Electronic Funds Transfer
Electronic Funds Transfer
Executive Overview
Electronic Funds Transfer (EFT) is the electronic transfer of funds utilizing either the Automated Clearing House (ACH) network (domestic) or SWIFT wire (international) for the purpose of making payment to a supplier. Today neutralizing cash float when converting from checks to Electronic Funds Transfer is approximately five days.
IMPACTS
Customer Impacts
- Selection of financial institution with EFT capability
- Accounts Payable system to generate EFT transmission detail
- Communication network to transmit to financial institution
- Establishment of business practices (EFT contract agreement) with the supplier that support and promote EFT process
- Determining the cash float neutralization period i.e. due date + X days
Supplier Impacts
- Commercial bank account
- Establish a process to receive detail remittance advice
- Establishment of business practices (EFT contract agreement) with the customer that support and promote EFT process
BENEFITS
Customer Benefits
- Eliminates check processing
- Reduces forms, stationary and storage costs
- Reduces clerical personnel
- Reduces mail cost
- No canceled checks
- Reduces bank processing cost
- Simplifies bank reconciliation
- Improves cash management
Supplier Benefits
- Reduces clerical personnel in cash application
- Provides more data for A/R analysis
- Generates fewer exceptions
- Expedites problem resolution
- Eliminates “check in the mail” syndrome
- Improves cash management/forecasting
- Soltec provides Electronic Funds Settlement Best Practices education to both business professionals and executives in both web enabled and on-site formats. Please contact Soltec to setup an educational session or to understand how Electronic Funds Settlement Best Practices can improve your organization’s financial performance.
