In a different blog post, we highlighted five reasons to use an outsourced bill pay provider. But what about the family offices and financial institutions that prefer to use internal staff to manage their client bill pay operations?
For those managing this function internally, it typically requires you to maintain lengthy vendor lists, process large numbers of transactions and produce time-consuming expense reports. Even with dedicated staff, these operations can be a huge drain on your team.
So with other tasks at hand, how do you save time and resources?
Accounts payable technology.
There are plenty of accounts payable solutions available to family offices, ranging from comprehensive software suites to function-specific online tools. In an ideal world, your accounts payable functions like cash management, bill payment, approval workflow and reporting should reside within your broader family office accounting software package. But, sometimes there are operational reasons why these functions are kept separate. In these situations, your AP solution should, at the very least, integrate with your family office accounting and reporting platforms.
Whether you are evaluating a comprehensive family office fintech platform or a best-of-breed accounts payable tool, consider the following capabilities to help you create efficiencies and automate manual bill payment processes.
Paying bills on behalf of high-net-worth families and individuals requires rigorous controls and processes. Automated workflow around common AP tasks like invoice review, accounts payable data entry, invoice approval, payment settlement and cash flow reporting allows you to define complex processes and multi-level approval hierarchies to ensure that no review is overlooked.
Client portals are gaining popularity among family offices and advisors working with HNW clients. While they are primarily used for reporting purposes, some client portals also feature tools that allow end-clients to interact with their advisors. For example, the Archway PlatformSM features a client portal that allows family members to view invoices, approve vendor payments and monitor their expenses. Users can also configure pre-approval rules or set dollar limit thresholds for specific vendors or recurring payments. Using these tools, you can digitize manual processes, like phone calls and signatures, and smooth otherwise clunky AP procedures.
The COVID-19 pandemic and ensuing physical distance has shed new light on the need for digital tools that allow family offices to ensure continuity across business processes, especially essential functions like bill payment. Leveraging an AP solution that securely stores e-signatures enables permissioned system users to immediately apply signatures to checks once approval criteria is met. This creates a fluid digital process, and eliminates the need for family members or account holders to be physically present for check signing.
An audit trail offers a complete history of any system transaction, including bill payments. Since family offices and financial institutions have a legal and fiduciary obligation to protect client assets, audit trails help ensure that they are tracking who, when and where a payment was issued.
For wealthy families, there is usually a high volume of vendor invoices and bank statements related to various accounts, credit cards, properties and assets. Combined with weekly expense reports and other AP documents, files accumulate quickly and risk getting misplaced in convoluted file structures. Through a centralized document vault, users can securely upload, categorize and share relevant AP-related documents.
Depending on how your firm pays bills or moves cash on behalf of individual family members, finding an accounts payable solution that offers various payment methods is key. Whether you use paper checks or electronic payments like ACH files and wires, your solution should offer the right method for your bill payment process.
Fintech platforms with integrated accounts payable tools tend to offer a greater selection of internal and end-client reporting options – from AP-specific reports to a broader suite of family office financial reporting. Using the Archway Platform, you are able to produce investment and net worth reporting alongside expense reports by bill type or vendor, invoice aging and consolidated cash summaries to determine when payments are due, which accounts are affected and how it impacts your client’s expense trends for the reporting period. Meanwhile, end-clients can access a complete analysis of their financial health including their cash balances, expenses and spending habits.
[If your financial reporting toolkit needs a refresh to better align with your client's reporting expectations, check out Financial Reporting for the Modern Family Office]
Every family office has a different process for moving cash, whether it’s between internal accounts or to outside parties. Depending on your own process, it’s worth considering whether your AP solution offers straight-through-processing for seamless cash movements. If your firm deals with a high volume of transactions or a substantial number of international payments, the STP approach can eliminate several manual touchpoints throughout the payment process and speed up the delivery of cash.
By finding an accounts payable solution that checks the appropriate boxes for your firm’s unique bill payment and cash management processes, you can spend less time on manual AP processes while ensuring secure, timely management of the family’s bill payment needs.
Vice President, Business Development
SEI Family Office Services