Maximizing Operational Performance With Automated Payments
Eft Vs Ach Vs Wire
When optimizing for efficiency and cost savings, automating accounts payable is an essential step for financial executives to consider. Understanding the differences between electronic funds transfer (EFT), Automated Clearing House (ACH), and wire services and the features and benefits of using software that leverages these services is key to achieving the optimal performance when managing and processing payments.
EFT is secure system that allows companies to transfer funds and initiates settlement in near-time. This method is cost-effective, however, it may not be the most efficient payment method if cost savings is the primary goal and requires longer for transactions to be completed.
ACH is the preferred method for many companies when companies need to send payments quickly and securely. This type of payment is also an economical choice since ACH fees are much less than wire-based methods. However, the primary benefit of using ACH is that costs can be minimized as the number of payments processed increase as the ACH fees are typically assessed on flat rate basis.
Wire services are also viable payment alternative for many companies. This payment method is much faster than EFT or ACH and often results in immediate receipt and disbursement of funds. Wires also contain added security, verified address and beneficial owner information, and built-in confirmation of receipt. The drawback of wire services is the relatively high cost, up to three times more than the cost of EFT and ACH transfers.
In order to maximize operational performance with respect to payments, companieshould consider incorporating software technology that allows for both EFT and ACH payments, with the switch to wire services being conducted selectively. This will provide cost efficiency and speed, as well as added benefits such as visibility, control and convenience. An accounts payable automation software can provide such advantages. This type of software allows companies to directly link their accounts with the banking system, enabling them to execute payments from one location in single transaction. Having this capability allows companies to set deadlines for documents to be received, for example, and the software ensures that transactions are posted in the accounts in the prescribed window. This not only improves efficiency and cost savings, but it also allows for more control and visibility of the accounts.
Accounts payable automation software is the ideal choice for companies that need to ensure smooth operations and reduce costs. Financial executives need to be aware of the different payment methods and features of software technologies and make the best decision based on their requirements. Automating payments can result in improved operational performance in terms of time management, cost optimization, and visibility.
