By Diane Holbert & Beth Warning, Pacific Western Bank
Now more than ever, organizations across all industries are re-evaluating their payment processes and working capital cycles. With remote working and imposed social distancing practices comes a greater risk for fraud and difficulty managing paper-intensive processes. Just in the past few months, 65% of organizations have reported they are shifting from paper to electronic formats, and 38% of organizations have implemented changes in their internal check issuance procedures to ensure payments are still delivered on time while going through the appropriate approval channels.* So, what does this mean for the HOA industry? How can property managers leverage technology to safeguard their business in a cash-strapped economy and drive productivity by improving their cash management practices? Whether you are managing one community or hundreds, the below tips can allow your organization to save time, mitigate fraud, manage risk, and create a foundation for strategic growth.
1) Moving Paper Payments to Electronic
As the payments landscape continues to evolve, protection and efficiency remain some of the top priorities for how operational cash is managed. The movement to electronic payments from paper continues to signify that organizations believe faster payments will have a positive impact on their working capital processes, vendor and customer relationships, and more. The use of checks has been cut in half since 2004, and this trend continues today.** Utilizing electronic payment options such as ACH and merchant processing offers more than just faster payments – processes such as reconciliation, researching payments, and more become quicker and simpler.
2) Application Programming Interface (API) Integration
As your business grows, managing payment processes can significantly impact the success of your business. As technology dramatically improves, the integration between your accounting, ERP, bank, and other software applications can provide a holistic solution to access your consolidated financial information to not only extract data, but make payments, reconcile dues, and more.
3) Integrated Payables
Changing technology has provided organizations more ways to create effective working capital cycles. Depending on what stage your organization is in, there are different solutions to streamline processes and/or open up time to allocate resources to other projects. Integration between accounting and bank systems can allow you to provide your bank with one file that consolidates checks, ACH, wire, and even card payments which ultimately, saves your team time from executing many separate types of transactions.
4) Purchase & Virtual Corporate Cards
Credit cards continue to be an increasingly used form of payment; they are also accepted by more and more organizations each year. Creating a formal corporate card program provides control, security, and opportunity for return on spend that is traditionally a complete cost. Purchase and virtual cards are issued to employees on behalf of the company to make designated purchases either in person or directly from their accounting system under previously approved industry codes.
5) Same-Day ACH
Same-Day ACH is a form of payment that serves as a cost-effective substitute to wires or even re-issuing lost checks. It is extremely useful in several scenarios, such as emergency payroll, business to business payments, and business to consumer payments as it offers same-day settlement at a fraction of the cost while using the secure ACH network.
6) Dual Approval
Managing the audit flow process for outgoing payments can often be overlooked or a clunky, sometimes manual process if original signatures are required. Through working with your accounting and bank systems, an electronic audit trail can provide transparency into where funds have been sent and who provided the authority. Ensuring separation of duties by defining roles of initiator and approver is an easy, simple way to protect your funds.
7) Positive Pay
In 2019, 58% of organizations reported payments fraud in the form of a forged check, attempted ACH Debit, stolen card, or other external human act.** Despite the consistently decreased use of the check, it continues to be one of the simplest ways to access sensitive account and routing number information to ultimately create a fake check or pull money from an unauthorized account. By working with your bank partner, you have the ability to ensure all checks and electronic transactions are pre-approved and saved in a secure environment to not only protect your funds but provide insight into how attempted fraud has occurred.
Diane Holbert and Beth Warning work with Pacific Western Bank as VP, Treasury Relationship Manager, and VP, Treasury Sales and Services Officer, respectively. In their roles, they serve as CAI certified Business Partners to HOA Organizations by bringing expertise and customized solutions to each of their unique clients. Pacific Western Bank and its executive team joined the Denver market in the summer of 2017.
*2020 AFP Survey: Impact of the COVID-19 Pandemic
**2020 AFP Electronic Payments Survey
***2020 AFP Payments Fraud and Control Survey Report