November 08, 2012

Consumers love bill pay. It’s a natural part of their online banking experience, and it’s a perfect fit with the way they pay their bills.

Small and Medium Businesses (SMBs), while similar to consumers in some ways, make many more payments, have more rigorous payment processes, and most often require payments solutions that are more sophisticated.

Unlike very small “microbusinesses” that make and manage just a few payments per month, SMBs use accounting systems such as QuickBooks and NetSuite to track incoming and outgoing invoices, payables and receivables, cash and collections, and lists of vendors and customers.

Today’s consumer-oriented bill pay solutions, typically separate from and not directly integrated into the SMBs accounting systems foster a “payment gap,” resulting in inefficiency, expense, and increased risk.

The Payment Gap

The dual entry problem. SMBs using bill pay solutions inevitably confront the “dual entry problem” - they must enter details about each invoice and payment into their accounting system when an invoice is received AND enter the same details into the application when issuing the payment. The result: errors, risk, and frustration.

Limited payment options. Bill pay solutions provide little to no control over how payments are made, and how quickly they can be released. While that’s not a consumer requirement, businesses need more specific controls. The result: separate processes for each payment type, as well as more errors, risk, and frustration.

Dual control and segregation of duties. SMBs typically follow a “dual-control” regimen—where the payment itself is first generated by one person (such as a bookkeeper), but is then approved by a different person (such as the owner). When the payment is submitted for approval it must often be accompanied by a variety of “back-up documentation,” including receipts, purchase orders, and expense reports. Bill Pay solutions do not offer this basic accounting and control requirement, which means that a single person often creates and makes payments, resulting in immense exposure to risk of internal fraud, and online account takeover.