DEFINITION ISSUE ACH PAYMENTS WITH REMITTANCE DETAIL

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Larger companies have already been able to fund invoices with Automated Clearing House (ACH) transfers for some time. Their accounting systems create a record of the amounts to be paid and link this to a file containing the banking information for their suppliers. This file is sent to the organization bank, which processes ACH payments overnight that appear in the financial institution accounts of suppliers by the next morning. One problem: The suppliers don’t have any supporting detail for the payments except for the name of the initiating party, which appears in the info transmitted by the bank. The effect is a callback to the business, requesting the detail so the supplier can properly post the receipt information in its accounting system. This extra contact essentially eliminates the full time saved by the originating company when it first put up the ACH payment system. Some companies have created a method that issues separate payment notifications by mail, but this extra system requires manual labor and results in supporting detail that arrives in the mail days later compared to payment.

A great alternative for larger companies may be the PayBase Electronically Sent Payment module, created by Bottomline Technologies (www.bottomline.com). This software can be linked via a custom interface to any existing accounting package. It generates standard files from accounting records that meet ACH transaction formatting standards, automatically transmits these records to the organization bank, and—the key part—automatically sends remittance details to the consumer by e-mail or fax. Given the slight delay in the transfer of ACH funds, which means the remittance detail could possibly arrive at the supplier prior to the payment, thereby giving the supplier warning to check on its bank account fully for incoming funds the following morning. This application can be utilized not only for payments to suppliers, but and also to employees for both payroll and expense reimbursements. However, that is an expensive software package that requires the construction of a customized interface between the program and a company’s existing accounting software package. The sum total price puts this best practice out of reach of most smaller companies.

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