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Five Ways You’re Paying Your Business Bills like It Is 1999

Payment Automation

Remember the Y2K bug and how long ago it happened? Thankfully, we all made it out alive, but many businesses still pay their bills the same way they did back then. Some business owners, accountants and bookkeepers are reluctant to change back office processes once they’ve been established. Business owners tend to think, “Why change what isn’t broken?  I’ve done it this way for years and haven’t seen any problems.” But when it comes to small business payments, your current workflow may be broken, especially if you don’t keep up with the latest best practices, tools, and technologies. By not advancing your bill payment workflows, you’re leaving the door wide open for fraud or other serious problems. 

Here are five of the most common small business payment mistakes and the best ways to overcome them.

1. Clinging to paper checks

Instead of paying bills by writing paper checks, explore digital payment options.

Checks have a long history in business payments and some reports say upwards of 70 percent of companies still rely on them. However, paper checks string out processes and smother transparency. Valuable time – and it builds up quickly – is wasted printing, signing, copying, stuffing and mailing paper checks.

Then you begin a waiting period for the checks to clear and get reconciled.

Paper checks also pose significant security risks. Employees can steal check stock (and often do – it is a common fraud tactic). Signatures are easy to forge, but investigating fraud is difficult. Also, thieves can intercept mailed checks or steal them from desks.  All a person needs to cash in on a quick payday is the exact information prevalently embossed on your checks: banking account and routing numbers.

Digital business payment options, however, allow you to control who has access to the review and approval process. Banking account and routing numbers are not shared with recipients – no one can readily steal them. You can schedule electronic payments such as ACHs, EFTs or credit cards for specific dates or even set them up for recurring, automatic payments.

Plus, you get to jettison those expensive paper checks. That’s right – expensive. This infographic breaks it down. With check stock, printer ink, hours spent by employees, stamps, bank fees and more, paper check expenses add up quickly. We found that a company using 500 paper checks a month and needing three people in the review cycle could spend upwards of $24,000 a year vs. $1,600 for digital payments.

2. Not enforcing the separation of duties

No matter what payment tools or methods you’re using, you can never ignore the separation of duties. Basically, this principle protects a company by distributing specific responsibilities in a process among multiple people. When paying bills, if the person who records the bill is the same person who pays the bill, it opens the door to fraud opportunities. When you split the responsibilities, you create a system of checks and balances that verifies if the correct amount/vendor, etc., is being paid.

When you pay with digital business payment tools, you can control the review and approval workflow. Based on your company’s guidelines, the system will ensure that the correct people in the correct order are involved in bill payments. No payment is authorized unless that order – your separation of duties – is followed as specified. Due to these automated workflows through software, there are digital fingerprints of who does what in a transaction workflow. If anomalies happen, they are easily detected; this will deter fraud.

3. Avoiding automation and mobility

As mentioned in the previous section, it’s essential to have a separation of duties. It’s even better to be able to automate that process and the communications that go with it.

Automation enforces your separation of duties without sacrificing control of the process.

Here’s how it looks to apply automation to the bill payment process.

  1. Bills enter the digital payments system via email or scan and upload.
  2. Bills are coded. Most systems have smart data entry that remembers past entries to expedite this process.
  3. Bills begin the approval process as the system automatically routes each bill to the right approver at the right time in the business rule hierarchy. Each person pulls the bill up online to review it and can easily access contracts, payment histories and other financial documents necessary for review. The system will even send notices and reminders to keep the process on track. 
  4. When the bill has successfully finished the review process, the final approver simply clicks a button to pay or schedule payment.

With this level of automation, no one pushes invoices from desktop to desktop. You can always see where the bill is in the approval process. And bills don’t languish in the to-do pile, racking up late fees and disgruntled vendors.

The companion piece to automation is mobility. While you couldn’t run apps to pay bills with your pager back in 1999, you can now pay bills with your smartphone. A digital payment solution mobile app preserves your separation of duties and automation but adds in the extra convenience of secure mobile access. Instead of sitting in the office behind a desk, you can pay a bill from a little red Corvette, the airport or the beach – in just a few taps. 

4. Not consolidating payment-related documents

Bills and contracts come in all formats – some paper, some scanned, some online. As a result, these critical pieces of the payment process end up in a thousand different locations in a company. Some may be laying on a desk. Others sit in a specific person’s email or desktop or may be misfiled and difficult to find. Documents spread throughout an enterprise mean employees scramble to find them or are even barred from ever accessing them.

All payment-related documents should be stored together and accessible by your digital payments solution to make your business payments process more efficient and streamlined. That way, when approving a bill, you can find contracts, payment histories, and past conversations with vendors all stored in one place and easily accessible. Everything a person needs to review and approve bill payments is at their fingertips.

5. Ignoring integrations 

You’ve jettisoned paper checks. You have a fantastic digital payment tool for your business. You’ve checked all the boxes, right?

Well, there’s one more.

Digital payment solutions work best when integrated with other accounting tools. For example, at Bill.com we integrate with accounting solutions such as QuickBooks Online, QuickBooks desktop, Xero, NetSuite and Sage Intacct. That way, your main accounting software is always updated with the latest bill payments and transactions. No double data entry is needed. No employee time is wasted on manual labor. Instead, you have information flowing between systems giving you real-time data on your financial performance.

The same goes for accounting-related functions such as expense reports. The Bill.com integration with Expensify, for example, simplifies the expense report process and then transfers that data to Bill.com for payment.

Ready to modernize your business bill payments? Start with this risk-free trial.

October 11, 2018
Elsvette Buenaventura
Senior Implementation Advisor, Bill.com
With more than a decade of experience in the financial industry, Elsvette has assisted numerous companies and their financial stakeholders utilize cloud-based applications to increase efficiency and security in their banking workflows in order to save them time and money. Currently, she is a Lead Implementation Advisor at Bill.com where she and her team help clients reinvent their back office by using Bill.com to automate the way they pay bills, send invoices, and get paid.