CHAPTER 5: CASH APPLICATION, DEDUCTIONS, AND DISPUTE MANAGEMENT
In the U.S., growth in non-check payment transactions has increased, although there is a long way to go. Julia Roberts, ARM, Manager of Revenue Accounting at Ingram Barge Company, notes, “We do prefer wire or ACH payments, but we do get resistance from some of our customers. I would say we probably get 70% of our payments either by wire or ACH. This works very well for us, but we do have a straggler every once in a while for which we have to track down the remittance.” As the internet and products for business-to-business payments become more trusted, more B2B payments are being made through electronic channels. Businesses are able to sign up consumers for electronic billing and electronic payment by offering consumers special deals and by appealing to consumers’ “green” and paperless lifestyles. Many consumers have embraced paperless bills and e-payments as quick and easy ways to pay monthly bills and are reaching out to ask for e-payments. Business-to-business e-payments, however, have been slower to catch on for many reasons. The primary reason is resistance to the change from a current check-clearing system that “works,” in combination with market confusion. Changing the current pay process requires knowledge of new pay methods, along with system changes that could be expensive. Doreen Smuda, BAC, APM, Manager of Accounts Payable & Accounts Receivable for Cameco Corporation, notes that her operation is 100% now paperless. “Invoices generated from our ERP, SAP, are saved as PDFs, and are emailed to the customer with any relevant attachments. PDF invoices are retained in SharePoint for the required retention regulatory period. Hard copies are not generated.” As AR departments are realizing the benefits of receiving electronic payments, many are asking customers to pay electronically. Benefits of e-payments include quicker payment, improved cash flow, and greater security and efficiency for you and your customers. Many companies offer discounts as an incentive for their customers to change their payment process and educate their customers on the cost and fraud reduction benefits that come with moving from paper check to electronic payments.
Gradually, business customers are embracing electronic payment networks in order to simplify the entire source-to-settle process.
AUTOMATED CLEARING HOUSE (ACH) ACH is one of two types of electronic funds transfer (EFT), a method of transferring funds electronically from one bank account to another without producing a check. (The second type is wire transfer, discussed below.) The ACH network is a well-developed method for accepting e-payments. The primary benefits of ACH are simplicity and lack of cost for the payee. There is no transaction cost for getting paid electronically via ACH as there is for payments via p-card or credit card. An ACH payment simply shows up as a credit to your bank account. There are two types of ACH transactions: credits and debits. A credit is when the buyer sends the money from their bank account to the seller’s bank account. A debit is when permission is given by the buyer to have the seller take the money from their account. Debits are either recurring transactions such as mortgage or insurance payments, or non-recurring point-of-sale (POS) payments. B2B tends to mainly use ACH credit transactions.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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