Solving disbursement issues in payment processing

Overcoming disbursement limitations with payment providers like Fire by leveraging API-driven payment solutions

Payment processing is an essential part of running a business of all shapes and sizes. Staff and suppliers have expectations that they will be paid on time, in full and as agreed. Despite the need to pay for goods and services being a tale as old as time, many challenges still present themselves in the disbursement process.

Manually keying payments through traditional banking channels can be time-consuming, prone to human error and cumbersome when it comes to authorisation and reconciliation processes. This can be made even more challenging when businesses have disbursement requirements across multiple jurisdictions and through different payment rails.

In today’s global economy, businesses need access to affordable, straightforward, cross-border payments alongside integration into local payment systems such as SEPA in the EEA and Faster Payments in the UK. All of this, while retaining the highest level of control and reconciliation over the flow of funds to and from their accounts. This is where payment providers like Fire come to the fore.

Efficient payment providers will help businesses build trust with their suppliers and staff. They will provide businesses with a cost-effective service to reduce operational overheads in accounts payable and receivable. They will give businesses confidence that they are in control of their payments. All while allowing them to focus on what is truly important to them: building their product and providing for their customers.

Understanding disbursement challenges

One of the main challenges faced by businesses relating to payment disbursement is the ever-looming spectre of manual errors. No matter how competent a business’ team is, we are all human so errors are bound to happen.

When using traditional paper-based invoicing and payment disbursement, there will always be the risk of mistyping a digit in the account number or IBAN, the payment value or even the invoice number. A single error in one of these fields can lead to major delays in payments, an increase in operational costs while the error is identified and rectified and in the worst-case scenario, a loss of funds.

Studies carried out by The Institute of Finance & Management put the rate of manual data entry errors at around 3.6% to 4% with Aberdeen Group even going as high as 5%. A separate study by Vanson Bourne estimated that $18.5 billion is lost by businesses globally each due to payment errors.

Payment disbursement can be delayed for a number of reasons such as errors mentioned previously, cash flow problems or just the sheer volume that businesses need to review, set up and authorise.

Delayed payments can contribute to strained supplier relationships, increase costs from penalties and importantly reputational impact on the part of the payer. Many organisations now see delayed payment disbursement for invoices as an early warning indicator of the financial health of the paying company.

As mentioned earlier, the process of reviewing an invoice, logging in to set up the supplier as a payee in both accounting and traditional banking systems, manually entering payment details such as account information and reference numbers, and notifying the relevant authorizers that a payment needs processing requires significant operational resources for each invoice.

Utilising a payment provider will enable businesses to speed up the processing of invoices while providing a greater level of control and oversight compared to traditional paper and banking models.

Want to learn how Fire can address disbursement challenges? Read our case study on how we helped Grid Finance to overcome theirs.

The role of advanced payment providers

Payment providers play a key role in the wider financial ecosystem by facilitating the movement of money to and from businesses, consumers and financial intuitions. Without payment providers, modern economies would not be nearly as diverse in their payment acceptance and processing capabilities, resulting in a significant slowdown in the pace of commerce.

Payment providers are driving the economy towards real-time, instant payments providing businesses with payment certainty and the ability to complete trades for goods and services in a fraction of the time it would have taken with traditional payment methods.

When looking for a payment provider to help overcome disbursement issues there are a number of key features that you should look out for:

• Collection and Disbursement Capabilities – Disbursement capabilities are only one half of the payment processing challenge. Payment providers who offer collection facilities will give a business the ability to reconcile their accounts receivable and accounts payable in a single platform enabling a streamlined cash flow process.
• API Connectivity – Payment providers with API connectivity will enable businesses to integrate their own platform into the payment processing journey. This will allow them to control the authorisation processes, limit the number of people who need access to the payment provider platform, integrate reconciliation services into their own platform, and eliminate the need to log in to multiple systems for processing disbursements, such as their internal platform, the payment provider platform, and the accounting platform. Payment providers who offer top-of-the-range API connectivity will enable a business to carry out all the necessary actions to complete a payment disbursement from beginning to end without ever needing to log in to their platform.
• Payment Rails – When choosing a payment provider, businesses should look for those who offer a wide range of payment rails and methods. In the post-Brexit world, businesses should ensure that their payment provider can access local payment rails in both the EU and the UK, at a minimum, to ensure they can trade and pay suppliers and staff in both jurisdictions without incurring high costs to process SWIFT payments.

As a dual-regulated payment provider, authorised as an eMoney Institution by the Financial Conduct Authority (FCA) in the UK and regulated as a Payment Institution by the Central Bank of Ireland, businesses can rest assured that they are in safe hands with Fire.

Our dual regulation allows us to provide our customers with access to payment clearing systems in both the EU and the UK as well as to provide services to entities incorporated in Ireland, the UK and other EU countries on a case-by-case basis.

How Fire’s API-driven payments address disbursement issues

API-driven payments are payments facilitated and managed through APIs connecting a business’s platform directly to a payment provider. APIs enable the seamless integration of payment services offered by a payment provider into various applications used by a business such as their enterprise resource planning (ERP) systems, treasury management systems, payroll systems or ecommerce websites.

These integrations put the control of all payment-related activities straight into the heart of the business’ technology, allowing them to configure their treasury requirements in a way that works best for them instead of trying to work their processes around a third party’s interface.

APIs can allow businesses to fully automate both inbound and outbound payment flows to ensure speed or service and accuracy of reconciliation, freeing up operational resources to focus on other areas of the business. A study carried out by Aberdeen Group identified some benefits of automation payment disbursement such as:

• 49% invoice processing cost savings.
• 18% fewer days payable outstanding (DPO), the equivalent of 5.55 days less on average.
• 4.11x as many invoices able to be processed.

The Fire Payments API enables you to deeply integrate Business Account features into your application or back-office systems. Whether initiating payments, segregating funds, or automating reconciliation, our powerful API enhances and simplifies a range of payment processes, including payment collection and reconciliation through open banking payment acceptance, with read access to your profile, accounts, and transactions, as well as payment disbursement through our batch functionality

Businesses can process batches in 14 different currencies using local payment rails for payments across the EEA, UK, US, Canada, Australia and Hong Kong.

Using the Fire Payments API to process payments based on data stored directly in a business’ back-office system enables real-time payment processing, reduces manual data entry errors by eliminating the need for manual input of payment details, and increases overall efficiency.

Step-by-step guide to implementing the Fire Payments API

Step 1: Understanding your disbursement needs

Fire’s API is ready to go when you are. There are 2 ways for you to go about integrating with our API. First, our Sales team are always on hand to discuss your disbursement needs and ensure that when you register with Fire, our API will suit your needs and help you take control of your payments. The other option is an independent approach. You can choose to register for a Fire account and set up the API independently. Our API documentation is available publicly on our website.

Step 2: Setting up your Fire account

Once you’re ready, you can submit an application to open a Fire account. You will receive a response to your application within a few business days. Once your account has been reviewed and approved, you can start configuring your account and API straight away, with no need to request API access and no additional fees.

Step 3: Integrating the Fire Payments API with your systems

To use the Fire Payments API, you’ll first need to set up an API application and retrieve the necessary tokens from the app. You can learn about integrating your systems with Fire’s API, including details on disbursement through batches, in our Batch API Tutorial. The tutorial will guide you through setting up your first application, configuring your disbursement workflows, and monitoring and optimising your disbursement processes.

Frequently Asked Questions (FAQ)

Who can set up an application on my account?

Applications can be created by Admins and Full Users.

When adding a payment to a batch, what is the difference between Mode1 and Mode 2?

There are two ways to process bank transfers – by Payee ID (Mode 1) or by Payee Account Details (Mode 2).

• Mode 1: Use the payee IDs of existing approved payees set up against your account. These batches can be approved in the normal manner.

• Mode 2: Use the account details of the payee. In the event that these details correspond to an existing approved payee, the batch can be approved as normal. If the account details are new, a batch of New Payees will automatically be created. This batch will need to be approved before the Payment batch can be approved. These payees will then exist as approved payees for future batches.

Why do I need to approve payees when sending payments using the Fire API?

As part of the PSD2 legislation, you are required to approve new payees on your account using Strong Customer Authentication (SCA). You will only need to approve payees when using Mode2 with the Fire API and only if the payee account details have not been used before.

What happens if I lost my API credentials?

If your API credentials are lost you will not be able to recover your Client Key. This is to ensure the security of your account. However, you can create a new application with the same permissions and generate new credentials. This is also what we would recommend in the case of your credentials being exposed.

Get in touch

For more information on setting up an application, please see our API guides and API reference or reach out to us at support@fire.com with any questions.

You can also see how MyMilkMan have streamlined their payment processing to their agents using the Fire API.