Funds Transfer (AFT), and while this has gotten progressively easier to use (particularly with the advent of online banking), it still requires customers to find and enter long account numbers as part of “setting up” a vendor as a permanent payee – not always worth the effort for vendors with whom a customer isn’t regularly doing business. What’s more, it takes a number of days for payments to clear the system, leaving the business waiting for its funds, and the customer uncertain of when their payment will actually be credited (which risks due dates being missed).
With Interac e-Transfer, by contrast, a customer can pay an invoice without having to set up the vendor as an AFT – and when they pay their bill, funds are debited immediately from their account and received by the business in 30 minutes or less. In the future, we plan to offer companies the ability to issue invoices through a single “bulk” file transfer to their financial institution – similar to how Interac e-Transfer Bulk Disbursement works today – with invoices customized to the business sent to all customers in the file via email. Capturing all the benefits of straight-through processing, the service will enable customers to click on a “pay now” button in the email invoice, authorizing payment to be made over the same platform in the same short time – an even easier process for customers than Interac e-Transfer offers now.
And as we all know, the easier we make a process, the more often and the sooner it will be used – which for a business means revenues arriving faster, and at less cost.