Receivables Strategy: Mastering the Move to Digital Payments
In this episode, Craig Jeffery and Layne Kight discuss the definition and significance of closed loop payments, such as RTP. They discuss their processes and challenges, as well as strategies for efficiently managing diverse payment methods. Listen in to this conversation on the intricate layers of the world of payments.
Craig Jeffery, Strategic Treasurer
Layne Kight, Deluxe
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Episode Transcription - Episode # 266: Receivables Strategy: Mastering the Move to Digital Payments
Welcome to the Treasury Update Podcast presented by Strategic Treasurer, your source for interesting treasury news, analysis, and insights in your car, at the gym, or wherever you decide to tune in.
Craig Jeffery 00:15
Welcome to the Treasury Update Podcast. This is Craig Jeffery with Strategic Treasurer. I’m joined with Layne from Deluxe. Layne, welcome to the Treasury Update Podcast.
Layne Kight 00:25
Thank you so much for having me, happy to be here.
Craig Jeffery 00:30
Every area of finance seems to be undergoing significant change. Technology is making a change, and demands for organizational efficiency and control are pushing changes. And in today’s podcast, we’ll be discussing receivable strategy, mastering the move to digital payments. Many of our listeners, many of you know of Deluxe has been a huge player in the digital inbound receipt solution space. And as we prepared for this topic, we described it as building like a cake layer upon layer. So hopefully nobody’s hungry, who’s listening. But just think of this concept, as we talk through today’s podcast is building it up in tiers or layer upon layer. So, Layne, it’s good to be with you today, I was wondering if we could begin by talking about closed loop payments, starting with RTP. And maybe you could provide a definition of closed loop, as opposed to open loop payments. And then let’s get into the challenges that this brings up.
Layne Kight 01:28
Absolutely. And I think it’s a great place to start just setting the foundation. And really, we’ve seen a growth in these closed loop networks, right. So when we think about the difference between a closed loop and an open loop network, really what we’re talking about is who are the players inside of that network, right. So within a closed loop environment, there are people that have access to a common platform. So a good example of that are digital wallets that we see popping up everywhere. And what happens is when people send payments in between this closed loop network, everyone has to be a part of it in order to facilitate the payment and make the transfer and receive the funds, which which was really, really great because it happens quickly. But when we start talking about a broader network of payments and a broader range of people that you’re paying, we start talking about more like open loop payments. So what that means is just essentially is it’s not just the the closed network of participants, it’s more open source. So you think about things clearing through like the Fed, different things like that are really what constitute the difference between closed and open loop. And real time payments can kind of straddle the difference between the two, when we start to think about it really. There are many examples of Faster Payments are real time payments that occur within that closed loop network. But a lot of things in what we talk about and building strategies really rely on those open loop networks of real time payments. So when we think about The Clearing House, FedNow, while they do have a captive audience of sorts, they’re not the traditional closed loop network that we’ve come to know, with certain things like funding a digital wallet, for one of the things that that helps eliminate is that need for that recipient to have something specific, tied to that wallet. So one of the biggest challenges with closed loop networks is everyone has to be present, if you’re not present, you’re not going to get paid. And so with the rollout of real time to be more open loop, and it still has a closed loop, because the banks have to be participative. But that’s where companies like us at Deluxe can kind of step in and help out. And to make things and facilitate the payments between these networks and be that connector, we start opening up those networks to more and more people and making real time payments, something that’s probably more achievable throughout the broader scope of people receiving and generating payments.
Craig Jeffery 03:58
You described a little bit of the difference between closed loop and open loop and RTP straddling both of those any additional thoughts that you would want to leave with the audience. So when we think about technology usually open tends to be better than closed. So we see all kinds of examples, who you know, when you think about this, or when you describe this? Is it better to go towards open or closed? Or would you say there’s a there’s there’s certainly trade offs?
Yeah, I would say there are trade offs. I think, to your exact point open is always better, because you’re gonna get a broader range. And I think when we look at the history of real time payments over the past seven to eight years as it started to emerge, there were a lot of challenges when it rolled out at first I mean, even within the ISO standards, right? There were challenges with the standards that were published and then things have been evolving as they’re going I think the beginning you couldn’t even indicate whether it was a credit or a debit within the ISO 20022 standards and that is all evolved as we’ve seen these real time payments take off. As we look at real time payments, and as they evolve, really, we’re going to start to see it become more of an open loop. And I think that is what we’re starting to see with things like The Clearing House and FedNow. And trying to discover which one banks and businesses are going to lean into, I think is really going to be the one that gives him the most open source of that network, right. So really, The Clearing House is fairly limited in scope just because of the nature of what it is. But when we start talking about FedNow, and it starts to expand to a broader range, we start to look more like an open loop network, you still do have to be registered. But again, it starts to have a more openness and expansiveness that I think makes real time payments actually something that can be viable, larger than just this, the small range of players that we’re doing it in the forefront of the initiatives.
Craig Jeffery 05:52
Thanks for the closed and open loop. But description examples just for those who are listening, and particularly those who are outside of the United States, the the two examples, The Clearing House and FedNow. The Clearing House is a clearing system, owned by, well, essentially, an entity owned by banks that the banks manage, as opposed to FedNow, which is run through the Federal Reserve System, which is owned by the central bank, and most most countries have central bank manage systems, but in the US, we’ve got both.
Layne Kight 06:28
Absolutely we do. That’s what makes it fun.
Craig Jeffery 06:31
That’s what makes it fun, and gives you more different payment options and more different channels. And you know, as a large economy, it it does provide some flexibility and some competitive pressure. But let’s let’s move to this first layer, if we’re using the cake analogy, we got the first layer, how to get paid in an environment of more or multiple, better payment systems, faster payment systems, new payment systems, always have some great features. However, it’s more it’s like when you used to go to the grocery store was paper or plastic bags. And now it’s paper, plastic paper or plastic bags, bring your own, carry it out loose, and it creates some additional complexity. And if we’re thinking about receivables, now I’m accepting an increasing number of payments. So maybe you can describe the how to get paid in this environment have more or multiple?
Layne Kight 07:24
Yeah, absolutely, I think you’ve touched on a really critical point is it is more and multiple, right? It will never be just this or just that. Everything we add to the payment scope that consumers and businesses have really is additive in nature. And, and that’s like, as I’ve been in Treasury, one of the things that I’ve seen throughout my career is that, you know, there’s always this idea of something that is going to come in and be a replacement. But really, I think what we see is they’re all complimentary, right? So real time payments, is great for physical payments is a great complement for other types of digital payments. So when we start talking about it, you really have to have a really inclusive strategy that incorporates all of these different methods of payments. You know, when real time payments, I think originally came on the scene, a lot of people said, you know, we’re gonna see same day ACH, maybe go away, because that was the first evolution of more of a real time payments. I mean, you had wire, and then you had same day ACH, and now you get RTP. On top of all of that, but what we’ve seen is that, yes, there has been volume that shifts from maybe one channel to another, they all still have a place and purpose within the overall commerce in the overall economy. As you start talking about higher value payments, while you’re still going to be a very, very big player, as you talk about low value payments, and that’s something we talk about all the time, especially in the like person to business or consumer to business space. That is where things like real time payments are going to be more and more applicable. Because they do have that that same thing of settling in real time. But oftentimes, they have $1 value cap. And I think we’ve seen the real time payments, dollar value cap expand as the use cases have continued to expand. But really, again, as we talk about it, it’s a game of multiple, and how do you efficiently proactively support all of them? And as we look at it, and as we look across our business, and as we talk with banks, and we talk with small businesses, middle market, everyone is really looking at this from a really inclusive strategy perspective. As they look over the past, you know, seven years, I think there was a focus on specific channels of these payments that are coming through but now is as I see, and I talk with banks and feel very, very lucky that I get to talk with some some wonderful colleagues throughout the industry. It really is how do we manage all of it? And we can’t just focus on one piece of it, it has to be something that allows us to harvest the information, harvest the money, and get all of that in a really, really great place. And without a recipe card, if we’re using the cake analogy, right, without a recipe card that delineates all of the different channels, you’re gonna miss the ingredients to make something that’s really, really impactful.
Craig Jeffery 10:26
This comprehensive look at all of these, there’s going to be more so how do we handle that? And you talked a little bit about the information side, I know we talked about that before, when we’re prepping, it’s like, some payment methods come with great amount of information. You know, some of the physical methods used to have everything shown in different columns, and some of the electronic methods have a way of providing that digitally. So it’s really easy to integrate, some of them leave it off. And to me, that seems to be there’s multiple methods, and not all information is the same.
Layne Kight 11:01
I mean, you kind of hit the nail right on the head on that one is we even if we look across like all of the different electronic payment channels, right, you have it, I sit in the receivable space for the majority of my career. So I think about, you know, electronic bill presentment and payment, which if you’re not familiar, that is just simply like a business, being able to take payments for their invoices and present them online. That comes with a different level of data than an ACH transaction comes with in some regards, different level of data than merchant card transactions come with bow but then you go to one provider for a solution or another. And they have their own ways of presenting the data and what they choose to capture and how they transmit it. To your point, it’s almost can be overwhelming, it feels like to take all of this information about, okay, I’ve got my money. That’s great. We know moving money is the easy part of this, right? That is the easiest part of the equation is getting money from bank account A to bank account B, that’s the easy thing, we can know how to do that we’ve done it for years, we’ve done it for decades, whatever. However we look at it, we’ve done it for centuries, essentially, even before accounts were created. But it’s that information that tells you how to apply the payment, where to apply the payment, how much it was for what invoices, that’s where things tend to get a little bit more complicated. As we roll out the more in multiple, because to your exact point, you know, those physical payments that we were so used to dealing with very information rich, but from the image, right, there were still pieces of that information that may not have been able to be captured automatically. So that’s where you know, dender records through the the ACH transaction started to come into play. And as we look at things like RTP, and how it expands and becomes more pervasive amongst payers, it’s how do you get that same information density, but in a way that is easily integrated, able and easily applicable throughout all of your systems, whether that’s your ERP system, your GL system, anything that you have, you have to be able to take all of that information and put it into the systems for it to actually be useful.
Craig Jeffery 13:21
You didn’t say point of sale systems, I thought you’re gonna list that. But just because there’s so many, right, there’s this almost limitless number of items. I don’t know that we talked about merchant services, right? We talked about different kinds of digital. But card is another factor there too. So we have we have to consider that I assume as well. And there’s some other challenges with merchant services. I know one thing we’ve seen is pain on the net or a gross basis. timing differences. So there’s a another order of challenges there.
Layne Kight 13:54
Oh, absolutely. I mean, we think, you know, as a consumer, oftentimes you think of cards or cards a card, right, and the payments or payments or payment. But on the back end, they look vastly different to businesses. And so it to your exact point, how do you I’m not going to use it? Well, I guess I’m going to say the word but I’m not going to use standardized because I think we’ve seen that dried app. And it’s really, really challenging when you have central banks, when you have fintechs, when you have the clearing house, as we talked about at the top of all these different players in the space. Standardization isn’t necessarily something that’s going to be easy or even potentially even achievable. But it’s how do you take what you’re given. And then what I will say is normalize it across all of these systems and payment channels.
Craig Jeffery 14:41
That’s a really good word normalize, right? Make it so it makes sense, even though they’re different, like translated, if you will. So that’s the Yeah, that’s the first layer, the foundation how to get paid in this environment of complexity or more and multiple. The second layer that we wanted to talk about was how do you gain efficiencies? And I don’t just mean process efficiencies. But that’s definitely a key part of it. But there’s some elements of control and capital control is the the level of fraud is increasing, the criminals are more sophisticated. And then certainly on the Treasury side, the use of capital, the efficient use of capital, and protection of capitals, capital matters. So how do you start talking about the second layer as we build on the first?
Layne Kight 15:28
Yeah, I mean, efficiency is one of those key words that we hear everywhere, right? How do we gain efficiency? We feel like we’re not efficient, you know, as we talk with, especially like, middle market type clients, or small business clients, that’s a big, big challenge in their world, because they’re strapped with one of the other things you mentioned, which is capital, right? That is something that is in everyone’s top of mind right now. And where do we allocate capital, especially given, you know, some of the constraints we’re under and some of the grander scheme of what’s happening in an economic environment, but capital allocation is a huge piece of it. And what I’m seeing and where I believe, a lot of this capital is going to be going as to your first point, and that’s the risk and fraud. So a lot of what we’re seeing is so many people, and so many companies and organizations, really look at their overall fraud and control strategy, right? As they look at these payments, we have them I wouldn’t say fully fleshed out and fully baked into all of the different other payment methods, right? With ACH, you have risk tolerance limits, you have the return network system, you have all of this, like pre built infrastructure to keep continue to support these legacy systems and payments. But as we start to look maybe towards the future at real time payments, that to me is where the capital, and the focus is going to be really is in in that space. And then and then what we see as well, and kind of like our lot in life is Deluxe, is to be that partner that can help provide those pieces to you right and help companies with their efficiencies with the control, but also to the overall grand processing efficiency. What we’re seeing is people really taking a look at their internal infrastructure and, and companies that have said, you know, we want to keep this in house, really look at saying, okay, is that my highest and best use? And is that my competitive advantage. And if your competitive advantage is not, you know, factory production type things where you’re taking in payments, doing what you need to do keying things in, sending them on their way. We’re seeing companies say maybe that’s not what we should be doing. And to your point, looking to outsource some of that, that doesn’t fall within their natural wheelhouse, but they may have held on to just for the sake of holding on to it.
Craig Jeffery 18:00
Yeah, I think it’s a rare, a rare company where that makes sense. You know, the, the default position should be that type of activity needs to sit with somebody who specialized in it. The burden of proof is on saying, let’s put this inside inside organizations. And I’ll give them Martha Stewart example. It’s like it’s funny to watch her do things. It’s like, oh, she makes her own paper at a tree and she mish Mosh is that. And she sends thank you cards from the star. It’s like, you can do that. I’m not doing that. There’s people that can do that. Why? Why? Why is that the case? No offense to Martha Stewart. But it’s amazing what people what people can do for hobbies. But from a business perspective, it’s it’s certainly a challenge, moving off the Martha Stewart lane. But back to the environment of how do we gain efficiencies. There needs to be, I think, a little bit more discussed on this, this next slide this the same layer that we’re talking about, as you know, even as we move to better payment methods, the old ones stay with us. And it doesn’t mean that they have to be processed or managed in the same way forever. You can think back to some of the physical methods that existed then they became imaged, they became images and then sent around. And so yes, they might be physical at the start. But 90% is moved around digitally. An image maybe not optimally, but certainly it’s reducing some of the friction. And we definitely need to reduce some of the friction to gain efficiencies. What are some of the other things that you see moving in this area?
Layne Kight 19:33
Yeah, no, absolutely. I’m just shocked that you don’t make your own paper. I thought everyone did that for their thank you notes and for their checks. But I’m really to your point, though, as we’ve talked about, it’s the game of multiple and more, but it’s how do you use tools that can really make things more efficient? Right. So one of the things that we see oftentimes in businesses is that the trends are what you see in technology and expectations. mirror what is happening in the consumer side, right? So you think around the instantaneous expectation of service, different things like that even outside the scope of payments. But as we narrow our focus into the payments world, you still see those same trends. So like, even giving the example of physical payments that come into an office that have to be imaged right, in the golden day, right, or the olden day, whatever we want to call it, there was you either sent them off somewhere, you either had a big machine that sat on your desk that cost you however much money and you send the physical payments, and all of that going through. But then in the consumer side, we could do all of that from the click of our phone, right, we took a photo of it. And what we’re seeing is, all of those trends are have started to make their way and become more and more important. Within the business space. As you talk about things like people who are going out and releasing goods. As soon as they have a payment, maybe they open a truck lock, you know, my first job out of college, I was running logistics for a Target store. And we didn’t open up that truck door until we had the manifest. And we knew everything was in there. And there are many companies that won’t do that until they have the payment in hand. Right. So things like mobile remote deposit for for instances like that are ways that these are becoming more and more efficient. And, you know, I look at like Bill Pay payments, things that used to as consumers are like, Oh, well, I started online, they’re going to get it one the day that I set it to go. And what you find is, that’s not always the case, unless the businesses are registered within all of these networks to say, hey, I can take an electronic payment, they’re still going to get these, these these physical payments coming through. And so we have now have solutions and technologies and ways to facilitate that transition from physical to digital. But it’s learning how to leverage them and incorporate those types of solutions, across your spectrum of wherever you want to be from a strategic perspective, that is really actually going to help create the efficiencies, as you look to gain with the newer payment methods that are coming online.
Craig Jeffery 22:19
Great point. So just I’ll just mention one thing before I ask you about your background, so the the physical payment process, and then there’s the digital. And sometimes the digital process is very disconnected, we talked about that with information. And then there’s the enhanced digital, where the information is rich, it moves, and it allows the process to work. And I think that’s really a part of the journey. It’s not just physical to digital, it’s different levels of digital. And I know we’re gonna get into some of that soon. But maybe I know you’ve said a few things about your work at Deluxe. Maybe you just give us a quick intro to what do you do at Deluxe.
Layne Kight 22:57
I oversee all of our digital receivable solutions. So some of the things we talk about with how to be more efficient, how to take payments in that digital space, whether it’s through an online portal, whether it’s through creating the digital efficiencies coming from Bill Pay payments, all of that falls under my purview, as well as a lot of what what I’ll call our informational hub product. So you’ll hear us talk about our our 360 plus, which is something that we are really, really excited and proud to bring in. And really that’s the hub of information around a company’s receivable. So my job is to sit over top of all of this and look at it from the strategic perspective of how do we as Deluxe really ingrain ourselves into this digital space. And I think we’ve done a wonderful, wonderful job on the receivables front. And now we’re looking to what is that next? Can we get insights? What can we do to incorporate all of this information and allow our clients to do that? And my job is to sit over top and say, Okay, how are we going to make it happen? What are our clients asking for? And where do we see the market going? And how can we create the best partnership for everyone that comes to Deluxe?
Craig Jeffery 24:11
Thanks for that background. And also outline in the next podcast, we’re going to talk about leveraging information as a strategic tool is a vital tool. So thanks for that, how to get paid in an environment of more multiple how to gain efficiencies. And then the third layer is there’s there’s new ways to get paid. And so how do you how can we leverage digital solutions most effectively if I’m, if I’m in charge of receivables at a company or I’m in Treasury, and I’m trying to make sure we’re collecting rapidly for liquidity purposes. What’s most important to be thinking about here?
Layne Kight 24:48
That’s a loaded question because most important, I think, how do we say it is in the eye of the beholder, right? It depends on where you’re at and what your your customer base looks like. I’m I’m a firm believer that you put your customer first and you understand who’s paying you whether it’s businesses, whether it’s consumers, and then that helps you identify where to go. I mean, I think they’re quick wins, right, we see we talked about a little bit on electronic bill presentment. And payment, we refer to it as E bill. But really, it’s that ability to take payments directly through a business’s website. To me, that’s one of the big quick wins, because it allows you to meet your customers where they are, especially in a consumer world. I think there have been studies recently that say like, over 40% of consumers say they are online constantly, which is a huge number. And if you’re looking to increase your collection, rate, your receivables rate, meet them where they are go online, I think that’s a really, really quick win that if you don’t have one, we should talk, right, because that’s an easy, quick, tangible win, to facilitate that, that move to digital. But then there, there are other things that are emerging. Like when we start talking about embedded banking request for payment, you know, what we’re seeing from the business perspective is they want one place where they can manage everything, right. And oftentimes, that’s their ERP systems. And so as you look to the future, that direct integration with ERP systems is going to be absolutely paramount, because businesses want to have a one stop shop, where they go in, you know, I think gone are the days of like, the small boutique pieces of it. And we’ve seen a lot of FinTech companies, especially over the past eight years, who can do small little bitty pieces of this overall value puzzle for payments. But I think to me, when I look at it overall, what businesses really should be focusing on is, how can I drive this? How can I really find a partner that’s going to allow me to be where I am doing my work and my ERP system, wherever that is? And if it’s not in your ERP system? If it’s somewhere else, great, but how do you facilitate all of that and create a strategy. And to me, it starts with the quick wins and identifying where your customer base is, and then meeting them where they are, and designing your overall collection strategy around it.
Craig Jeffery 27:18
As you were, as you were just describing that, I was wondering if you would agree with this statement? It’s it’s more about being embedded than fragmented or focused on the embedded not the fragment.
Layne Kight 27:30
I would absolutely an embedded, it’s kind of one of those words in the industry right now that it has many, many meanings, right? Embedded banking is like, I think one of the hot topics, right of how do you create that. But embedded to me can mean not only is it like, from your ERP, or ERP system directly to your customer base, it could be within your business platform that is online. But it’s to your point, it’s just something that you don’t want to see physical payments, digital payments, you have to go look at many different places for all of this type of information. It’s how do you create it in one place, or get it and receive it and use it in one place? That is of the utmost importance.
Craig Jeffery 28:17
One of the goals of of payments, it seems is to make the payment process, not just get easier, but almost disappear almost fall outside of our site. We’re just transacting business. The payments happen, systems are updated. It’s fully embedded, if you will.
Layne Kight 28:36
Oh, yeah. I mean, I think if I think back to seven or eight years ago, the term was straight through processing, or lights out processing, right. And that’s still the goal is to know that that payment, once your customer initiates, it goes all the way through the process without you ever having to touch it. That’s wonderful. But it’s not always going to happen. So you have to have all the tools in place to support the exceptions, writing, give that information and be able to capture it so that your downstream systems can do what they need to your goal is should always be to see how much you can take your hands off physical payments, your hands off keyboards, but really not always going to be the case. But how much of that can we achieve. I think that’s still something that we’re all really, really focused on.
Craig Jeffery 29:26
Now we’re gonna look at the top layer, the outside layer, I guess this would be the frosting companies need to solve this issue of more and multiple changing drive to more efficient methods, more efficient digital methods from less efficient digital methods. Maybe you could tell, tell me what you think about addressing the situation with for example, RTP that’s one channel you have to handle other payment channels and information. You mentioned apart like that you have or a platform or 360 Plus, companies have to solve that, in some way handling more multiple. Any thoughts on that? And I’m not setting that up as a commercial. I’m just saying that that is that has to be a strategy for integrating that bringing that together. What do you think about since you live in this space all the time?
Layne Kight 30:22
Yeah, I mean, I think we’ve hit on so many of the pieces of it, right? It’s, it’s the normalization, right? The first thing when you start talking about information is it has to be usable, right? So you have to extract what you need from that payment, and that remittance information that actually usable is actually what you need. So to me that that’s piece number one, is that almost normalization of it? And then piece number two is, Okay, where is this information coming into? Where is it stored, in what we’ve seen from a best practice is, is in one place. And as you said it, our our 360 Plus platform does just that, right? We take in Ach, we take in wire, we take in any third party payments, you know, physical payments, all of that is in one place in what that allows businesses to do is see that normalization, and then have that at their fingertips when I think of what I’ll call like, the, the pinnacle of the value chain of a treasury solution at the very, very, very top of this is that Treasury workstation, right? Or that cash flow forecasting piece. So when you start to get all of these different types of information into one place, into one database into one system, you can actually get an accurate look at your receivables. Right? I think a lot of times what happens is within businesses, we say, okay, we know this is where our account position is, based on recent history, you know, this is where we expect to be in a day. But that recent history could be, you know, based on a multitude of things, some historical from a year ago. But when you start to actually concatenate that information into one place, and you normalize it, you can get a much more real time insightful use of that data that improves your forecasting, that improves your internal efficiency and improves your capital position. So all the things that we talked about in the second layer, really, but then it also gives you some proactive insights that you can say, Okay, now do am I going to be a little bit short today? Do I need to go find some credit? Do I need to leverage this? Do I need to do that. But without having that information in one usable place? It’s almost like a treasure hunt, to go look through to find all of the pieces that you need. So really, for me that that is the like, biggest piece of this of this whole puzzle, as we talk about the multiple and more is how do you get all of it in through the funnel into one place that makes it easily usable and accessible?
Craig Jeffery 33:05
So so whether that that process of getting it all into one place is called consolidated receivables, integrated receivables are 360. Plus, there’s a there’s a way of doing that, I wanted to ask you have a question about the value of the information and getting into one place. And I know this gets down to the information. So I want to set the stage like, how is that better? You know, being able to see it that way, as opposed to if I can see everything coming in through a bank account or series of bank accounts, you know, five different payment types? How does this additional information provide better or more useful information or more insight for today or for today? And tomorrow?
Layne Kight 33:50
Well, when you look at your bank account, you don’t get all of the remittance data that you need to actually use the funds within your system, right? So when we talk about it like that, right, there’s, there’s use number one of saying you can check the box and say, Okay, I know I got paid. But then the second box that’s directly underneath that is what did I get paid for? Who paid me right and we when we look across, especially some of the the legacy and older of the multiple payment channels, you don’t necessarily have that at your fingertips, you might have to do a little bit of a bit of digging, right, as we talked about with like, some of the supplemental or agender records that are in an ACH transaction, or even at the most basic level, some of the physical payments that are coming in. So if you don’t have it in one place, and you don’t have that you have one team that sees PSA and one team that sees piece B and then you’re relying on all of these different pieces to from one person to one system to come together in one place, that it may not be fit for right. And so what you can encounter is fragmented data or data that It doesn’t align or all of that information coming in, may not be in a way that is congruent with the rest of it. And that’s what having like a consolidated receivables, and integrated receivables, receivables hub, our 360 Plus what ever you want to call it, that is what makes it really, really important to have. Because you’re not going to experience that anymore, it’s going to be in one place, you can see everything you can gather the insights you need to and know with confidence that it’s in a usable manner, that your systems downstream are going to say, give me that data. I know I can use it as opposed to saying, What is this, this isn’t usable. So having something like that really, really critical.
Craig Jeffery 35:45
That certainly makes sense. I want to see if I can go to another level on this if if you have another few moments. So if if the data is coming in from multiple payment types, different levels of information is a scenario as well. If you don’t have a good way of posting it, your your receivable systems are not up to date, you received all this money now they’re out of date, and you’re probably relying on your receivables systems for better and more accurate forecasts. And now that’s a camera the term you use, but it’s not congruent. It’s it’s not reconciled. There’s a latency issue. And so there’s a timing aspect. So that’ll be the first one. Is that Is that accurate?
Layne Kight 36:21
Yes, you can come take my job, because that’s the question that I ask all the time. And I’m going to give you just one, I’ll make this as brief as I can, because clearly I like to talk at times. And I could talk about this all day long, and it excites me. One very quick example is those online bill pay payments, right? Those payments that are coming in, when we think about them, as a consumer, we talked about it earlier, right? We set it to go on, you know, August 4, we expect it to go out the door, and we expect the business to get it on August 4 or August 5. And what’s happening is, if you’re not getting that information in real time, if it’s coming in maybe through a physical payment through a different channel, you’re not able to update your accounts receivable system. So if you’re not able to get that in that efficient manner, you’re going to have customer satisfaction issues, right of misapplied late fees of potentially services being cut off. So that’s why it’s really, really critical to understand where can you speed up that collections process, make it more efficient? And then how do you get that data as quick as possible, because you might be able to get that money. But if you’re not getting the data, you still have those same customer friction points. And in a world of consumer choice in a world of customer choice where somebody can turn their head and see a business that probably does something very, very similar to you. Your goal as a business is to reduce those friction points as much as you possibly can. So you’re not creating that doubt in those customers minds to say, Wow, let me turn my head and look over here. And having that accounts receivable system be updated in an accurate manner is one of the first ways you can really, really do that.
Craig Jeffery 38:12
Yeah, thanks for thanks for that. Some of those details. I guess the other side, too, is on the information front. If you’re getting more information, enriched information, that’s one aspect of it like those those payments are coming in today. For example, is there an aspect of that where you can get better forecasts and information not from your own system? But here’s a payment that’s scheduled for tomorrow or the next day? I always remember, you know, one industry that usually pays hospitals, etc. They send no say we’re gonna make payment for this in 42 days or 39 days. And it’s you knew exactly when the payment was going to be and they paid. It just was a long time in the future. But that idea of visibility helps the treasurer on the forecast. So is that is that currently what’s going on? Is that something that’s, that’s emerging that type of information, too,
Layne Kight 39:05
I would say it’s definitely emerging. It’s something that I’m not seeing being done constantly. It’s something that I’m seeing take a little more time because to your point, there going to be instances where somebody says I’m going to pay you on day 42, especially when we start to your exact point in the medical payment process, right in claims payments, right? You have so many different payers in the mix, you have the patient responsibility, you have the insurer responsibility you have maybe there’s another plan sponsor or something in the mix that creates all of these different pieces of it without having the payment I’ve seen. What I’ve seen right now is that it’s more like how do you match remittance to payment that you’ve already received or, but now I think to your exact point, it’s, well I know I’m going to receive this payment. So now how do I include that in the forecasting, and that’s something that’s being looked at, but it’s not something that I think is right now fully fleshed out. And I think that’s probably because there are so many different payment types and so many different players. That is one thing that I think will be the next evolution of the use of information in that that payment forecasting.
Craig Jeffery 40:15
Yeah, it happens in the current day, right, with the cache positioning, you know, you have known items, you have highly expected items, and that changes throughout the day. So that makes sense. I mean, the use of portals is now much more of not physical, but people have to go in and look at a portal, and maybe that information can be scraped. So very good. Thank you so much for for allowing me to just poke it at that a little bit. Thanks for your comments. Want to give you a chance, if you had any, any final thoughts to leave today’s discussion with?
Layne Kight 40:47
Thank you so much for having me. And again, as we look at it, right, moving money, we do it all day long. We anyone can do that. But what do you do with the information that you need along with that money? And as as people listen to this, and as people look at their overall strategy? What I hope they take away from this, this whole podcast is that it’s not just about the payment. It’s about everything that goes into it, and making it as robust and efficient as possible.
Craig Jeffery 41:20
Excellent, yeah. Comprehensive look at everything in the payment, and look at all payments together. Thanks. Thanks so much, really appreciate it.
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