MEANING ISSUE ACH PAYMENTS WITH REMITTANCE DETAIL

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Larger companies have now been able to cover invoices with Automated Clearing House (ACH) transfers for a few time. Their accounting systems create a file of the amounts to be paid and link this to a file containing the banking information because of their suppliers. This file is sent to the company bank, which processes ACH payments overnight that can be found in the financial institution accounts of suppliers by the next morning. One problem: The suppliers haven’t any supporting detail for the payments except for the name of the initiating party, which appears in the information transmitted by the bank. The effect is really a callback to the company, asking for the detail so the supplier can properly post the receipt information in its accounting system. This extra contact essentially eliminates enough 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 the payment.

An excellent alternative for larger companies is the PayBase Electronically Sent Payment module, produced by Bottomline Technologies (www.bottomline.com). This software could be linked through a custom interface to any existing accounting package. It creates standard files from accounting records that meet ACH transaction formatting standards, automatically transmits these details to the business bank, and—the key part—automatically sends remittance details to the client by e-mail or fax. Given the slight delay in the transfer of ACH funds, which means the remittance detail might actually arrive at the supplier before the payment, thereby giving the supplier warning to check its bank take into account incoming funds the next morning. This application can be used not only for payments to suppliers, but and also to employees for both payroll and expense reimbursements. However, this really is an expensive software package that will require the construction of a personalized interface between the software 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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