In a search for greater efficiency US
corporates are turning increasingly to electronic payments to solve
vendor payment needs, a trend that is driving significant growth in
Bank of America’s PayMode network. Bank of America executive Kevin
Phalen discussed the PayMode success story with Charles
Davis.
corporates are turning increasingly to electronic payments to solve
vendor payment needs, a trend that is driving significant growth in
Bank of America’s PayMode network. Bank of America executive Kevin
Phalen discussed the PayMode success story with Charles
Davis.
Bank of America’s (BofA) rapidly growing
Paymode electronic data interchange and corporate payments exchange
reached a significant milestone recently with the acquisition of
its 50,000th vendor. The PayMode network, which facilitates the
electronic exchange of invoices and payments between businesses and
their suppliers, allows BofA’s clients to pay about 30 percent of
their targeted vendors on day one and up to 75 percent within the
first 12 weeks, enabling immediate processing and cost
efficiencies.
Paymode electronic data interchange and corporate payments exchange
reached a significant milestone recently with the acquisition of
its 50,000th vendor. The PayMode network, which facilitates the
electronic exchange of invoices and payments between businesses and
their suppliers, allows BofA’s clients to pay about 30 percent of
their targeted vendors on day one and up to 75 percent within the
first 12 weeks, enabling immediate processing and cost
efficiencies.
Kevin Phalen, an executive in BofA’s Global
Product Solutions Integrated Debt and Treasury unit, told EPI that
the growth of the network has been largely client-directed and has
reached a critical mass of users that is bringing new vendors
online daily.
Product Solutions Integrated Debt and Treasury unit, told EPI that
the growth of the network has been largely client-directed and has
reached a critical mass of users that is bringing new vendors
online daily.
“Electronic invoice and payment processing
represents the next wave of solutions that can maximize
supply-chain efficiency,” Phalen said. “The milestone of reaching
50,000 vendors and our high client retention rate show that we have
the most comprehensive network available to meet any client’s
supply-chain needs. We are committed to continue driving immediate
process innovations and cost savings for our clients.”
represents the next wave of solutions that can maximize
supply-chain efficiency,” Phalen said. “The milestone of reaching
50,000 vendors and our high client retention rate show that we have
the most comprehensive network available to meet any client’s
supply-chain needs. We are committed to continue driving immediate
process innovations and cost savings for our clients.”
Phalen said that PayMode began as a startup
during the dotcom era, and may very well been a bit ahead of its
time, as its technology outpaced consumer demand among corporate
clients still working in a paper-driven world. Fleet Financial
bought the company that owned PayMode in the 1990s, and then BofA
bought Fleet in 2004.
during the dotcom era, and may very well been a bit ahead of its
time, as its technology outpaced consumer demand among corporate
clients still working in a paper-driven world. Fleet Financial
bought the company that owned PayMode in the 1990s, and then BofA
bought Fleet in 2004.
“The PayMode franchise was just on the verge of
really taking off, and it was a real strength of the Fleet
acquisition,” Phalen said. “Technologically, all the pieces were in
place for us to build from just as the corporate sector was really
starting to move away from paper in a big way.”
really taking off, and it was a real strength of the Fleet
acquisition,” Phalen said. “Technologically, all the pieces were in
place for us to build from just as the corporate sector was really
starting to move away from paper in a big way.”
To date, the PayMode network, a component of
BofA’s Electronic Payment Services suite, Comprehensive Payables,
has processed more than $225 billion in transactions, and Phalen
said that new vendors are being added at the rate of approximately
2,000 per month. Since April 2007, transactions processed through
the network have grown 65 percent and the client base – now more
than 425 companies – has expanded 64 percent.
BofA’s Electronic Payment Services suite, Comprehensive Payables,
has processed more than $225 billion in transactions, and Phalen
said that new vendors are being added at the rate of approximately
2,000 per month. Since April 2007, transactions processed through
the network have grown 65 percent and the client base – now more
than 425 companies – has expanded 64 percent.
The Comprehensive Payables suite, which
includes PayMode and ePayables, increases the speed and efficiency
of a client’s payments by converting checks to electronic card and
automated clearing house (ACH) payments.
includes PayMode and ePayables, increases the speed and efficiency
of a client’s payments by converting checks to electronic card and
automated clearing house (ACH) payments.
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PayMode is an all-digital, online accounts payable solution that
enables borrowers to send electronic payments to vendors and other
payees, along with electronic remittance detail in formats that
have been specified by the payees. ePayables uses purchase card
technology instead of wire and ACH.
The service enables companies to initiate card
payments on approved invoice amounts by sending an electronic file
to their treasury services provider instead of issuing a “cheque
run.” Some companies may choose to integrate PayMode and ePayables
and use the combined solution for ACH, wire and purchase card
payments.
payments on approved invoice amounts by sending an electronic file
to their treasury services provider instead of issuing a “cheque
run.” Some companies may choose to integrate PayMode and ePayables
and use the combined solution for ACH, wire and purchase card
payments.
“The suite gives us the ability to perform a
consultative role with our clients with regard to their payments,”
Phalen said. “If they are making large-value payments, for example,
the ACH may well be the way to go, and then they can use the
ePayables service for smaller, everyday sorts of purchases and earn
rebates back to the company.”
consultative role with our clients with regard to their payments,”
Phalen said. “If they are making large-value payments, for example,
the ACH may well be the way to go, and then they can use the
ePayables service for smaller, everyday sorts of purchases and earn
rebates back to the company.”
Phalen said that as one of the few fully
integrated “many-to-many” networks, PayMode allows any payer to pay
any enrolled supplier on the network.
integrated “many-to-many” networks, PayMode allows any payer to pay
any enrolled supplier on the network.
“It is comprehensive enough of a network now
that we can turn to a potential client, look at their payments and
find 30, 40 and even 50 percent paper reductions literally
overnight,” Phelan said. “That is a powerful incentive, and that’s
before you start showing them the much richer data flowing from
those transactions.”
that we can turn to a potential client, look at their payments and
find 30, 40 and even 50 percent paper reductions literally
overnight,” Phelan said. “That is a powerful incentive, and that’s
before you start showing them the much richer data flowing from
those transactions.”
Corporate clients crave that rich data because
it allows them to better manage payments and enable richer cash
management, he said.
it allows them to better manage payments and enable richer cash
management, he said.
According to the bank, its clients can pay
about 30 percent of their targeted vendors on day one and up to 75
percent within the first 12 weeks, enabling immediate processing
and cost efficiencies.
about 30 percent of their targeted vendors on day one and up to 75
percent within the first 12 weeks, enabling immediate processing
and cost efficiencies.
Once a client is on board, BofA begins to scour
their payments for new vendors to bring on board. Once the supplier
enrolls, he agrees to be paid by anyone in the network, so there is
no need to re-enroll for each payer.
their payments for new vendors to bring on board. Once the supplier
enrolls, he agrees to be paid by anyone in the network, so there is
no need to re-enroll for each payer.
Phalen said that the benefits are there not
only for BofA’s commercial clients, but for the suppliers as
well.
only for BofA’s commercial clients, but for the suppliers as
well.
“PayMode offers vendors electronic deposit of
funds and provides flexible alternatives for delivery of remittance
information to meet their current banking and system capabilities,
thereby removing the barriers to their conversion,” he said.
funds and provides flexible alternatives for delivery of remittance
information to meet their current banking and system capabilities,
thereby removing the barriers to their conversion,” he said.
Remittances can be delivered in any format or
can be viewed, printed or downloaded from the PayMode secure
website. Additionally, suppliers do not need to share bank account
information with their customers as PayMode maintains and
authenticates all the bank data for its network members.
can be viewed, printed or downloaded from the PayMode secure
website. Additionally, suppliers do not need to share bank account
information with their customers as PayMode maintains and
authenticates all the bank data for its network members.
BofA currently has 400 commercial and
government clients enrolled in the PayMode service. Although Phalen
says it is open to any size client, it works best for entities that
make a minimum of 12,000 accounts payable payments per year.
government clients enrolled in the PayMode service. Although Phalen
says it is open to any size client, it works best for entities that
make a minimum of 12,000 accounts payable payments per year.
The appeal of paperless corporate payments
holds strong appeal for back-office operations looking for
efficiencies. While paper cheques are subject to delays,
uncertainty and fraud, automated methods of fund collection and
payment provide companies with more control over when their
payments are disbursed and faster access to receivable funds. By
automating their accounts payable and receivable systems, companies
may also realise opportunities to reduce errors and costs
associated with manual processing of cheques and decrease their
exposure to the possibility of cheque fraud.
holds strong appeal for back-office operations looking for
efficiencies. While paper cheques are subject to delays,
uncertainty and fraud, automated methods of fund collection and
payment provide companies with more control over when their
payments are disbursed and faster access to receivable funds. By
automating their accounts payable and receivable systems, companies
may also realise opportunities to reduce errors and costs
associated with manual processing of cheques and decrease their
exposure to the possibility of cheque fraud.
From spend management tools to its own ACH and
card solution, it is clear that BofA has been paying attention to
its corporate clientele and evolving into the one-stop corporate
payments shop that their treasury clients have long demanded.
card solution, it is clear that BofA has been paying attention to
its corporate clientele and evolving into the one-stop corporate
payments shop that their treasury clients have long demanded.
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