The definitive source of global instant payments intelligence

Unplugging the Dam – Working Faster Payments into Business Receivables


Let’s face it. Everyone likes to get paid faster. It makes life less complicated. There is no need to spend time depositing checks, hoping that they cleared, or waiting on credit card receipts to arrive. For small businesses, these delays can be crucial to their cash flow.

Although Faster or Instant payments have largely been established in a number of countries around the world, they are just now gaining traction in the US. As with any exciting new market, the level of competition in the instant payments space in the US is intense and will likely continue until the market matures and clear front-runners are established. Consumers and businesses will see 30 or more solution providers targeted for specific market niches. And while this will be good for consumers, businesses need to prepare for the challenges created by receiving payments from multiple sources, in various formats.

Having money arrive in a business checking account is one thing. But posting to accounts receivable is quite another. Business accounting systems are not equipped to automatically handle real-time cash application from numerous sources. This results in manual effort to apply payments and additional time spent in reconciling what was received in the bank and what was actually applied. Manual effort means additional delays which defeats the whole promise of faster or even instant payments. What good does it do a consumer to pay their electric bill or loan payment using a real time payment method if that payment is not credited to the back end accounting system at the same speed with which it was paid? It may sound backward, but the recent increase in electronic and emerging instant payments has inadvertently lowered straight-through-processing rates. This inefficiency lowers businesses gross margins.

Financial Institutions need to consider the importance of an Integrated Receivables solution to close this gap in payment/remittance matching for current payments channels, as well as the emerging instant payment channels. Integrated Receivables solutions transform existing treasury management product offerings by delivering automation of the receipt and accurate posting of numerous Instant payment solutions, ACH payments and traditional check or wire payments. For those payments that cannot be automatically matched and posted, a rich UX streamlines the effort of exception processing. Machine learning then enables corrected transactions to be automated in future payment cycles. Integrated Receivables has become a mission-critical service that allows payments to post in seconds instead of days.

Businesses are looking for banks to take a more strategic approach to the treasury management service offerings. Financial Institution electing to implement an Integrated Receivables solution help their business customers improve the speed and accuracy of posting payment methods. And that saves the business money, making the financial institution strategic. FIs that take a wait and see approach may find highly profitable business customers walking out the door to competitors, which could be other banks or fintech companies.

The question you need to ask your treasury services department is, “Are we initiating the conversations with our business customers that will highlight ways we can be strategic?”. Instant payments may only look like a trickle now, but by taking a strategic approach to solving the current problems of today, your business will be prepared when the flood gates open. Failure to focus on becoming strategic might be the equivalent of owning a taxicab while everyone takes an Uber.


David Peterson, President of U.S. Dataworks

Author: Kate Nelson