EXPLANATION ISSUE ACH PAYMENTS WITH REMITTANCE DETAIL

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 document containing the banking information for their suppliers. This file is delivered to the organization bank, which processes ACH payments overnight that can be found in the lender accounts of suppliers by another morning. One problem: The suppliers have no supporting detail for the payments except for the name of the initiating party, which appears in the info transmitted by the bank. The end result is really a callback to the company, asking for the detail therefore the supplier can properly post the receipt information in its accounting system. This extra contact essentially eliminates the time saved by the originating company when it first put up the ACH payment system. Some companies have created something 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.

A great alternative for larger companies could be the PayBase Electronically Sent Payment module, made by Bottomline Technologies (www.bottomline.com). This software may be linked by way of a custom interface to any existing accounting package. It creates standard files from accounting records that meet ACH transaction formatting standards, automatically transmits this information to the organization bank, and—the important thing part—automatically sends remittance details to the customer 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 test its bank account for incoming funds the following morning. This application can be used not just for payments to suppliers, but and to employees for both payroll and expense reimbursements. However, this is a costly software package that requires the construction of a customized interface between the application and a company’s existing accounting software package. The sum total price puts this best practice out of reach of all smaller companies.