Increasing Operational Performance With Accounts Payable Automation
Eft Vs Ach Payment
business are placing greater emphasis on operational performance, developing strategies to optimize the efficiency of their accounts payable processes. Introducing technology to streamline those processes is becoming an increasingly popular option, with accounts payable automation software particularly attractive to finance executives looking for comprehensive, cost-effective solution. One benefit of these automated systems is the choice they offer between EFT (electronic funds transfer) and ACH (automated clearing house) payment technologies, though many are unaware of the differences between the two.
In an EFT payment, funds are debited automatically from the payor’s bank, with funds transferred directly to the payee’s bank. This process eliminates the need to manually write checks or transfer funds, saving time and reducing the potential for errors or costly paperwork. EFT is also the preferred option for larger payments due to the enhanced security it offers.
By contrast, ACH payments involve the transfer of funds between two bank accounts through clearing house. Payments are typically processed in batches, rather than individually, and require beneficiaries to submit additional paperwork, often resulting in higher administrative costs. With ACH payments, greater risks are associated with the accuracy and security of the process.
A good accounts payable automation system should offer payors the freedom to select their preferred payment technology in accordance with their specific organizational requirements. The ability to tailor the system to business particular needs is essential for optimal operational performance. Fees for both EFT and ACH payments should be broken down and compared as part of the selection process, given the cost sensitivity in accounts payable departments.
The system should also include features that make it easier for finance executives to track payments, with visibility across all accounts. This will allow them to assess the effectiveness of their current system, identify gaps, and make further improvements. Automated reporting can be beneficial too, helping to provide the analysis necessary to identify outliers and stay ahead of potential compliance issues.
When it comes to managing accounts payable processes, automation systems with EFT and ACH payment capabilities can make valuable contribution to operational performance. With careful selection, forward-thinking executives can leverage the advantages of both payment methods to enhance efficiency and ensure they remain compliant and secure.
