Project Description

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By Laura Lee Orcutt, Head of the Treasury Management Product Group at Wells Fargo

Every business pays employees, suppliers and taxes. Every company collects payments from customers. Smarter payments optimize both sides of the payables and receivables equation to enhance the customer experience, working capital and the revenue cycle.

A strategic mindset

A smarter payments strategy seeks to understand linkages between payer-payee needs and then to bridge the needs of both parties by integrating payments and information, delivering them fast, making things simple, and seamlessly fitting into the customer experience and broader processes that impact the revenue cycle.

How are smarter payments making business better?

Emerging trends include:

  • Pay anytime. There is no deadline for sending payment instructions to your bank. In a real-time payments environment, your business can transact anytime. You define your business day, and it can be 24 hours.
  • Manage liquidity differently. Anytime payments are changing consumer expectations around money management. Payments can become smaller, more frequent, and better aligned with available cash flow. For example, consumers can choose to pay a mortgage premium or utility bill based on excess funds on hand rather than at a standard, fixed frequency such as monthly. Payments can be last minute or on demand.
  • Forecast more finely. Increasingly banks are providing consumers with information and tools to help them plan financially based on their cash positions. Likewise, businesses that use smarter payment strategies for business to business customers can better utilize information for more granular forecasting that helps to optimize liquidity management.
  • Enhance the revenue cycle. Connecting the dots between payer and payee enables a more efficient revenue cycle. For example, when customers can pay faster, it can free up credit earlier to do more business.

The foundation: a clever way to connect to banks

The basis for paying and receiving smarter is a fundamental change in how banks can fit into your business. Historically companies have sent instructions to their banks by plugging into an online banking portal, transmitting files, or using host-to-host communication. Today banks are turning this on its head by bringing services directly into your systems so that you don’t have to leave your environment to access banking services and information.

Ride share services like Uber and Lyft achieve this. Drivers and customers can do everything, from ordering a car to pinpointing location pickup and accepting payment, without ever leaving their app. Banks are bringing this model to their customers.

APIs enable this approach by allowing banks to fit into your systems in a way that makes things seamless. For example:

  • Streamlined user administration. Rather than managing user entitlements through your bank’s online portal, your administrator designates entitlements within your ERP, CRM and other systems. Your systems then interact real time with banks, making and sending requests between through usual workflows, rather than having to sign-in to separate bank systems. These can all be managed via APIs to access information with these entitlements.
  • Seamless service. Customer service representatives can see the right details at the right time on screen rather than logging into others system to check a payment’s status.

The best of both worlds

Organizations can evolve at their own pace. They can continue to use existing batch processes while bringing in smarter payment tools, such as new faster payment methods, where real-time processing capabilities make sense.

Payroll illustrates this:

  • New employees or staff, who missed a payroll cycle, may need a one-time payment.
  • Gig economy workers may expect immediate remuneration or multiple smaller payments following a project.

Banks can support your ability to make all of these types of payments.

Coming together

To optimize payables, receivables and liquidity still requires specific tools that focus on each component. However, these pieces are coming together in ways that bring greater value as a whole to your business and your customers. Smarter payments are helping to realize this vision.

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

Laura Lee Orcutt is executive vice president and head of product management for Wells Fargo Treasury Management. Her team is responsible for strategy, development, and technical consulting on Wells Fargo’s industry-leading treasury management products.