Payments 25 May 18

Bulking payments: the reconciliation play to save your company millions

By: Currencycloud
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Every business leader must acknowledge growth challenges and work to overcome them at various points in their strategic, operational and tactical efforts. One such challenge lies with payments, specifically sending and receiving funds. If you’re dealing with a high volume of payments (lets say in the hundreds of thousands), transmitting them individually could run your business millions in payment fees. It stands to reason that bulking these payments would create both savings and an ability to scale.

From the payer’s perspective, reconciliation is the biggest benefit of bulking payments. It’s not enough to just lump payments together and expect to save. It’s how you structure and use payment information that matters. What’s important is your ability to reach the underlying data that clearly outlines what the payments are, who they’re going to, and the reasons for them. Access to the granular information about each payment — even when those payments are bulked together — is what allows you greater control over your cost base.

Bulk payments and the reconciliation process

Bulking payments as a way to save on time and money is intuitive. What’s less intuitive is the way that this reduction occurs. Imagine receiving a set of invoices from your legal firm. You send out a singular payment to cover the set. But your law firm may not be able to process these funds if the payment details don’t reference a specific invoice. On their end, they need to be able to reconcile exactly who sent the funds and what it was for. A law firm would be forced to reject the payment out of concern for money laundering issues and compliance. Consequently, you must now spend more time to send separate, individual payments for each individual invoice, incurring additional fees.

Unless, that is, you have the ability to bulk payments and see granular details on individual payments, even when those payments are made or received together. If your system allows you to see details more clearly, you can better control your cost base. Let’s put it another way. Imagine you’re placing an order for stationery and you want to bulk order 1000 blue pins from Bic using SKU 1234, and 300 reams of paper using SKU 5678. If you have a procurement system in place, you could pull data at any point to see what type of supplies you typically buy, how much it usually cost as well as what vendors you use. Having this amount of data would allow you to easily see if you’re being overcharged by a particular vendor. It could also allow you to better control your cost base by negotiating for a discount, if you’re looking to increase your order by 2000 pens for example.

With any payment you make, you need to send a ton of information about that payment — particularly when these payments are cross border. Typically, detail is lost when payments are lumped together, but it might not make sense to send individual payments either (due to the fees tacked on each payment). Bulking with a sophisticated reconciliation system however, allows you to achieve both: lowered payment fees overall — and a higher understanding of where you spend. When you seek and gain granularity even when bulking payments, reconciliation of this information is vastly simplified, lending to saved time, as well as saved opportunity and compliance costs. For more on how a smart payments reconciliation process could help your company save millions, contact us to start a conversation.

By: Currencycloud
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