The money is in the bank – or will be soon, at least as soon as you can get there and deposit your check. Whether it’s your employees, your clients, or your suppliers, how do you process payments?
This thought struck me after I opened a letter that Wells Fargo mailed me with some “Important Information” about my Wells Fargo account. It turned out that the letter contained a cashier’s check – nice, right? I’m still unclear what for; there was only a vague reference to a charge made to my account “in error.” OK, but at least I got a check, although I did a double take when I saw that it was for two dollars. A mere $2!
If you stop to think about this, Wells Fargo has actually managed to turn an asset (my original $2) into a real liability. For me, the expense of getting the two dollars back into my account far exceeds two dollars. Even if I just address a letter to the bank, place the check inside, add a deposit slip and postage, and then send it on its way, the expenses (don’t forget the opportunity costs!) will far exceed $2. It’s even more if I go to a bank branch to deposit the check.
Then you have the trouble that the bank makes for itself. Even with fully automated routines to identify the billing error, approve the fee correction, print the checks, put them in envelopes, add postage, and dump them in a bin for the USPS to pick up, you can see the many steps, pieces of equipment, and solutions required. Then there is processing the physical check after I have deposited it. Call it the painful gift that keeps on giving.
No matter how slick you make this process, it’s still a lot like creating a carbon fiber horse carriage – you can spiff it up as much as you like, but it’s still obsolete as a delivery mechanism. Instead, the bank should have simply made a reverse entry back into my bank account, notified me via email about the changes, and that would have been the end of it. (Come to think of it, with behavior this utterly inefficient, one is led to wonder whether there is some well-intended but fails-in-reality government regulation behind the scenes.)
Consider your supplier payment processes. I certainly hope none of the above applies to how you approach it. eProcurement is near and dear to us – and it should be to you too. Take a look at our long list of current, 2014-focused writing here.
In fact, if you hurry, you still have time to catch a Spend Matters webinar on this very topic. Sign up for this Friday’s webinar now!