GBC Treasury Solutions: Pay Overview
Brian Weiner | Senior Product Manager | Treasury Solutions
In an increasingly digital world, the need for faster and more transparent payments is more important than ever. Whether you are paying your employees, vendors/suppliers, making large one-time purchases or funding recurring monthly expenses, having the cash you need when you need it is critical to achieving your business goals.
Implementing a complete Payables solutions framework includes not only paper check processes but also a complete electronic payables process.
A Payments solution should address the following needs:
- Automate manual processes
- Reduce fraud
- Maximize investment
- Increase efficiency
- Improve Accuracy
- Provide actionable metrics/information
A Product Mixture that addresses Payment needs includes:
CashCash is still used for many businesses, such as the retail industry, coffee shops and convenience stores, for example. Considering the fees associated with debit and credit cards, many retail small businesses prefer cash payments from their customers. Cash has its own disadvantages, as it can be lost, stolen, or destroyed. Businesses dealing in large transactions must often incur additional expenses to pay for related security measures such as secured transit, processing fees or fraud detection.
ChecksChecks have fallen out of favor over the years due to advancements in technology, allowing payments to be electronically submitted. However, there are instances when checks might be helpful, such as when the seller wants a guaranteed payment. Banks offer two types of checks that help sellers receive the money owed from the buyer; a bank cashier's check or a certified check.
Online Bill PayOnline Bill Pay is a method of payment which allows you to issue payment instructions electronically through Online Banking. Online Bill Pay can virtually eliminate errors, making the management of a company's finances that much easier. As long as the recipient is able to receive an electronic payment, it will remain an electronic transaction. In some instances when the recipient cannot receive the payment electronically the transaction is converted to a paper check.
Benefits of Using Online Bill Pay
Automated Clearing House (ACH)ACH payment processing is more secure, cost-effective, and convenient than traditional paper checks and credit card processing. So, what is ACH payment processing, and how does ACH processing work? ACH stands for Automated Clearing House, an electronic network that allows people to transfer funds between two bank accounts directly. ACH payment processing is essentially a bank-to-bank transfer initiated from a merchant or a consumer. The merchant uses bank information from the consumer and directly debits the consumer's account, or a consumer enters the bank information to debit their account directly.
Features and Benefits
- Reduce expense with more cost-effective electronic funds collections
- Streamline reconcilement processes
- Improve daily cash positioning and forecasting
- Same Day ACH available for faster payments without the expense of wire transfers
- Collect recurring payments quickly and efficiently
- Reduce risk of check fraud
- Faster payments mean less idle cash and more funds for daily operations
Direct DepositA direct deposit is an electronic transfer from an employer's payroll account to one or more employee bank accounts. Direct deposit has steadily grown in popularity over the past few decades. However, several requirements must be in place before a direct deposit program is a feasible payment solution for a company.
Companies benefit from using direct deposit because:
- Costs are reduced or in some cases eliminated.
- Monthly bookkeeping tasks are simplified
- Payroll security is enhanced at a reduced cost
The benefits of direct deposit to employees include:
- Bank accounts credit payroll deposits on the scheduled payday
- Employees do not have to deposit checks on their own time
- Direct deposit is more secure and faster than making deposits in person
Wire OriginationWire transfer is a direct funds transfer completed electronically and sent to the desired recipient. The primary purpose of a wire transfer is to transmit funds quickly and securely. It's also a means of sending money across great geographical distances without the need for the physical mailing of cash and checks.
Benefits of Wire Transfers
While wire transfers are one of the more expensive ways to move money, they have several benefits that make them worthwhile. There are two main reasons why people wire money in both business and personal transfers.
One of the primary benefits of wire transfers is their speed. In business situations where deals can be made or lost in minutes, the ability to almost instantaneously send and receive payments can be vital.
Wire transfers are also preferred due to the finality of payment. Once the transfer is complete, it can't be reversed. Unlike credit cards or even ACH transfers, an outgoing wire transfer is nearly identical to handing over physical cash.
Credit CardsToday, credit cards are widely used for purchases and payments. Credit cards work by offering the company a line of credit where a business can draw credit up to a certain limit. When the company attempts to use their credit card, their account information is sent to the merchant bank. The merchant bank then receives authorization from the credit card network to process the transaction. Many businesses accept credit cards, though many that accept cards charge a fee from the merchant that provides the machine and payments infrastructure as well as their financial institution. This fee is often a percentage of the transaction amount and/or a flat fee for each payment.
Debit CardsDebit cards may look similar to credit cards, but their underlying mechanism is entirely different. When a debit card is used, funds are immediately withdrawn from the business' account. Instead of having a line of credit that the company can pull from in excess of what they have saved, debit card transactions can be declined if they do not have enough money in their account. Debit cards share many advantages as credit cards, as the small piece of plastic is easy to carry, widely accepted by many merchants, and has varying levels of fraud protection.
Get StartedAs outlined above, your business payment needs are unique and whether they are simple, complex, or somewhere in between, we offer a full range of tools to help you manage your payments and stay ahead of your cash flow needs. Which payment types work best for a given company is driven by three factors:
- Need for finality
- Speed of delivery
Partner with our Treasury Solutions experts and build a complete Payables process tailored-made to fit your business.
Phone: 866.711.4530 Option 3
Georgia Banking Company (GBC) is a full-service, commercial community bank headquartered in Atlanta, Georgia. GBC's team of veteran bankers know their communities and are focused on leveraging technology to deliver an exceptional service experience to meet the needs of growing businesses and private banking clients. The bank also offers a unique suite of mortgage products to independent mortgage bankers across the nation. Visit GeorgiaBanking.com to learn more.