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Straight Through Processing: How STP & Automated Payments Help Drive Growth for Business Owners

As a business owner, you likely experience some headaches when it comes to managing payments and cash flow. Luckily, Straight Through Processing (STP) may help you streamline these processes while setting your business up for growth. 

Even the most effective business managers can struggle to handle check delays, piles of credit card information and other challenges synonymous with payment processing. These challenges often lead to payment mistakes that impact a business’ cash flow.  

In this blog, we’re going to explain how STP works, and how it can help you solve these cash flow challenges by reducing manual tasks, avoiding mistakes, cutting processing times, lowering days sales outstanding (DSO) and increasing time for staff to focus on strategic initiatives.

What is Straight Through Processing (STP)?

Straight Through Processing  means your payments travel from approval to your merchant account on electronic systems using automation. And, importantly, no one has to get involved in the process until it’s time to upload remittance data into your ERP (Enterprise Resource Planning) system. 

Using STP, depositing paper checks and keying in 16-digit card numbers are a thing of the past. 

A survey conducted by the Association for Finance Professionals (AFP) showed STP to Accounts Payable (AP), Accounts Receivable (AR) and general ledgers was a top benefit for businesses that receive electronic payments, just behind speed of settlement.  

Primary Benefits of RECEIVING Payments via Electronic Payment Methods

Speed of settlement
50%
Straight-through processing to AP or AR, and general ledger
45%
Improved cash forecasting
30%
Improved matching for cash application
27%
Improved supplier/customer relations
26%

4 ways automated Straight Through Processing benefits your business

1. Gain tighter security using virtual credit cards  

STP is often used for  virtual credit card (VCC) transactions. These are one-time-use digital cards that give your business an extra layer of security against fraudulent attacks.  

In a traditional VCC transaction, you’re given the digital card from your customer or their AP software provider. When you type in your unique 16-digit number, your payment is delivered.   

Now comes the good part. The 16-digital number is useless to fraudsters because they can’t detect and capitalize on any numerical patterns. You can be more at ease while running your business without being distracted by cyberattacks.

2. Do fewer steps, save time, reduce repetitive work

Using STP, manual keying and human intervention is eliminated.  

When you reduce steps in a business process, it saves time and work for you. And that’s the case with STP. One STP payment using the VCC method takes only four steps; without STP it takes six.  

We’re going to take you through these four steps to bring to life the benefits of virtual card STP:  

  1. You bill your customer using your normal process  
  2. Your customer approves your payment  
  3. A single-use VCC is generated, and payments are delivered directly to your merchant account 
  4. You receive remittance advice electronically to help reconcile your payments to your accounting system 

All this is done automatically. It is succinct and simple.   

Now contrast that with these six steps using manual VCC processing:  

  1. You bill your customer using your normal process  
  2. Your customer approves your payment  
  3. A virtual single-use VCC is generated and sent to you directly 
  4. You confirm the amount due matches the card amount  
  5. You type the VCC and payment data into your point-of-sale system  
  6. You enter the data into your accounting system  

Notice the difference here. In the last three steps directly above you have to spend some time matching documents and typing in data.  This is also when the bulk of payment processing mistakes happen. 

VIDEO: Straight Through Processing Explained

3. Enjoy faster transaction processing

STP automates payments directly through to your merchant account in as little as 48 hours and boosts your business’ cash flow. Paper checks, on the other hand, can take 10 days or more to land in your mailbox. 

Even traditional VCC transactions rely on your availability to manually enter card information. 

With more expedited and predictable cash flow, you can pay your employees and other expenses on time to avoid late fees or a disgruntled workforce.  

4. Obtain better data availability and reliability

Using STP you’ll maintain up-to-date detailed transaction data. That means you’ll contact your customers less often about payments, decreasing the strain on your relationship.  

At the end of each day, you’ll receive one email that aggregates highly valuable remittance data, such as invoice amount, number and date, and payment information for all prior day STP payments.  

That’ll make it much easier for you to manage invoice and payment data more securely than individual check stubs (which have a tendency to go missing) or the emails associated with each individual VCC payment processed manually.   

Final thoughts

So, it all comes down to this: Business owners will feel less frustrated and overwhelmed with cash flow using STP because it’s faster and more reliable, more manageable and more secure than processing payments manually.  

That means you can spend more time growing your business while feeling less stress about the whole payment process. 

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