What Design Professionals Should Know about the Digital Transformation of Getting Paid
Josh Cyphers is president of Nvoicepay, the leading financial technology company specializing in intelligent payment automation. KB-Resource approached Josh to talk about this important topic to our audience – the world of design and architecture.
KB-RESOURCE: Studies show that approximately two-thirds of B2C global expenditures are processed using e-payments, whereas just one-third of total B2B global expenditures are processed electronically. We’ve been reading about paper checks are the most fraud-prone form of payment, but are also aware of the growing electronic transactions usage. What are you seeing in terms of the movement toward automated payment processes?
JOSH CYPHERS: The case for payment automation in business has largely focused on cost savings and Accounts Payable efficiency. But COVID-19 and remote work actually boosted that business case—for safety purposes, many companies hesitated to send employees to the office to cut checks. What we’re hearing even more is that their suppliers don’t want to receive checks either, and they’re asking buyers to start making payments by ACH. With suppliers adopting digital payments at a more significant rate, it feels like we’ve reached the tipping point where checks are becoming obsolete on a much broader scale. This is becoming true in the world of design and architecture as well.
KB-RESOURCE: We did some research and noted payment processing via the ACH network has existed since the 1970s, and that according to what we read, ACH moved financial transactions worth more than $61.9 trillion in 2020, almost 11 percent from the previous year. So can you expand a little bit about ACH from your point of view?
JOSH CYPHERS: Sure. As organizations pay more suppliers by ACH credit, they realize the true cost of ACH payments and the risks around them. At $.25-.50 per transaction, ACH looks really cheap, but when you consider the time, expense, and liability of supplier enablement, the real cost ends somewhere between $1.40 and $3.79 from our analysis—similar to what it costs to process a check. And that doesn’t include the cost of fraud prevention. ACH payment fraud, I would imagine because of its growing usage, is on the rise—particularly Vendor Email Compromise (VEC) schemes, where scammers pose as vendors and convince AP teams to send ACHs to fraudulent bank accounts.
KB-RESOURCE: So what should designers and architects or other professionals do about protecting themselves?
JOSH CYPHERS: There’s always been the possibility of fraud, and there always will be. Digital fraud just moves faster. The thing is that most large enterprises have mature controls around check processes, and banks offer controls via Positive Pay and Positive Payee. Smaller firms and independent designers have the same degree of protection. In both cases, however, those controls don’t always exist for ACH, and banks often struggle to offer fraud protection for this payment type simply because check fraud was the main focus for so long. I think that now, with ACH fraud rising, the risk is greater than with checks because the ACH payment process is worlds faster. It’s almost impossible to recover stolen funds if you don’t recognize the problem BEFORE the funds reach the bad actors. All these challenges are likely to push more organizations toward outsourcing their payment process to alleviate their overworked teams.
KB-RSOURCE: So what do you see happening that might help our audience tackling these automated payment options?
JOSH CYPHERS: We’re likely to see businesses sorting through some ripple effects in 2021. Organizations had to move forward urgently last year – people working from home, the rise of digital information flowing — and there wasn’t time to plan for some of the changes that would normally take time to implement. I think we’ll see similar ripple effects from what I call rapid, tactical digitization across departments and industries. For example, in the design world you have many value-chain participants – wholesalers, consultants, contractors, architects and the owners themselves. Each of these points represent links in the payment chain, and as you know, the chain is only as good as the weakest link. I think this widening of the value chain in terms of payment options will lead to a second, more strategic wave of transformation and automation with solution providers addressing emerging needs.
KB-RSOURCE: Can you give our readers an idea of what you mean by such solutions?
JOSH CYPHERS: Let me point out that one of the hidden reasons checks held onto their popularity for so long is that they’re easy for Accounts Receivable (AR) to reconcile. The funds and data appear simultaneously, with the remittance data right on the check stub. From there, AR knows exactly how to apply the funds against their invoices. Until recently, that simplicity didn’t translate to ACH payments. Accounts Payable (AP) staff would see ACH deposits in their account, but they wouldn’t necessarily be told how to apply them, because the data didn’t travel with the payment. In other words, it was just an amount. NACHA (National Automated Clearing House Association) and the RTP (Real-Time Payments) network have improved ACH remittance data transfer. Although the number of fields and characters are limited, that is a big step in the right direction.
KB-RSOURCE: It seems like what you’re saying that this type of speed in payment processing will benefit not only the entire value chain of participants, but the supply chain as well. Yet it has a cost: the lack of data, or information around a payment. Is that where you see this headed?
JOSH CYPHERS: When it comes to supply chain financing, the U.S. is behind the times compared to Europe, which has had electronic invoicing in place for a while. But that’s really the opportunity in the U.S. — to create more fluidity and working capital for suppliers and buyers alike by using data to accomplish a faster and more dynamic kind of underwriting.
KB-RESOURCE: Are you suggesting that money is data?
JOSH CYPHERS: I’m not suggesting it, it is. Smarter systems with access to the whole data stream—from PO issuing to payment transacting—can support pre-approved discount and financing options and currency. This wasn’t at all possible in a paper-based environment, but we’ll see more of these offerings as businesses digitize their data – and their currency.
KB-RESOURCE: So how far down the road is this going to take place? The world is becoming increasingly complex. What advice do you have for our readers?
JOSH CYPHERS: Think of it this way: It’s becoming old-fashioned to think of buyers and suppliers—and AP and AR—as separate and independent organizations. Digitization is really the convergence of things – the tearing down of barriers and walls and exposing the interactions for what they are: a kind of dialogue between people. Every AP team has a corresponding AR team. All companies are both buyers and suppliers simultaneously. By looking at all the connections between them, you start to see a huge social network of finance professionals behind the constant exchange of funds, POs, invoices, contracts, and other documents. The caution, however, is that for all the highly sensitive data, businesses are simply not equipped to handle these as securely as they should. Some financial companies are using the B2B social networking concept to build proto versions of a “Facebook for Business” into their product. But, we have yet to see any with broader functionality or mass adoption. What you readers should be aware of is change…and err on the side of caution rather than embracing every solution that looks like the shiny new object in the room.
 Automated Clearing House (ACH) is an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit, payroll and vendor payments. ACH direct debit transfers include consumer payments on insurance premiums, mortgage loans, and other kinds of bills.
 The Association for Financial Professionals (AFP) conducted a Payment Fraud and Control Survey, asking businesses to assess the level of fraudulent events occurring. Based on their findings, the need for payment technology security is crucial. Results document that 81% of companies were targets of payment fraud in the year before. You can read about their recommendation, 6 of the Best ACH & Wire Fraud Prevention Steps to Take.
 According to the IBM U.S. Retail Index Study, the pandemic propelled ecommerce to levels that weren’t expected until 2025, while crushing many brick-and-mortar brands.
About Josh Cyphers. Josh Cyphers is the President of Nvoicepay, a FLEETCOR Company. For the past 20 years, Josh has managed successful growth for a variety of companies, from start-ups to Fortune 100 companies. Prior to Nvoicepay, Josh held leadership roles at Microsoft, Nike, Fiserv, and several growth-stage technology companies. Josh is a lapsed CPA, and has a BS in Economics from Eastern Oregon University.