It is no secret that implementing family office technology and automation helps improve operational efficiency and ensure consistency and regulatory compliance. It also comes in handy when reducing the costs associated with manual back-office functions, which is often a significant pain point for many offices. This is especially true for accounting and bill payment systems since tasks are often highly labour-intensive and are therefore prone to substantial margins of human error.
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Traditional Bill Payment Solutions and Its Limitations
What does manual bill payment in the family office industry look like? Let’s say that a product or a service is purchased, the family office receives a vendor invoice for the same which is then validated by an in-house bookkeeper, processed, and then paid using a payment gateway. Traditionally, family offices would outsource such time-intensive tasks to external firms. However, with the advent of newer technologies that allow for seamless integration into existing operational systems like enterprise resource planning (ERP) and customer relationship management (CRM) suites, it has become easier for more and more family offices to execute these tasks internally or outsource them to specialist service providers instead.
However, in order to gauge the full range of benefits that automated expense management systems bring to the table, we must first look at the key challenges that the existing traditional solutions face:
- Traditional payment gateway services generally limit family offices to transact through a single banking institution which often means having to deal with higher processing charges, poor customer support, and payment failures in case of service shutdowns.
- Traditional payment systems are generally inflexible and cannot cater to the personalised needs of an individual family office.
- Billing is one of the most vulnerable areas of accounting with respect to fraud. The 2022 Associated Certified Fraud Examiners report highlighted that billing comprised over 24% of occupational fraud cases in the accounting departments of various businesses.
Emerging Bill Payment Solutions
As new fintech startups are entering the market, they offer new alternatives to traditional payment gateway. These disruptive technologies provide a holistic, end-to-end workflow with automated money transfers and invoice management for greater efficiency and complete auditability at all levels using integrated payment gateways.
Here are some of the key benefits that modern bill payment solutions can bring to the table:
- Seamless Invoice Management: An integrated billing interface can be used to read, record, and track all the data from various invoices into a single platform without having to move between different departments for approval.
- Easy Access: The billing software can be configured for easy and convenient admin access for final payment approvals. Additionally, if any family member wishes to review the process, they can easily do so using a client portal or a personalised mobile application.
- Integrated Payment Gateway: We’ve already established the limitations of using traditional payment gateways offered by banks. Bill payment software offers integrated payment systems to initiate automated clearing house (ACH) payment batches or wire transfers without having to resort to a specific bank portal.
- Fraud Mitigation: Automated bill payment solutions offer a single point of data entry and a maker-checker workflow for data authorisation. This helps create on-demand audit trails which can help mitigate fraud to a large extent.
Such technology-driven solutions offer a far more streamlined approach to the tedious task of bill payments. They help improve operational efficiency as well as accuracy and are therefore excellent tools for cost and risk management.