Eliminate Printing Checks: In-House ACH vs. Third-Party Services with Dynamics ERP

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One of the first chores your AP department may want to tackle with digital transformation is to eliminate printing checks.

But then, how will you handle payments? There are options, and each has pros and cons. You can work with your bank to make ACH(Automated Clearing House) electronic payments and transfers or outsource to a third-party service. Third-party providers will handle check printing and other types of AP functions.

Let's explore some pros and cons of Dynamics ERP-based AP solutions on workload, security, and cost.

Automated Clearing House

Automated Clearing House (ACH) in partnership with your established bank is simple, and all the tools you need are in your ERP solution.

But processing bank ACH payments in-house can require significant work and be expensive to set up and maintain. This is especially true if yours is a large company with many vendors to pay.

For starters, your team must verify vendor banking information and enter it into your ERP solution. Then the data must be maintained and updated securely as necessary. Although it will take less time than manually printing checks, your team will still be responsible for managing and processing all transactions. It's also possible that not all of your vendors will accept ACH. So you'll still be stuck printing checks for them.

An in-house ACH payment system will give you complete control and visibility throughout the payment process, and it is managed within your ERP and through your bank. You'll have significant flexibility when managing your payments.

But maintaining control means implementing robust security and vendor management protocols. Electronic payments, including ACH, are far more secure than checks, but professional fraudsters can insert themselves into the workflow and misdirect funds. You'll need to ensure you're fully using the security features in your ERP system - including vendor approval workflows that require verifications of account changes.

ACH transaction fees paid to your bank may be small, but there could be costs associated with software implementation and monthly fees for Treasury Services. Pay attention to the difference between what your bank offers and charges for ACH processing and what a third-party provider includes in their cost.

Third-Party Payment Services

You could choose to work with an outsourced third-party payment provider. Services can range from printing your checks to providing more complex electronic payments.

Check Printing Service

A check-printing service will take over the printing, folding, and mailing of checks. It's essentially a labor-saving service. That may be all you need for a small operation with few transactions.

Evaluate how much you currently spend to process your regular check runs. Include the cost of supplies (check stock, printers, ink, envelopes, etc.) and labor. You can determine the cost per check and weigh that against the outsourcing fees.

Full Payment Service

Some outsourced payment services will pay on your behalf by ACH, credit card, wire, or other electronic means. They may offer additional benefits like vendor management, fraud prevention, rebate programs, and risk management tools.

Having outsourced providers manage your vendors can significantly ease the burden on your AP team. They'll pay vendors much faster, and vendors can choose how they receive funds.

Some setup and management may still be required when working with a payment service. You might need to integrate your ERP system with the payment service provider and set up accounts. Communicating with vendors during onboarding is crucial so they'll know the payment provider is legitimately contacting them on your behalf.

Payment services usually charge fees per transaction based on the payment volume and type. Checks and wires will cost the most, as they do when processing in-house. Often payment services campaign for vendors to accept electronic payments, decreasing costs over time.

There may be other costs, such as implementation or monthly fees. Does the service have a virtual credit card option? That may be the most secure and will likely earn rebates, further offsetting costs.

Third-party providers can provide extra layers of security. They must maintain compliance with industry security standards and may offer additional assurances for their clients. And they protect your banking information.

Whether you use a check printing service or a full payment service, decide what level of integration you'd like to have with your Dynamics ERP system. A lack of integration with your system may require downloading and uploading files. An integrated solution allows you to pay as if you were printing checks and will automatically transmit the data to the service. Your system of record remains within your ERP and uses your ERP's approval workflows.

It's Time to Eliminate Printing Checks

Deciding whether to implement in-house ACH payments or outsource your payments with a third-party service will depend on the resources and preferences of your company. Are you most concerned with cutting costs, freeing up resources, fraud protection, or offering your customers and vendors additional payment methods? Perhaps all of the above.

In-house ACH may cost less in fees but take more of your team's time. A check printing service will save labor but may leave you to manage electronic payments. A full-service outsourced provider frees your staff and may offer more payment types, fraud protection, and vendor management.

In the end, weigh the pros and cons of your options and choose which aligns best with your business objectives and budget.

Would you like to know how outsourcing compares to processing ACH internally for your business? We'll analyze your AP costs, time spent processing AP, and where you will see the greatest benefit.

Contact our experts at Mekorma today for an ROI report on improving AP efficiency.

Mekorma remote payment services for Microsoft Dynamics 365 Business Central & Microsoft Dynamics GP can help your AP department eliminate printing checks.

By Mekorma, mekorma.com

 

 

 

 

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