NACHA “Topical Talk” on Integrated Receivables Highlights Key Factors in Automating a Multichannel Solution

May 20, 2015

By Bill Ensslen

Recently TransCentra sponsored an “Integrated Receivables Topical Talk” at the NACHA Payments Conference in New Orleans. During the discussion, attendees had an opportunity to speak on the challenges they face, approaches they have taken to address inefficiencies, and more with Nancy Atkinson, Senior Analyst, Aite Group. This blog highlights the key takeaways of the main discussions.

High or Critical Integrated Receivables Capabilities

The definition of integrated receivables varies depending on the analyst, vendor, and customer viewpoint, as well as the specific industry. In this case, the attendees were primarily from the banking industry focused on providing services to their commercial customers. Participating banks prioritized the following capabilities as being high or critical in importance to an integrated receivables solution they would use or offer:

  • Remittance data capture and processing for all payment types
  • Consolidated reporting of receivables and exceptions for all forms of payment
  • Automated exceptions processing including workflow
  • Automated invoice matching
  • Automated posting to internal accounting, credit and treasury systems
  • Integration of check and remittance stub images from your lockbox provider
  • Transaction aggregation
  • Automated returns processing
  • Clearing and settling all payment types to your company’s/client’s bank account(s)
  • Payments and receivables analysis of trends and current activities
  • Exports and extracts

High or Critical Integrated Receivables Capabilities

Business Case and Associated Service Offering(s) are in the Discovery Phase

As the traditional paper lockbox loses more transactions to electronic channels, banks are looking to regain the associated fee revenue by offering similar services for electronic channels. Most of the banks in attendance do not currently offer an integrated receivables solution and are just beginning to evaluate how they would enter this market. Although the banks receive the actual payments via check, ACH, and wire, they do not typically receive the associated remittance information unless the payment comes through the lockbox. There are no prevalent standards for receiving electronic remittance information. In fact, most often the banks’ clients receive this information via email with and without attachments that contain the details of the payment. The banks are uncertain whether their clients will be willing to provide the necessary vendor billing information required for an integrated receivables solution to perform payment association and matching. In addition, the multiple channels and electronic formats present a challenge to consolidating the information and capturing essential remittance information.

Summary

According to a March 2014 The Accounts Receivable Network (TARN) study AR Benchmarks: Cash Application, over 50 percent of the remittance information for payments is now received through channels other then the paper lockbox. So dealing with the multiple channels and data formats is a real industry problem begging for a solution. For large corporations the problem is significant enough to define a business case to solve the problem through an integrated receivables solution. For the mid-tier and small business market, a simplified set of services is required so that both the effort and the investment can be cost justified.

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