Providing payment services has historically been a hassle for accountants. It’s not always added value, it’s low margin, and it creates the risk of human errors, resulting in lost time from admin and damaged client relationships.
But increasingly clients expect accountants to make supplier and employee payments, and firms could be losing out on new engagement opportunities if they remain reluctant.
That said, advances in technology mean that valid excuses for not getting going with payments as a service are fewer and further between – it’s becoming easier than ever to provide, and has the potential to be a profitable service line in its own right. Welcome to the new world of Payments as a Service.
Follow our six top tips for best practice in incorporating payments as a service and becoming more embedded within your clients' business. It’ll enable you to expand the range of services you can offer to clients and benefit from automation to aid real-time business insights.
1. Document all payments processes
It's good practice to fully document payments processes as it can be a fiddly area to master. This is particularly relevant for firms that are yet to use technology to replicate their manual tasks.
Processes should cover the entire lifecycle of payments, including how invoices are received (i.e., through a specific email inbox) and approved, when they are captured in accounting software, and finally, how payment runs are generated. The latter should detail which bank accounts payments are made from, whether any USB sticks/devices are needed, and crucially to check whether sufficient funds are in place before transacting.
2. Assign staff to fulfil payment runs
Assigning specific staff to conduct payments assignments allows them to build up expertise in a distinct area that’s undergoing change due to general technological developments – as well as payments tech such as Faster Payments, where funds are cleared instantly.
Additionally, tasking individuals with fulfilling payment runs means that this will be developed as a service area to be taken seriously in its own right and reduce the chance of missed payments or errors.
3. Schedule clients' payment runs
Payment runs for clients should be scheduled weekly or fortnightly, depending on the volume of invoices needing to be paid for clients.
Scheduling them to take place on specific days helps to manage clients' expectations, and will give both accountants and their clients visibility of when payment runs are due to take place, alongside their respective responsibilities.
It’s a good idea for accountants to have a two day cut-off for receiving invoices to be paid for each run. And communicating this to clients will mean there’s a good understanding of the payment runs period in which each individual invoice is paid – and it can also be an effective way of motivating businesses to send invoices on time.
4. Make sure banks are fully reconciled before transacting
It's easy to make duplicate payments if banks are not fully reconciled in accounting software, but doing so can damage client relationships and take up additional resources to claw back funds from suppliers.
The fail-proof way to stop this from happening is to ensure bank accounts are fully reconciled before payment runs so that historic bank payments are matched to invoices.
Cloud accounting technology and matching rules mean that it’s easier than ever to do this, so there’s no excuses for not getting into this good habit.
5. Update your accounting payments technology
Technology that automates payments and manual processes is becoming more popular as accounting firms recognise how much time they can save by speeding up payroll – and how much more they can do with their business as a result.
Modulr’s Payments Dashboard is the UK’s first payments solution that manages all client payment workflows from a single online portal, and is flexible to the accounting software you already use. Accountants can quickly easily view pending payments, approve invoices for payments, and eliminate the risk of costly errors. And that leaves plenty of capacity for rolling out payments as a service as a scalable and profitable service line.
6. Don’t make client suppliers chase you for payment
Being chased for overdue payments isn’t very pleasant and is often a fruitless task. It’s also a drain on time and can damage client relations.
So it’s important for accounting firms to clearly understand that they are not responsible for liaising with suppliers for overdue invoices.
As well as making this clear to clients, accountants should ensure that their contact details are not shared with suppliers directly or by them being cc’d into emails. A fail-safe way of segregating accountants' contact details from suppliers is to have an email forwarding inbox set up, which accountants have access to either directly or through receipt scanning software.
