CHAPTER 5: CASH APPLICATION, DEDUCTIONS, AND DISPUTE MANAGEMENT
With STP 820, the payment and information arrive together. AR can credit the account because it has the information to apply it.
There are two major standards: 1. Europe: ISO 20022 format, for use in the Single Euro Payment Area (SEPA); and 2. United States: STP 820 is approved by the American National Standards Institute (ANSI) and promoted by the national Automated Clearing House Association (NACHA).
This leaves open the question of an eventual global standard, a question that may be resolved through mapping from one standard to the other.
CARD PAYMENT (CREDIT CARD, P-CARD, PURCHASING CARD, PROCUREMENT CARD) Card networks allow customers to pay invoices by creating payment instruction files generated by the customers and then sent to customers’ and vendors’ banks. Although most businesses think of credit-card payments as being reserved for consumer transactions, B2B payments can also take place with corporate credit cards—also commonly called purchasing cards, procurement cards, or p-cards.
The ease for customers to pay with credit cards and the ability for businesses to use credit cards like short-term loans help make this option attractive for customers.
Because the online networks for accepting cards are very well developed, with security in place, accepting cards online is neither difficult nor expensive to set up.
From AR’s perspective, accepting credit cards is one way to guarantee that payment is made on an outstanding invoice. AR can often persuade the customer to pay for an outstanding invoice for smaller amounts, usually in the range of $1,000 to $2,500, on their corporate or personal credit card, and have the money appear in the corporate account within a matter of one or two business days. The obvious downside of accepting credit cards for payment is the bank service charge, typically ranging from 2 to 3 percent. However, many companies consider accepting credit cards and paying the service charge worth it to get immediate payment; it is similar to early payment discount offers. There are companies whose corporate policy is to never accept a credit card/p-card for payment. It is important, however, to find out why this policy exists. Even if getting the money in the bank sooner is not enough of an incentive to pay the points, at least reconsider this pay method before saying “no” to a potential customer whose credit score is not strong enough for open terms, or before you write off a bad debt. Receipt of customer payments via credit or debit cards requires the seller to ensure that the customer’s card account number is protected and kept confidential. The U.S. lags behind many other nations in the protection of confidential information. However, a mandate set by the Payment Card Industry (PCI) Compliance Council requires all companies that process credit card payments to maintain a secure environment and comply with the PCI DSS (Data Security Standards) 2 .
2 https://www.pcisecuritystandards.org/document_library/?category=pcidss
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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