The Data Challenge To Cards And Accounts Receivable

In accounts payable, manual data entry is a problem. Research from AP company Tipalti, released last year, found that, while the error rate of manual data entry is quite low — for the majority of companies surveyed that process at least 500 payments a month, the error rate stands at just 1 percent — even an infrequent mistake can be costly.

“Lacking adequate end-to-end accounts payable automation systems, CFOs are unable to advance critical finance initiatives that generate greater corporate value and strategic insight, such as improving productivity, improving business analytics, strengthening financial controls and accelerating financial close,” pointed out Tipalti CEO and cofounder Chen Amit in a statement when the research was released.

Even when companies turn away from paper, manual data entry still plagues a business. For card payments processing firm Century Business Solutions, its businesses would see friction when manually keying in data from incoming payments into ERP and accounting platforms — both may be digital, but without an integration between the two sides, the devil is in the data.

“For a business that doesn’t have an integrated payment application, what would happen is, when you’re accepting a payment, you have to leave your ERP or accounting system to go to a website or a physical machine and key in a credit card number,” explained Century Business Solutions Sales Director Chirag Vithlani in a recent chat with PYMNTS.

That extra step alone is the beginning of multiple mistakes a person could make.

“The first possible mistake could be keying in the credit card number incorrectly. Assuming it’s correct and the transaction is approved, you have to enter in the approval number and authorization code and go into your accounting system and add in a general payment with all of those fields,” added Vithlani.

There are credit card numbers, transaction numbers, authorization codes, approval numbers, invoice numbers, customer codes and other fields that all rely on pinpoint accuracy when each perspective string of numbers is keyed into a system. So much can go wrong.

“It could result in the wrong customer being charged, the wrong amount charged — there are a lot of steps that can go wrong,” he continued.

Adding to the deluge of data has been the rise in X-as-a-service (XaaS), a now common business model that sees businesses charging their customers on subscription basis. It means a new way companies have to approach accounts receivable and cash flow management, and for companies that haven’t linked their payments processes into accounting and ERP platforms, the rise in XaaS means even more data to key in by hand.

According to 2016 data, the XaaS industry will see a compound annual growth rate of 38.22 percent between 2016 and 2020. For all of the companies offering those as-a-service tools, many on a subscription basis, accounts receivable and payments acceptance and reconciliation becomes a new breed of a challenge.

Century Business Solutions VP of Sales Scott McEwing said being able to automate data entry between a payments platform and through to ERP and accounting is critical when payments are made on a recurring basis.

“Businesses don’t have to reach out to their customer via telephone or email on a monthly basis,” he said. “It creates ease of use for the customer, because they don’t have to call in, either.”

In the world of B2B sales, this automated data entry is also crucial for businesses whose customers pay in installments under a net terms agreement, noted Vithlani. Data automation enables a supplier to ensure a customer pays a specified amount within a specified amount of time and can keep track of remaining balances and payment schedules.

But card payments continue to lag compared to other payment rails in B2B payments, especially in supplier payments. Historically, the challenge has been getting suppliers to accept commercial and virtual cards as payment, with some reluctant to accept the processing fees or simply struggling to change their habits of accepting paper checks.

A card processing firm able to integrate payment data direct into ERP and accounting systems may enable B2B vendors to overcome hurdles of commercial card acceptance. According to Vithlani, accepting cards means customers have more choice in how they pay, and integrations like Century’s recent integration with SAP B1 HANA accounting solution can support that choice.

“Allowing your customers payment variety is extremely important, especially in the B2B space,” he said. “It adds a convenience for both business and customer.”