Session 5 - 07 Payment Schedules & Remittance Advice

Summary

The transcript discusses the process of creating efficient payment schedules for clients, emphasizing the importance of consolidating bills and processing them in a batch to streamline payments. It highlights the need for clients to have a clear understanding of the payment schedule type and the importance of checking bank balances before authorizing payments to avoid issues. The speaker also stresses the value of proactive management in business operations to prevent problems and improve client relations.

Takeaways

• 📋 The primary goal of preparing payment schedules is to efficiently transfer information and streamline the payment process for clients.
• 🔑 Efficiency is achieved by consolidating all bills to a single email address, processing them, and presenting them in batches to avoid clients forgetting or misplacing individual bills.
• 🗂️ There are multiple types of payment schedules, akin to a menu, which cater to different client needs and legacy systems.
• 📬 Clients are informed of the type of payment schedule method they should use, ensuring they are aware of the process for their specific case.
• 💼 Small business owners often lack sophisticated purchase order systems, so batch processing of bills is crucial for their operations.
• 🔒 The accounts team has user-only access to bank accounts, allowing them to upload payments but not to make them, ensuring security and oversight.
• 📝 A remittance advice is sent to suppliers to match payments with invoices, preventing miscommunication and ensuring both parties have the same record of transactions.
• 🕵️‍♂️ Before sending a remittance advice, it's important to verify that the payment has actually left the bank account to avoid supplier confusion and additional work.
• 🚫 Ensuring there are sufficient funds before authorizing payments is crucial to prevent failed transactions and the need for follow-up actions.
• 🔔 Proactively managing payment schedules and bank balances can prevent issues like late payments and overdrafts, demonstrating diligence and value to clients.
• 🛠️ Operating proactively rather than reactively can significantly reduce the stress and workload associated with managing payment schedules and client expectations.

Q & A

Why is efficiency important when preparing payment schedules for clients?

Efficiency in preparing payment schedules is crucial as it ensures the most effective transfer of information, streamlines the billing process, and facilitates quicker payments, which is particularly beneficial for small business owners who may not have sophisticated purchase order systems in place.

What is the purpose of directing all bills to the accounts email?

Directing all bills to the accounts email allows for centralized processing, which helps in avoiding omissions and ensures all bills are accounted for, thus improving the efficiency of the payment schedule preparation.

How many different types of payment schedules are mentioned in the script?

The script mentions there are about four or five different types of payment schedules, likened to a McDonald's menu, indicating a variety of methods to cater to different client needs.

Why is it necessary to batch payments together instead of entering them individually into the bank?

Batching payments together reduces the workload and time spent on processing each payment individually. It allows for a single file upload into the bank, simplifying the process and minimizing the chance for errors.

What is the significance of having user-only access to the banks in the context of payment schedules?

User-only access to banks means that while the account handlers can upload payments and check statements and balances, they cannot make payments or withdraw money. This ensures security and that payments are only made with the client's authorization.

Why is it important to check that the money has left the bank before sending a remittance advice?

Checking that the money has left the bank before sending a remittance advice ensures that the payment has been successfully made and received by the supplier. This step avoids miscommunication and additional work in case the payment fails or is delayed.

What is a remittance advice, and why is it sent to suppliers?

A remittance advice is a document sent to suppliers that informs them exactly what has been paid. It helps suppliers match the payment to their system and close the correct invoices, preventing discrepancies and miscommunication about unpaid invoices.

What is the additional step taken to ensure funds are available for automatic payments like payroll tax?

An additional step is to set a reminder to check the bank account balance one day before the automatic payment is due. This proactive measure helps prevent overdrafts or failed payments due to insufficient funds.

Why is it recommended to inform clients in advance about their bank balance when preparing a payment schedule?

Informing clients in advance about their bank balance when preparing a payment schedule allows them to make informed decisions about approving payments. It helps avoid situations where payments are approved but cannot be processed due to insufficient funds, thus preventing delays and additional work.

What does operating in a proactive state mean for a business, as mentioned in the script?

Operating in a proactive state means that a business anticipates and addresses potential issues before they become problems. This approach involves organizing systems to prevent issues, learning from mistakes, and continuously improving processes to minimize the need for reactive measures.

What is the benefit of sending a reminder to a client about an upcoming direct debit when the bank balance is low?

Sending a reminder about an upcoming direct debit when the bank balance is low helps the client take timely action to ensure sufficient funds are available, thus preventing failed payments and the associated negative impacts, such as late fees or loss of client trust.

Outlines

00:00

📊 Efficient Payment Scheduling for Clients

This paragraph discusses the rationale behind the preparation of payment schedules for clients, emphasizing efficiency in information transfer. The process involves consolidating all bills to an account email, processing them, and presenting them in batches to avoid individual handling by clients, which is not efficient. The speaker mentions different types of payment schedules, likened to a McDonald's menu, and the need to adapt to the client's preferred method. The aim is to streamline the approval and payment process, reducing the workload for small business owners who may not have sophisticated purchase order systems. The paragraph also explains the importance of checking that payments have been made before sending remittance advices to suppliers to prevent miscommunication and additional work.

05:01

🔄 Proactive Payment Management and Client Communication

The second paragraph delves into the importance of proactive payment management to avoid issues such as insufficient funds in the bank account when payments are approved. The speaker shares an example of a payroll tax situation where they set reminders to ensure sufficient funds are available before automatic debits. The proactive approach is contrasted with a reactive state, where businesses are constantly fixing problems instead of preventing them. The speaker highlights the benefits of operating proactively, such as smoother work processes and increased client value. The paragraph concludes with the speaker's appreciation for the technological systems in place that facilitate a proactive work environment and the importance of individual diligence in maintaining this approach.

10:02

📄 Post-Payment Client and Supplier Communication

In the final paragraph, the focus shifts to the communication process after bills have been paid. It is confirmed that remittance advices should be sent to suppliers to inform them of the exact payments made, allowing them to match the payments to their systems and avoid miscommunication. The paragraph is concise and directly addresses the action to be taken post-payment, ensuring that suppliers are kept informed and that the payment process is closed out correctly.

Keywords

💡Payment Schedules

Payment schedules are systematic plans outlining when and how payments will be made to various parties. In the context of the video, they are crucial for efficient financial management, ensuring that clients' bills are processed and paid in a timely manner. The script mentions different types of payment schedules, likening them to a 'McDonald's menu,' indicating a variety of options tailored to client needs.

💡Efficient Transfer of Information

This concept refers to the streamlined communication of data to ensure that all parties have the necessary details without redundancy or confusion. The video emphasizes the importance of preparing bills and presenting them in a way that facilitates quick understanding and action, which is integral to the payment schedule process described.

💡Accounts Email

In the script, the 'accounts email' is the designated point of contact for receiving all bills. This centralization is part of the strategy to streamline the payment process, allowing for all bills to be processed in one place before being presented to the client in a consolidated payment schedule.

💡Batch Processing

Batch processing involves grouping multiple tasks together to be handled as one unit, which increases efficiency. The video describes how payments are batched, or combined into one file, to simplify the banking process and reduce the need for individual entries for each payment.

💡User Access

The term 'user access' refers to the level of permissions granted to a user within a system. In the context of the video, the speaker mentions having 'user only access' to banks, meaning they can upload payments and view statements but cannot make payments or withdraw money, reflecting a controlled and secure approach to financial transactions.

💡Remittance Advice

A remittance advice is a document sent to suppliers that details the payments made, helping them reconcile their accounts. The video explains the importance of this document in preventing miscommunication between the payer and the payee, ensuring that both parties have a clear record of which invoices have been paid.

💡Bank Balance

Bank balance refers to the amount of money available in a bank account. The script discusses the importance of checking the bank balance before sending a remittance advice to ensure that the payments have been successfully made and to avoid any discrepancies or follow-up issues with suppliers.

💡Direct Debit

Direct debit is a payment method where funds are automatically withdrawn from an account to pay a supplier. The video mentions a scenario where payroll tax is paid via direct debit, highlighting the need for proactive monitoring of bank balances to prevent overdrafts or failed payments.

💡Proactive State

Being in a 'proactive state' means taking anticipatory actions to prevent problems rather than just reacting to them as they occur. The video speaker advocates for this approach in business operations, emphasizing the benefits of systems that allow for preemptive problem-solving and the avoidance of constant crisis management.

💡Diligence

Diligence refers to the quality of being careful and thorough in one's work. The script mentions that while technology and systems can support a proactive approach, individual diligence is still necessary to ensure that all aspects of the payment process are handled correctly and efficiently.

💡Supplier

A supplier is a company or individual that provides goods or services to another entity. In the video, suppliers are the recipients of payment schedules and remittance advices. The script discusses the importance of clear communication with suppliers to ensure that payments are correctly allocated and to avoid any potential misunderstandings or delays.

Highlights

Efficient transfer of information is key in preparing payment schedules for clients.

All bills should come to the accounts email for processing to avoid client forgetfulness.

There are about four or five different types of payment schedules, similar to a McDonald's menu.

Legacy systems may require handling payment schedules in multiple ways.

Processing all bills in one batch and presenting them to the client for approval streamlines the payment process.

Batch payments by combining them into one file to simplify bank transactions.

Client has user-only access to the bank, meaning they can upload payments but not make them.

Business owners sign off on payments before they are made to ensure funds are available.

Remittance advice is sent to suppliers to match payments with invoices and avoid miscommunication.

Checking bank accounts before sending remittance advice ensures payment has been made and received.

Avoiding supplier confusion and chasing payments by ensuring funds have cleared is crucial.

Insufficient funds can cause payment schedules to fail, highlighting the importance of checking bank balances.

Proactive approach in payment scheduling prevents problems and reduces reactive firefighting.

Individual diligence is necessary to maintain the proactive state of the business.

Technology solutions and systems are in place to support a proactive business operation.

The importance of notifying clients in advance about low bank balances to prevent payment failures.

Creating reminders for automatic payments to ensure sufficient funds are available.

The value of proactive communication in building trust and reducing client workload.

Sending remittance advices after bills have been paid is a standard practice to keep records straight.

Transcripts

next one is

why do we prepare payment schedules for

our clients

the way that we do payment schedules

we're looking for what is the most

efficient transfer of information right

that's what we're looking for how can we

prepare the bills that are required how

can we present them and how can we get

them paid in the most efficient way

possible

so we look at it and we say okay if the

client is getting every bill and the

client is then passing it on to us

um they may forget things you know it's

not efficient so what we do is

generally we'll request that all bills

come to the accounts email

um we will process all of them and then

we prepare

this about there's about four or five

different types of payment schedules

uh it's a bit like a mcdonald's menu

right but when you get a client

um it'll tell you whether it's payment

schedule one two

three four five whatever method it is um

unfortunately we have a legacy from

early on where we have some clients

with different methods and we have tried

to become more efficient

so there'll be you'll be doing payment

schedules in in probably about four or

five different ways

so you just you'll need to know um you

know for each

client what type of way it is so the

idea is that

we're processing all the bills we're

then we're presenting the bills in one

batch

um in an email to the client so they

don't have to go through each one

individually

because because they're smaller business

a lot of them are smaller business

owners they don't have

as i told you before purchase order

systems and

all of that in place so then they go

through they approve it they say pay

these pay these or maybe don't pay that

yet

you then batch those payments that they

said by batching we're combining them

all together into one file so we don't

have to individually enter them in the

bank

we upload them into the bank we let the

client know sometimes it's text

sometimes it's email

payment is uploaded in the bank it's

ready for you to go in and sign it

so we have user only access to the banks

that means we can't make payments we

can't withdraw money but what we can do

is upload the payments we can use

statements

um balances all of that then once the

business owner has uh signed it

then we go in and we check

you know has the money left the bank

then we send the remittance advice

i want to ask now if does anybody

remember

why we go into the bank and check it

before we send the remittance advice i'm

really curious to see if anybody

remembered

or if you didn't remember think through

the process and

maybe what i'll do is i'll let you know

what a remittance advice is again a

remittance advice

is um it's a document or a piece of

paper that goes to the supplier letting

them know

exactly what we paid so that they can

match

our payment to their system because keep

in mind

every invoice we have in our system that

we've processed they've got in theirs as

well

so we want them to allocate the payment

to the same

invoices as what we did and close the

same invoices that we did

otherwise we can have miscommunication

later if they close the money to

different invoices

then we could be saying um they could be

coming and saying

uh this hasn't been paid but we'd be

saying yes we paid it

and then that creates extra work so

once we let the client know it's ready

for signing they go in they authorize it

why do we wait why do we go in and check

that

actually the money's left the bank

before we send the remittance advice

yeah okay good question

so we make sure that uh the payment is

actually been made

or also the the supplier have actually

received that money if the money has

left from our bank then we can be sure

that it uh

landed that they received the that

amount

if the money for example didn't left the

bank we know that there has been some

problem and that

the payment hasn't actually been made

yet maybe there are some delays or

whatever so

just to make sure that the money has

left

our account and that means that it

landed on theirs

okay so you're halfway there the other

reason is

imagine now you're a supplier and you

receive a remittance advice

and you're looking at it and you're

thinking i got paid

and you look in the bank and actually

you didn't get paid

because the business owner didn't sign

it

so what are you gonna do you're gonna

ring up or you're gonna email accounts

hang on i didn't get my money

it just creates extra work that's the

what you're saying is right

and then it's just that extra bit it's

the bit to avoid all the suppliers

chasing you

um because the person they think they

got paid because they got the remittance

advice but

some business owners um can be slack and

all busy

and they can miss they can miss the um

signing and then it doesn't go for

another day or two

and for those few days you're going to

keep getting people emailing you

asking you you know why did you send me

the remittance advice you didn't get

paid

whatever there also would be the

situation where there's no enough

money in the bank account before

uh owner approves your payment something

else which is for example on direct

debit went through

so there's no enough money he approved

but so there's another

reason why you have to check in the bank

that reminds me that's a really good

point um

you know one of the things that's really

important is that you're really switched

on if you're doing your payment schedule

and this has happened you know quite a

few times where a person does a payment

schedule

they send it they upload 50 000

but there's only 20 in the bank account

so the whole payment fails

and if you can imagine there's a timing

thing like sometimes bills have to get

paid because

to continue work whatever it is so

that's why it's really important that

you're linking the fact that i'm making

payments i'm gonna need to make sure

that what i'm paying that there's enough

money

and that you're telling the client in

advance okay if you want to pay

50 000 but even looking when you send

the payment schedule

okay um there's about fifty thousand

dollars worth of bills that need to be

paid

i'm just letting you know that currently

the bank balance is twenty thousand

you know maybe you need to do a top up

you know are you able to do a top up

or would you you know at least let them

know so then maybe they'll only approve

15 000 worth of bills rather than

you know them approving the whole lot so

just being connected to

the whole the impact of everything as

you're doing the payment schedule

um and again i want to

share example uh for example we are

for one client we're paying payroll tax

each month

and because of the quality situation

they allow us to pay installments

so smaller amount in uh more more

frequently

and they said okay this uh amount will

be direct debited from your account

each tenth of the month and that's okay

you

basically don't have to do anything

money will

automatically be

taken out from your account what i did

is i create requested the boomerang and

reminder for myself

to check uh one day before is there

enough funds

on the bank account because it is

automatically i know

if there is no enough money on the bank

account

we if we are late with the payment we

will have to pay interest

so that's an additional step no one

asked me to do it

client doesn't want to like think about

it but

uh they're like they have a lot of

suppliers and their payment schedules

are really big

there is situation where they pay

payment schedule and there's no

uh money on their bank account so just

just example off and it's it's those

little things

um that can you imagine that you're

you're a businessman and somebody emails

you the day before

saying look i just noticed that the

balance is low and the direct debits

coming tomorrow

can you imagine how much you value that

that's that

the thing is yes there's a little bit of

work there but if it

fails then there's a lot more work on

the other side as well so it's in

everybody's interest it's in your

interest plus

you're actually you're valued even more

by the client but you you're making your

life

smoother and easier and the work that

you're doing um you know a lot a lot

more

simple you know as a company um one of

the things that i really love is

because of all of the technology

solutions systems that we've put in

place

we actually um do operate in a very

proactive state

so do you guys know what proactive is

can i get a hands up

okay um i believe most businesses or a

lot of businesses they operate in a

reactive state

what that means is all most of the time

that they're

fixing one problem after another they're

putting out a fire that's how they're

operating all the time

um because they don't have the time to

get themselves organized and preempt the

problems

and as i said before fortify the systems

fix it before

it's going to happen um when you can do

that

and and you leverage every mistake so

that you slowly

eradicate a lot of the problems that are

happening um

then suddenly you don't have to have all

these dramas all the time you don't

always have to be

saying sorry um

right so that's the reason why we

operate like this that's why we're

saying all of this

it is pleasant it is so much more

pleasant for yourself

to work that way and we've come a long

way with our systems to

promote that but it also takes each

person's individual diligence

what should you send after bills have

been paid

okay this is an easy one who's got it

alexandra

the remittance survives excellent

excellent great