On June 29, 2007 the world would never be the same. I would doubt anyone would know the significance of that day, but that was when the first iPhone was released. Now you might be wondering, why is this significant? Well, what phone do you own? What phone do your kids own? And when you get your next phone, I would bet it will be an iPhone. We witnessed an extreme change in technology and how it affects our everyday lives. Facetime became the norm for face to face conversation when we were away from our friends and family, especially during the pandemic. We send text messages using Wifi instead of paying for texting rates. This is just one of many examples of how a jump in technology changed everyone’s lives. We are seeing the same thing today with the huge advances in financial technology (fintech).
You may think that your life is not affected by fintech, but it is all around us. Fintech is using new software and technology to change the way people pay for things. Fintech is also the driving force behind the advances in cryptocurrency. This development is changing the way that consumers interact with businesses. Fintech is powerful in that people are able to trade stocks, pay for food and clothes, and even apply for mortgages with the power of their smartphone.
Fintech is not only for the consumer. A new wave of fintech is upon us and it deals with business to business (B2B) transactions. This new technology optimizes the way businesses interact with each other. They can now speed up payment processing, apply for loans, and offer electronic payments. All of these services are available to your business and a healthy investment to make for the future. Soon, all businesses will be using some sort of fintech in order to develop their business.
Accounts Payable Automation
Accounts payable is a portion of your business that demands high levels of attention and accuracy. If your accounts payable is still being run manually, you may want to rethink that. Accounts payable automation helps small businesses by automatically sorting invoices and payment orders instead of keeping track of financial transactions by hand. An AP automated system also decreases the time for buyers to pay their suppliers, getting money in your pocket faster. For example, in a study done by APCQ, the difference between the best and worst companies in terms of cost per invoice is $7.46. The difference largely depends on the best performers automating their accounts payable.
Applying for Loans
Finding funding for small and large businesses can be challenging, but fintech has changed how businesses apply for loans. By moving the loan application process online, fintech is able to cut out many of the factors that make the process a hassle in the first place. Companies like Tyro and Prospa expedite the loan application process and get money to small businesses faster. LoanMe, a digital lending company, reports that a traditional loan could take 24 to 72, while a loan using fintech could only take minutes!
Electronic Payments
This sector of B2B transactions makes things like automatic payments in order to make the process easier and faster, which helps increase your company’s cash flow.
If you are mailing a check to pay, you have to mail it (which takes 2-5 days) and then you once you receive the check and have to make sure it clears (24 to 48 hours), and then you have to spend money for processing the check! Electronic payments typically make your money available to you in no less than 3 to 4 hours. You no longer have to deal with sorting invoices and keep track of where your money is, this new technology will do it for you.
Blockchain Technology
Since online payments are on the rise, the technology used to protect you must rise as well. Blockchain uses a multi-step verification process in order to ensure the safety of your funds. Also, the tech creates a database for your records to be accessed and that cannot be changed or altered once they are submitted. This prevents an outside user from accessing your information and changing it for their benefit. CSNC reports that 84 percent of companies are already actively using blockchain technology. Most companies sense its future in the workplace as a foundation for what is to come.
When you finally got your first smartphone, how much easier did life become? You had a literal computer sitting in the palm of your hand compared to a phone that took 5 minutes just to send a text message. That is the feeling from switching to traditional businesses practices to fintech. With this update in new technology, handling the finances of your business will become easier, your cash flow will start to become more up-to-date, and you can use technology to protect your business. Investing in fintech could be what brings your business to the next level.
Driscoll, M. (2020, October 28). Metric of the Month: Accounts Payable process cost. Retrieved February 03, 2021, from https://www.cfo.com/expense-management/2015/06/metric-month-accounts-payable-process-cost/
Rooney, K. (2018, August 27). 84% of companies are dabbling in BLOCKCHAIN, new survey says. Retrieved February 03, 2021, from https://www.cnbc.com/2018/08/27/84percent-of-companies-are-dabbling–in-blockchain-new-survey-says-.html
Try as we might, sometimes old things that we love just break down and fail. Or sometimes they get to the point where the maintenance is too much to justify staying with them.
Let’s take stadiums and theaters. When you were younger, you probably had a favorite stadium to go watch a game or a favorite theater to go see a concert. As the building got older, it kept the rickety charm but the costs of keeping it upright got higher for the owner. Eventually, the owner knew it would be cheaper in the long run to spend more money up front on a modern building because it would save money on maintenance down the road. And so, your favorite building bit the dust, relegated to scrapbooks and Frank Sinatra songs about baseball parks. As fans, we love those buildings. But as business professionals, it’s hard to love those buildings when they impact your account in ways they shouldn’t. In short, the old palace can be nice and charming… until it hurts a business to keep it standing. (RIP Old Comiskey Park)
The pandemic is the latest in a string of events that has stress-tested countless systems we have come to rely on. For businesses that paid suppliers/vendors mostly by check, that method is currently unsafe and inefficient. The system needs retooling.
Back in December, we made the case for why checks and related Automated Clearing House (ACH) payments shouldn’t be left behind when it comes to taking care of your vendors. However, as the pandemic has persisted, we have to face reality that cost matters when we process payments. So, today’s blog is about potentially cheaper ways to pay your vendors/suppliers besides checks and ACH.
ACH Fees
There are two main reasons for ACH payments might not be the best option for your company.
The Fees, The Fees, The Fees
ACH is notorious for saddling you with fees that aren’t always apparent. Some of these fees are charged on a monthly basis like a monthly minimum fee for using ACH. Others are charged on a per-transaction basis like if a customer makes a return, disputes a charge, or needs an expedited delivery of a good/service. There are even ACH fees for businesses that are TOO SUCCESSFUL. If you process a high amount of ACH payments at once or process a payment for expensive items, be prepared for a batch fee and/or a high ticket surcharge. Since when should we ever be penalized for being good at our jobs? We don’t need to hurt our vendors by forcing those charges on them, either.
Processing Rates
Besides the fees listed above, ACH payment providers like to charge processing rates that can be either a fixed amount of cash or a percentage of the transaction. In the end, it’s a paltry sum for each transaction. However, as we said before, if you’re good at your job, you’re getting ripped off here. If you make 100,000 transactions and each has an ACH processing rate between $1.00 – $1.50, you’re out $100,000 – $150,000. Not great, Bob. Not great.
Alternatives To ACH
Okay, enough with the processing fees. Let’s get to some alternative payment methods.
Google Pay
With Google Pay, you can send money from your bank account through a heavily-encrypted Gmail account for free. It’s super simple, too. Compose an email, click the dollar sign, input the cash, hit send. Google Pay also can be used in various stores and restaurants, too. If you’re a customer, you just have to hope that Google Pay is accepted in those places. By the way, the security is pretty nice.
Intuit
Not just for filing taxes anymore, Intuit will let small businesses accept payments via QuickBooks. Their per-transaction fees are actually lower than Square and Stripe. However, you will have to make a small monthly payment ($8 and up) in order to accept payments of your own. Intuit will even give you a mobile card reader if it’s convenient for your setup.
ProPay
We like ProPay because it runs similarly to each of the above services, but it will also tailor itself to the type of business you have. That means the fees will be tailored to your business as well. If you opt for ProPay, you’ll want to have your customers swipe their cards as often as possible instead of keying in their numbers. Keyed transactions come with a higher fee.
Payoneer
Payoneer is arguably the most trusted system of freelancers around the world. This is a great system to use as long as all parties involved all have Payoneer accounts. If one end of the chain doesn’t have an account, it won’t work. There are credit card fees to watch for as well. One reason why this system remains popular, though, is because you’ll find it accepted by popular businesses like Amazon and AirBnB.
Square
Square is often used as a Point of Sale (POS) method of accepting payment and is far more convenient than an anchored cash register. You simply take an official Square reader and attach it to a phone or tablet. The result? Payments accepted literally anywhere with an Internet connection. While there are small fees for every credit card swipe and manually-keyed payment via phones. It also accepts other methods of pay such as Google Pay, Apple Pay, and plenty of others beyond basic credit cards.
Stripe
Stripe will function similarly to Square, but it’s better used for web-based transactions. Fees are similar to Square and may fall way short of ACH fees. If you have a service that provides subscriptions to customers, Stripe is a better bet than Square because it’s geared more towards seamless renewals and management of mass amounts of subscriptions. The security Stripe offers is excellent as well.
But wait, you say…
Ah yes, you may have noticed we didn’t mention systems like PayPal, Venmo, and TransferWise. We left out PayPal because they’re pretty well-known at this point and don’t require much of an explanation. Venmo and TransferWise, though, aren’t great options in this situation because those are systems typically used more for small, personal transfers of money. They’re systems you use when you need to split some wings or pay someone back for those beautiful mezzanine seats on the 1st base side. Besides, businesses really shouldn’t use a system like Venmo because it doesn’t provide receipts or documentation. Save those transfers for the simpler day-to-day things instead.
Hopefully you’ve got a better idea of safer and possibly cheaper ways to pay vendors in 2021. If you’ve always thought ACH was the only other option besides paper checks, now you know. So go make some change already and your bottom line will thank you.
What does it take to maintain your car correctly? You need to get the oil changed every 3000 miles, rotate your tires every 5000 miles, and replace your windshield wipers every time you get your oil changed. These are basic things that we need to do in order to keep our cars running smoothly.
Every once in a while, your car needs more than maintenance. If you don’t take your vehicle in for regular check-ups, how would you know something is wrong? When it starts leaking fluids? Starts making strange noises? These are uncontrollable circumstances that apply to all car owners, whether we want it to or not. These sorts of mechanical mishaps happen regularly and aren’t usually that unexpected when you own the same car for long periods of time.
What would happen if someone was intentionally causing damage to your car? If someone were to siphon a gallon of gas out of your car every day, would you notice? How could you? Unless you regularly monitor your car’s fuel efficiency, you would never know. It is crucial to monitor your conditions at all times because you may never know what is going on, but doesn’t it seem ridiculous to constantly measure your car’s fuel efficiency every time you go fill up? You won’t know if your car was underperforming until the damage to your wallet has already been done.
Without a system of checks and balances in your internal control, this may be happening to you. Employees and outsiders may be taking advantage of your weak internal control system for your accounts payable to siphon extra money off the top. We will explain the downsides of a weak internal control, how to identify these problems, and how to make your internal control system even more effective.
Risks of Weak Internal Control
Sometimes the risks of an unsafe car could be fatal. There could be leaks within your engine that might lead to a fire and even an explosion! That is why most oil changing services offer a multiple point inspection to make sure your car is running safely and is fit for the open road. While the risks of a weak internal control do not mean life and death, they could lead to serious setbacks for your business. Be wary of the potential risks that your company could be taking on.
Weak internal control dramatically increases the risk of fraud within your company. In fact, nearly half of all frauds are because of internal control weaknesses. When most people think of fraud, they think of an outside source infiltrating their company because they take advantage of their weak internal checks and balances. While your company needs to be wary of external threats, no one knows the control system’s inner workings better than your own employees. It is not unreasonable to think that your own employees might be doing this to your company. Also, if you think you are safe because you are a small business, think again. Small companies lose an average of $200,000 per scheme, so all shapes and sizes of businesses are at risk. If your company is operating on a weak system of internal control, these are some of the risks you are taking on:
Duplicate Payments – While some duplicate payments are honest mistakes, some vendors may be taking advantage of your weak internal control and stealing thousands of dollars a year. Be sure to check the accuracy of your vendor’s number of invoices a year to ensure their validity.
SOX Certifications Are at Risk for Loss – Older automobiles get called in for emissions checks to make sure your car is producing safe enough air for the environment. If you do not pass the test, you are unable to renew your car’s registration. Similarly, if your internal control system is weak and non-compliant with the Sarbanes-Oxley Act, you could lose your certification along with current and future business. Be sure to continually check your internal control disclosure to ensure it has the rigor it needs.
Inaccurate Financial Reporting – Inaccurate financial reporting results from poor internal controls, therefore misinforming account executives who make important decisions based upon these financial statements. Be sure to set your company on the right path by double-checking your financial statements and keeping your company in line. Do not be afraid to send another employee to take an outside look at your reporting to get a second opinion.
Tax Issues – If your company fails to follow the Generally Accepted Accounting Principles (GAAP), you could find yourself in hot water with the IRS.
Ways to Check your Internal Control
If you do not have a reminder to get your oil changed, how would you ensure that your car has a safe level of oil to get from point A to point B? You get your hands dirty and check the dipstick. By doing some of the dirty work, you are able to ensure the validity of your car’s condition. The same applies for your internal control. Every once in a while, it couldn’t hurt to send a pair of fresh eyes to examine the safety of your internal control.
Random Sample Testing – This testing method randomly selects an invoice, and you must make sure there is a matching purchase order to go with it. This ensures the validity of the purchase orders and invoices if they are properly matched. Unless you have reason to believe a specific paper trail leads to fraudulent behavior, choose randomly. This ensures the integrity of your choices and could lead to unknown activity.
Run Vendor Maintenance Reports – An important aspect of your company’s structure is to make sure that none of the employees are playing duo roles as vendor maintenance and invoice processor. Also, check to make sure all invoices were run with a valid PO number and the appropriate approval before being processed. If one of these pieces of information is regularly missing from your procedure of processing payments, it should be raising red flags.
Wire Transfer Regulation – Be strict on your wire transfers. Only allow wire transfers if it has the supporting documentation. You would not want to buy a car from someone if they did not have the proper title, would you? Be sure to double check your documentation for the safety of your company and your vendor.
Internal Control Improvement
Changing the way you take care of your automobile can make its life last longer. You could switch from using standard oil to synthetic or you could fill up your tank with premium gas. In the long run, these sorts of adjustments can lower your cost for future mechanical issues. Just like your car, there are always different options for optimizing your accounts payable procedure.
Duty Segregation – You should be separating the data entry, vendor management, approvals and payment processing. While you separate these powers, continue to be wary. Just because an employee has tenure does not mean they cannot commit fraud. Thorough background checks are also an essential aspect of the hiring process. You need to ensure that none of the employees you are bringing along have a previous history of embezzlement or fraud. A sturdy foundation of loyal employees can lead to a better future.
Taking Advantage of Technology – A 20-year-old automobile could be in perfect shape, but is it worth it to keep driving that same car? A newer car that is just as reliable could get you plenty more miles per gallon. Your older style of processing accounts payable may work but holding back your business in terms of efficiency. An automated system that controls your accounts payable removes all human processing errors during the data entry procedure. This also saves time for the company.
Improving Payment Controls – By modernizing the way you handle accounts payable, like switching to electronic or ACH, you can eliminate some of the hassle you previously dealt with during payments. These processes can make tracking the payment, as well as processing, much easier. If a document is lost or stolen, the system will automatically know where to find the payment or how it was lost. Requiring additional signers also ensures the validity of each purchase order and invoice. The more people signing a check is an opportunity for your employees to hold each other accountable.
When it’s time to upgrade your current mode of transportation, you should always be doing your research. Cost of maintenance, reliability, and safety. If you don’t realize it is time to upgrade, you might find yourself stranded at the side of the road and left behind the rest of the traffic. Do not let yourself be the company that ends up in the fraud statistics. Be sure to check your company’s internal controls often and ensure the safety of your business. There should not be a reason to fall behind the competition by encountering a mistake that could have been avoided.
We don’t know about you, but we like game shows. Game shows are fun. Most of you who read this blog may be familiar with a guy by the name of James Holzhauer. No? How about Brad Rutter or Ken Jennings? Yes, we’re talking about the Jeopardy! Triumvirate of Almighty Knowledge. Do yourself a favor and watch their epic clash from January 2020. It’s worth your time even if you don’t watch the show.
Speaking of Jeopardy! gurus (R.I.P. to the spiciest of all memelords, Alex Trebek), we submit another name for your consideration–Roger Craig. Not the pro football running back, the Jeopardy! player. He held a whole bunch of single-day records until Holzhauer came along and wrecked his gaudy numbers. The way he got to that level of ridiculous, though, deserves a closer look.
Craig watched the show regularly and had a hunch that he was stronger in some categories than others. (Not really a bombshell revelation because most people who watch the show would feel the same way about their own performance.) However, he wanted to know exactly how much weaker his gaps were. That’s where the story gets good.
Craig developed a series of data-mining and text-clustering algorithms to chart which clues came up more often than others. He used an archive of past Jeopardy! clues to increase his sample size. Then, he used memory training software to help him learn those clues, and he focused even harder on the clues that gave him the most trouble. The preparation was meticulous. The software made it faster. In short, one scary combination that gave a man the ability to unleash the unholiest of hellfires upon the most unsuspecting trivia buffs from all corners of these vast United States. The lambs didn’t even know they were about to be slaughtered.
When Craig got on the show, he bet fearlessly on Daily Doubles because he had the breadth of knowledge covered. The category data for his games matched the trends of his own research. In his second game, the man won $77,000–a new one-day record that eclipsed Jennings’s old mark of $75,000. Craig won 6 games in his initial run and then blitzed through the Tournament of Champions. It wasn’t even close. To give you a sense of how good he was, think about this sequence: On Day 1 of the Tournament of Champions final, he found the first Daily Double in Double Jeopardy and bet all 9K of his winnings. He nailed that one and then went hunting for the second Daily Double. When he found it, he bet all 18K of his winnings and got it right again. The man quadrupled up in less than 2 minutes of game time. Ambitious, bodacious, outrageous. (By the way, he won the whole thing…duh)
Was he good enough to win on his own without preparation? Probably. The software-aided preparation though? It made him unbeatable.
The Lesson and the Decision
In other words, Roger Craig decided that this prep was worth his time and effort given his circumstances. The risk was high, but so was the payoff. This risk-reward calculus is at the heart of most companies’ decision-making when it comes to AP Automation Testing. When a company aspires to the gold standard of DevOps (software development and IT operations combined), they have a critical decision to make about how much automation should be implemented into their testing. As always, there are factors that must be considered first.
What To Consider
Before you unequivocally demand to automate all of your testing, consider these questions:
Is it cost-effective? If automation helps you provide high quality with lower expenses, you go for it. If not, you have a tougher decision.
Are your software tests overly repetitive? Repetitive tests by humans means lost time and potential inconsistencies. Automated testing saves you the time and lets your team focus on more productive tasks.
Will any time be saved? If you’re not saving time, it’s not worth moving to automation.
Can you run multiple tests at once? If you need to run a high number of tests at once, your human employees can only do so much (even your best ones). Automation can still do significantly more runs than people can.
What To Watch Out For During Testing
So let’s say you’ve considered the above questions and made the decision to automate your testing fully. Let’s think about where companies go wrong so that you can avoid these pitfalls:
Drawing conclusions that aren’t data-based. Making decisions on hunches without the data to back them up means bad decisions get made over and over again.
Developing software that isn’t customer-friendly. Congratulations, you’re the first contestant to solve a problem with your new development. But what good is speed if you develop something that no one wants to use because it takes forever to learn?
Not preparing for hypothetical issues. When you’re developing any plan (not just software testing), you want to stress-test that plan against anything that could possibly go wrong. Skipping this step is often regrettable.
Big Goals To Focus On During Testing
Establish clear goals for your release. Set goals that all of your team members can understand with simple articulation.
Don’t go for style over substance. Flashy is fun, but it isn’t a guaranteed winner. Substance usually has a better track record.
Quality over speed. Remember, you want the software to work. You want the software to be usable. You DON’T want the software to be quickly chucked in the bin.
We realize the above questions and considerations are more general. However, the point we’re trying to make is that only YOU can know the true risk-reward calculus for your own business. Make a decision based on good data, put your all into it, and you’ll sleep better at night over a big debate like this one.
Okay, you have to admit, some of these cooking shows are starting to get just a little over-the-top in trying to convince us how easy every recipe is. Back in the day, if you wanted to make an omelet, you cracked eggs, melted butter in a pan, did your best Julia Child impression, and BANG–omelet. That’s what easy is supposed to be. I see the chef do something, I process the idea, I replicate it. Breakfast is served.
Nowadays, though? Forget it. I see a loaf of bread on TV. The end product looks so unassuming and so unpretentious that I figure I can do this easily. I go back and find the show’s YouTube clip for their allegedly “5-star easiest ever” bread. But if I want to make this so-called “easy” bread, these shows essentially want me to:
Find the finest bread flour that’s been milled by a New Hampshire granite stone at the end of a Douglas Fir tree crank
Heat up a pair of typical Peruvian bread stones to 400.15 degrees and water them using spring water that has a pH of 7.2
Bloom a packet of yeast that’s been personally approved overseas by the Dalai Lama (he IS a long-hitter after all)
Cover the dough using tempurpedic tarry cloths
Read a Dickens novel while the bread rises to give the room a cultural milieu and improve the bread’s provenance
Obviously, easy. Duh. And yet, there are still plenty of people out there who feel this kind of effort and pretentiousness is worth their time. Why do we do this to ourselves and each other? When we want to improve on something or learn a new skill, all we want to do is watch a master and then have them tell us how to replicate the process. We know some practice will be required, but we appreciate that what we’re being told to do is an act that many are capable of doing eventually.
If you look at the P2P articles all over the web, the same problem exists there, too. There are TONS of P2P articles telling you how to achieve the highest levels of success. But when you start reading them, they’re full of jargon-y finance terms and meaningless cliches meant to discourage you from trying to replicate what someone else has done. Let’s do our part to fix that right now. Here are some tips on P2P that we feel can be replicated by any dedicated AP leader.
Outline and Accommodate
Start off by taking a look at your current P2P setup. Make a list of how many steps your process has. Keep the steps in their sequential order, too.
Assess Current Performance
For each step in your process, determine which steps currently seem to run efficiently and which ones do not. Focus primarily on the steps that take too long to finish and reflect on what may be causing those problems.
Research and Select
Armed with your knowledge of how your system currently operates, research and select P2P software that speeds up your inefficiencies within your system.
Train and Promote
With your software selected, train your staff on how it works. Show them how their jobs get easier with the new software in place.
Measure and Evaluate
As your new P2P setup takes flight, determine how you will know if the setup is being successful. Select three or four key performance indicators (KPIs) that can provide concrete data about the specific phases of your P2P process. Decide beforehand what will qualify as “successful” numbers and “unsuccessful” numbers. Consider using a color-coding system so that successes and failures can be identified visually within a moment’s notice. That will make it easier for your colleagues to understand the implications of the data, too.
Reflect
It is critical with any new initiative that you reflect on a consistent basis. Be honest with yourself about where the P2P setup is meeting its goals and where it isn’t. Reach out to your staff and get their input as well. Their firsthand accounts will give you the best information about P2P successes and failures. Based on the data, adjust your practices and reflect on the new data as it arrives.
Remember, no matter how complicated P2P may get, the above tips will keep you [insert cliche here].
The Associated Press