NACHA and the Credit Research Foundation recently conducted a study of payments trends, preferences, and perceptions of electronic payments by credit and receivables professionals. NACHA's Rob Unger sat down with Matt Skudera, VP of Education and Research for the Foundation, to get his views on some of the most interesting finds from the survey. You'll be surprised! Learn more by listening to the recording of the Webinar covering the same topic.
Rob: Matt – tell us about the Credit Research Foundation and your role with CRF.
Matt: I am the Vice President of Education and Research for the foundation. The Credit Research Foundation is a 69 year young non-profit group that is made up of credit and like-minded professionals from Fortune 1500 companies. We are focused on providing education in the area of risk management for the B2B credit space, so, companies that are selling to other businesses. The credit pro is focused on establishing sound risk management with respect to providing credit lines and maintenance of accounts receivable through collections and cash application.
Rob: What kind of challenges do your members face today, particularly with respect to payments?
Matt: Today, cash is still king for businesses, and credit execs are tasked with managing cash flow from accounts receivable efficiently and effectively, keeping the general ledger of accounts receivable as clean as possible. They are measured on the efficiency of maintaining cash flow and how they perform operations. The diversity of payment options and details causes pressure to maintain staff that can support all of the activities.
Rob: How are credit pros addressing these challenges?
Matt: Moving to electronic alleviates pressures and provides consistency in process, with measurable results in effectiveness of cash flow, DSO (days sales outstanding), and relative performance of operations. We are in a continuum; split down the middle between paper shops and electronic. The paper folks are striving to move to the next level, and achieve straight-through processing nirvana. Electronic folks are looking to take the hit rates higher for multiple payments types, still moving to 100% STP, moving beyond email remittance. Opportunities exist to marry artificial intelligence with robotics for improving operations.
Rob: CRF conducted a survey with NACHA-The Electronic Payments Association to benchmark CRF member activity, trends and perceptions of electronic payments. Why did you want to partner with NACHA to conduct this survey?
Matt: I’ll start with NACHA first. Here we have two leading independent associations looking to achieve common goals for respective memberships. The common needs are pain points with respect to some aspects of payments and remittance, and we both want to focus on education to help our members improve. The partnership allows for impactful change for those responsible for making and receiving payments, keeping records clean and managing their operations effectively and efficiently.
There is an added benefit, one that is important to CFOs that want to embed greater control in operations, knowing your cash position, applying financial controls, having a standard for making payments and applying cash. The educational partnership allows for a vertical value chain for those AP (accounts payable) and AR (accounts receivable), and all financial operations that roll up to the CFO.
Rob: What issues did you ask members about in the survey?
Matt: The survey defines the current payments landscape of the credit professional and offers a practitioner’s point of view as to where payment operations are heading over the next several years. It establishes both pain points and highlights opportunities that exist, particularly the movement to electronic payments.
Rob: What are the key takeaways from the survey?
Matt: An important one is that our members expect that by 2020, ACH credits will have surpassed checks as the number one form of payment received. This is a pretty big swing. When looking at current volumes, checks are the dominant payment type, as they were three years past.
There is tremendous opportunity too to improve the full payments cycle through cash application, and for managing human capital and cash flow with greater consistency and controls. Many say they are fully electronic, but to them that means they are getting emailed remittance, so are not fully integrated.
Where many companies are now receiving checks and paper remittance, sometimes it is as simple as asking your customer to move from paper to electronic, with electronic remittance advice.
The survey shows trends and best practices. As we look at responses and where people are on the continuum of paper to electronic, there are opportunities to make greater use of things like value added bank file transmissions as well as online portals.
Rob: Matt – you and I are collaborating as well to present the detailed survey findings. We have a free webinar scheduled for June 28, from 1:00-1:45 EST. What else will be covered in the webinar?
Matt: The webinar will include a review of all the responses that came back. More importantly, it will enlighten folks on the availability of resources, opportunities, action steps and best practices for credit and related receivables professionals. And, we promise it will be fun!