Thursday, August 16, 2018
4 Reasons Your Current Payment Processes Aren’t Working for You
Implementing payables automation software, which includes accounts payable (AP) and electronic payments solutions, is one way of reducing costs in the back office. But, Paystream Advisors found almost 50 percent of healthcare organizations today are still using checks to make the majority of their supplier payments. Manual, paper processes are inefficient, labor intensive and costly. These outdated practices are incapable of supporting today’s increasingly complex payment environment. If you are a healthcare organization that is still relying on paper, here are four reasons why your current payment processes aren’t working for you.
- Out of pocket payments: Healthcare organizations must be able to manage differences in payment mechanisms and insurance schemes. Compared to just a decade ago, a larger percentage of medical bills is paid out-of-pocket by the patient rather than through an insurance provider. Because patients are not always able to pay their medical bills as consistently as an insurance company, payments can remain in receivables long after the initial bills are issued, impacting providers’ ability to pay their suppliers on time. Inefficient, paper-based provider to supplier payment processes extend the length of time it takes to pay suppliers, increasing the risk for late payments and missed savings opportunities.
- High use of checks: When it comes to payments management, research shows most companies are still using checks for a high percentage of payments. Checks are a highly inefficient method for making supplier payments in terms of time, cost and effort. The high use of checks may reflect the more traditional mindset behind many healthcare back-office teams or potentially the result of the supplier trend to no longer accept card payment – leaving healthcare providers with check payment as their only option when lacking payables automation. Surveys show the healthcare industry tends to adopt more efficient finance tools at slower rates than many other industries.
- Manual, paper processes: Manual-based invoice and payments management results in several different problems for payables processes, including slow payments, potential credit holds and lost savings from missed early payment discounts. High volumes of paper invoices typically require AP teams to manually key invoice data into their accounting systems. This can lead to input errors, invoice-PO-matching difficulty, and a risk of non-compliance with reporting regulations. Furthermore, high volumes of paper checks can lead to significant processing costs, payment processing errors, and a risk of fraudulent or improperly authorized payments.
- Misconceptions about automation: Healthcare organizations and their decision makers believe the burdens of time, costs, and IT involvement during the implementation of a payment solution would be too disruptive to existing processes. For companies that are automating from a fully manual system, the scale of investment and scope of changes to existing processes can seem overwhelming, particularly for companies with complex approval workflow requirements, as in healthcare. For many years, there were no alternatives to manual processes, and therefore back-office upgrades were not generally considered by decision-makers when setting budget priorities.
Today, there are many more supplier payment options available for healthcare organizations. These newer, more advanced tools are built to eliminate some of healthcare’s long-held concerns around disruption and budget, as these solutions come at more affordable price points and with fewer implementation requirements than in years past. Paper AP processes eventually get the job done but they are working against your goals for efficiency and savings.
Learn more about the value of implementing an epaybables solution in the PayStream Advisors white paper Payables Automation for Healthcare.