Unlock the Value of a Digital Payments Solution:
How Multi-Unit Franchisees Can Transform Payables
The OneDataSource Editorial Team
August 3, 2023
We’re excited to bring you our most recent conversation with onePAY Payments leader, Mark Reiss. Mark has significant experience implementing and servicing digital payments platforms.
During this conversation, we cover the value that a digital payments platform can deliver to end users, finance leaders, and businesses as a whole.
We hope you find the conversation valuable!
IntroductionMichael Krieger: Welcome everybody. I’m Michael Krieger with OneDataSource, here with our digital payments guru, Mark Reiss. Welcome, Mark. Mark Riess: Thank you.
The Benefits of a Modern Digital Payments PlatformMichael Krieger: I wanted to start by talking about the impact of a digital payment platform on the person with ownership of the payments process. What value does a digital payment experience bring to them? Mark Riess: From a B2B perspective, what we’re essentially doing is bringing business payments up to speed with our current consumer practices. For instance, 20 years ago checks were a common form of payment. Now, when you walk down Main Street, checks are hardly seen. Many companies don’t even accept cash anymore. They simply want to get paid quickly and cleanly. This is exactly what we’re trying to achieve in the B2B space. In my experience, the restaurant industry lags by 20-25 years. As businesses grow and pass through generations of ownership, they tend to stick to the same old methods. Our objective is to automate payments, enabling buyers to pay suppliers or customers to pay vendors quickly and efficiently with as much data as possible. This is where digital AP automation comes in. We work with companies ranging from the tens of millions to billions, and these companies do not need a huge AP staff. They can reallocate that headcount to revenue generation. All it takes is uploading a file to make payments swiftly to suppliers. The suppliers are happy because they get paid quickly, and we’re able to significantly reduce any manual errors. For instance, I’ve worked with many accounts payable auditing companies, and it’s a known fact that for every billion dollars spent, there’s about $2 million in ‘fraud.’ However, this ‘fraud’ often isn’t theft. It’s duplicate invoices, paying a paper invoice, paying an electronic invoice, typographical errors, paying for goods or services that weren’t received, and so on. Therefore, a true digital AP automation process can significantly reduce these issues to almost less than 1%.
“Our goal with implementation is to minimize disruption. People have been using certain systems for a long time, and we don’t want to add more work for them.”
The Day-to-Day Impact of a Modern Digital Payments Platform
Michael Krieger: For the AP user, the person making those payments, what would the shift in their process or day-to-day operations look like?
Mark Riess: Technology truly is a beautiful thing, especially in the fintech space where we partner with many banks. As a fintech, we don’t make a good bank, and banks don’t make good fintech, but when we partner, the results can be powerful.
As for the AP personnel, their lives shouldn’t change much; in fact, their workload should be reduced.
Every business, irrespective of the industry, works in a similar way: an invoice comes in, and someone enters it into the system. If they’re using onePAY for OCR technology, it’s automatically entered into the system and goes through an approval process, be it dual- or tri-approval. Our payment technology sits at the back end of that process.
Instead of dealing with separate ACH, check, and potential purchase card files that require manual reconciliation, they just upload a single file to our platform. It could be via SFTP or API, but from their end, nothing really changes. The efficiency comes from not having to run three or four different files every week; they’re running just one file and all payments are going out through that.
Michael Krieger: To give finance leaders a better understanding, could you walk us through the process of implementing a digital solution like onePAY Payments?
Mark Riess: Our goal with implementation is to minimize disruption. People have been using certain systems for a long time, and we don’t want to add more work for them. The biggest changes, ideally, happen in the background. We’re not switching banks, we’re not switching ERP systems. Invoices come in as usual.
Where our work really comes into play is with our supplier enablement. Let’s say you have 100 suppliers and you’re making all payments by check. We reach out to those suppliers on your behalf to enroll them in other payment methods, like ACH or a virtual card, or straight-through processing. We offer seven different payment modalities that we can use to pay those suppliers on your behalf.
The goal is to provide suppliers with options that suit them best. If they prefer to take a virtual card via a VISA platform, they generally get paid quicker, and they’re happy to pay the interchange fee for a quick, safe payment with rich data. If they prefer ACH or check, we can accommodate that as well.
We aim to push payables out as far as possible. With rising interest rates, holding onto your money as long as possible is important. If suppliers are willing to be paid quickly, great, we’ll pay them. Otherwise, we’ll extend those payables as far as possible, which ideally improves cash flow for you, the buyer paying your vendors.
“By eliminating checks, you can save between $5-$12 per check in hard costs.”
Why Finance Leaders Lean Into a Modern Digital Payments Platform
Michael Krieger: Beyond the value of adopting a more digital approach to payments, there are several features of the modern payments model that could allow finance leaders to improve the company’s financial outlook. Can you elaborate on those features and the impact they could make?
Mark Riess: Certainly, everyone tends to focus on rebates and revenue share, and yes, we offer rebates based on the amount you spend on our platform. However, the real benefit lies in eliminating checks altogether.
By eliminating checks, you can save between $5-$12 per check in hard costs. If you’re currently issuing a thousand checks a month, we can reduce that to a hundred, resulting in savings of five to $10,000 per month. This alone can essentially cover the cost of your accounts payable team.
Transitioning to a digital form of payment, such as a virtual card, allows you to send rich data directly to your suppliers. If you have a hundred invoices and you want to send them a file, we can push that data straight to their merchant ID, eliminating the need for any additional action on their part. The reconciliation is sent back to you, and we can handle as much data as you require. This streamlined process is known as straight-through processing.
For ACH payments, although the data is more limited (around 60 characters), we are directly tied to ACH.com, which allows us to utilize ACH as another monetizable payment form.
From a CFO perspective, using the VISA rail provides additional benefits such as zero liability. If fraud occurs, we don’t see it on our platform because we issue single-use cards with specific dollar amounts. This means that if any fraudulent activity takes place, your business is protected by the VISA rail, and you have the ability to dispute charges.
For example, if a product you purchased arrives damaged and the seller refuses to provide a refund, you can initiate a dispute, and we handle that process on your behalf.
Michael Krieger: Great. Is there anything else regarding digital payments that we haven’t discussed yet that you believe provides additional value to organizations?
Mark Riess: B2B payments are playing catch-up with consumer payments. The acceptance of VISA and MasterCard in the B2B space is growing by more than 12% annually. More businesses are shifting towards these payment methods because they want to be paid quickly and efficiently. They no longer want to deal with checks that come in the mail with limited data and require manual reconciliation.
As the B2B space continues to evolve, if you currently have 100 suppliers and we enroll 20 of them, chances are that next year we will onboard eight to ten more who have transitioned to one of our seven payment forms available on our platform. It’s not a one-time setup; it’s an ongoing process. It’s a full-circle experience.
Even if some suppliers say no or don’t accept certain forms of payment today, there’s a good chance they will change their stance in a year or two. They may have experienced a bad check or an ACH pullback, and they simply want to improve their cash flow. They become more willing to accept quicker, more efficient, and more secure payment methods, even if there’s a small fee associated with card payments.
Michael Krieger: Great. Well, I appreciate your time today, Mark. Let’s continue driving forward with digital payments.
Mark Riess: Thank you.
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