Project Description

3 icons in a row from left to right, invoice, dollar sign, computer with check mark on monitor.There are two sides to every story. Switching to electronic payments increases efficiency for the payer but often increases the amount of paper and manual processing for the receiver.

This is because payers tend to separate the electronic payment from the remittance information. They may send remittance details by mail, email, or fax, or require receivables staff to log on to a separate bank or third-party web portal to view remittance information. Even when electronic information accompanies a payment, remittance details may be incomplete or not received due to incorrect formatting or the payer’s use of a proprietary format.

Receivers need an automated solution to these problems, and they need it now.

Efforts underway to address remittance challenges

Banks, fintechs, trade associations, and others are all looking at ways to improve electronic remittance processing.

Industry standards exist that could relieve receivers’ challenges. With the corporate trading exchange (CTX) format for ACH payments, full remittance information is transmitted to the beneficiary’s financial institution with the payment. However, companies have been slow to adopt the CTX format for ACH and enhanced remittance for wire transfers. Electronic data interchange (EDI), widely used by large trading partners, is not a viable solution for all companies.

Another method that shows promise are Real-Time Payments (RTP) method. Launched in November 2017 by The Clearing House, RTPs move funds between banks within seconds. Soon, this faster payment method will include a “request for payment” work flow to facilitate straight-through processing (STP). The proposed functionality will allow suppliers to submit invoices and “request” payment, and for payees to fulfill this request with an RTP transaction — all while linking payment funds and remittance data directly to corresponding invoice and account numbers.

Bank solutions can make an immediate impact

If your business is ready to make improvements right now, banks offer the best opportunity.

What businesses need most are effective tools for streamlining and automating the receivables matching process for electronic payments. Those tools must integrate seamlessly with exception management on the receivers’ side without requiring any change by payers. Banks have built automated lockboxes to enable STP of paper receivables. Look to those same banks to enable STP of wire, ACH, and new faster payment methods.

Electronic receivables solutions from your bank can:

  • Match and validate incoming payments. Expect your receivables bank to match incoming payments to their remittance advice for you. You supply the matching criteria, such as payer name, invoice number, account number, and dollar amount. Bank engines — similar to those that match issued check files to presented checks in Positive Pay services — make the match.If you leverage your receivables bank for bill presentment, either by outsourcing invoice printing and mailing, or delivering electronic bills, you can use the same billing file for matching remittances. Issuing electronic bills — where payees can submit payment through a secure payment portal — is another effective way to improve the accuracy and completeness of electronic remittances. The portal maintains tracking information to automate posting to the correct invoice and account.
  • Streamline decisioning and reduce exceptions. Once receivables data flows into your ERP system, payments that don’t match create exceptions. Bank tools can reduce this challenge by presenting questionable or incomplete payments for decision-making before they hit the ERP system. Staff can quickly review the items via a secure bank portal, to manage and resolve issues faster.
  • Address multiple payment methods and channels. Your customers want choices — but often, these choices create more work, with a separate process for each payment method and channel. Your bank can tackle a variety of electronic and paper remittances, then provide you with a clean, consolidated file that’s ready for your ERP system. Staff can be more productive and focus on higher-value work.
  • Align to the specifics of your business. By applying decisions you make on exception items to future payments, your bank can increase STP and reduce the number of exceptions over time. Where payers include electronic information that is incomplete or unreadable, expect your bank to fix the information systematically whenever possible to enable STP for information reporting.

By handing off problems with electronic receivables processing to your bank, you’ll dramatically reduce the manual work and exception handling of your receivables department and move closer to a paperless processing environment. You’ll also benefit from expertise and systems designed for high-volume transaction processing and rigorous information security. Ask your bank how much of this work it can take off your hands.

For more information, contact your Wells Fargo representative or fill out the Contact Us form on this site.