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.