Why do companies continue to pay by check? In part two of the series “The Top 5 Reasons Why Checks Still Dominate B2B Payments” I explore the absence of paper remittance data as a perceived obstacle to timely, accurate cash application when paying electronically.
Reason #2 - Remittance. Remittance is critical for suppliers because the absence of remittance details can lead to delays in applying the payment to the proper account. With a paper payment, the remittance travels with the payment. The costs
of manually keying the remittance information (both in terms of time and errors) is not trivial but are accepted by A/R departments as a necessary part of receivables processing.
Electronic payments systems may create obstacles for remittance delivery. In the case of cross-border payments, complete remittance details may not flow through end-to-end due to the differing capabilities of national clearing systems. Many ERP systems
support the generation of electronic payment files and deliver the associated remittance via fax or email. Nearly all suppliers recognize the benefits of electronic payments including convenience, reduced paper handling, reduction in lost payments and reduced
lockbox fees. But cash application can be a challenge. Properly posting their receivables and linking the payments that appear on their bank statements with the associated remittance from emails and faxes can be a time-consuming and frustrating experience
for suppliers. Additionally, some suppliers are reluctant to pay fees to their financial institutions in order to receive payments via electronic means.
Is matching remittance with the associated electronic payment a challenge for your organization?