Closing Compliance Gaps in Client Payment Workflows

0:00 Listen, I appreciate everybody joining. My name is Bassem Lanas. I'm actually the CEO and founder of Alternative Payments and we've been partnered with with NSA for a few months now and got to know Susan and the team and I'm really excited to to start really our first first webinar series as a part of many others. And you know, the items that we really want to focus on today really relate to a topic that's super important in relation to payments but often goes untalked about. And and that's really around around compliance and and the fragmentation of payment infrastructure for accounting businesses, cash businesses, and also has some applications to the broader services and recurring services-based businesses.

0:49 The agenda for today is is really to talk one about kind of how fragmented invoice billing and payments are in the ecosystem. You know, two, double-click on some of the specific compliance challenges that that companies face, especially if you're managing accounts receivable for your clients, right? You're kind of doubling, multiplying the potential challenge and and friction there. Talk a little bit about reporting and reconciliation and and how to do so effectively and in a streamlined fashion. Um go into maybe really what what good and and maybe great looks like for these work streams. And then get into about, you know, talk a little bit about Alternative Payments and and how we fit into this broader landscape. Again, if you guys have questions or thoughts, please feel free to jump in and and and ask away.

1:44 Um So, one of the biggest challenges in in this market and and as you think about invoice billing, payments, and reconciliation, accounts receivable automation, getting paid is often times this data lives in many different systems. I think if you're best in class, all of this data lives in one system. It's very very streamlined. Um but oftentimes things live on uh pen and paper. Customer information lives in a quoting system.

2:16 Um payment information lives in a processing system. And so you basically have these multiple different components and fragmented data sets across the board uh that not only exposes you to compliance risk, it also just becomes really really hard to manage. Um so this is probably the biggest opportunity for a lot of businesses, which is how do you start to aggregate and consolidate this information into one setup? And how do you ensure that you have a process from quote to cash to streamline the workflow? Um I got off the phone with with a mid-size accounting firm earlier today and they had payment information that sat in in an Excel sheet. And so every single month they would basically copy and paste the payment method into their processor and process that transaction. Now that's obviously not what we would recommend from a business perspective, but you know, that's the way a lot of processes are done um here and and so, you know, where are those opportunities? Um as the world also moves more digitally, you know, the core piece of it is how do you get information within the source of record software? Uh and so many of you guys may be using CCH Axcess, you may be using Thompson Reuters, you may be using just QBO. You know, that would be your source of record software for this information.

3:48 And how do you double-check and confirm that all of this information is living in one one standalone system. Um often times the payment information is separated and that's really where we see the opportunity come in for alternative payments and for a lot of online payment options. Now, if we switch to the next page here, one of the biggest challenges and the biggest compliance issues that we see is regarding PCI compliance. So, PCI compliance governs credit card data.

4:22 It's a compliance protocol that started with the card networks. So, these are MasterCard, American Express, Discover um to really reduce risk in the world and and so that bad actors cannot grab card information and payment information and just process credit cards left and right, right? And so then fraud increases. Um the goal is for all of this information to be tokenized and held PCI compliant fashion to not expose your business for risk but the system right of risk. And so PCI compliance governs this and actually finds companies that are not PCI compliant in the management of of credit card data specifically. Um this does not apply to bank account information interestingly enough because it's a different body that governs the compliance and risk associated with bank account information. Um so it only applies to to credit card information.

5:24 And and what does it mean? This means basically that if you are holding credit card information you are responsible for holding that information in a PCI compliant tokenized encrypted fashion and if you don't live up to those expectations then there is an opportunity for the card networks to find you for not holding this information in a in a properly sensitive manner. Um so going through this slide in in specific detail, right? We talked a little bit about what is PCI compliance.

5:57 So this is all card number, expiration date, CVV number. Um it governs the entire system, right? So it doesn't matter if you're small business, mid-size business, large enterprise. Um it is the governing body. There are you know you can search Google or you know use Claude and and understand what kind of fines um the networks have put down on people, but it's it's pretty significant. Um especially if there's a breach or especially if there's an issue. And and why is this important? This is important because when a client calls and says, "Hey, my credit card's 1 2 3 4 5 6." Um writing that on a piece of paper is obviously not the best way to handle this information.

6:39 Uh and it's important that you are part of the solution to properly secure the the information. Um we see this information in a bunch of different ways, right? This could be in Excel files, this could be in PDFs, this could be in uh quotes. Um this could be in um applications, right? And often times I think the most common thing is really upon onboarding of a client, you send a form out, you say, "Hey, please submit your payment information." And the client submits his payment information, and then you have a PDF that has the credit card information on file. There are certainly better ways uh and more sophisticated ways to to do that um and to do that in a safe and fashion to reduce your potential liability and compliance. Um same thing on the end client side, right? It's super important that if you are managing accounts receivable for your end clients, you know you are using best-in-class protocol to to capture and safeguard their information. Um as you can imagine, you know, in this day and age, bad actors are constantly trying to get access to credit card information, run credit cards, and evaluate what what they can potentially get away with. Um, breaches do occur, and and generally, if you think about the liability, the liability is probably from 5 to $100,000.

8:04 Um, so it can be a sizable liability. Um, and again, it's important that, you know, we're all doing our part in terms of educating our clients, educating our um, friends, family about this potential liability, and and how do we, as business owners, um, do do the best thing for ourselves, but then also for our clients. Um, the other big compliance gap that we see, uh, in the market, uh, really is reporting and reconciliation. And so, you know, obviously, as as business owners, it's incredibly important to always, um, track down the cash as much as possible and have a clear understanding of where cash sits in the system. So, when someone pays an invoice, did you receive that cash, right? Is that invoice reconciliation, bank reconciliation, and how do you match that pattern up?

9:02 Um, so that when Joe pays me, I know where my AR balance is, and I'm properly accounting for that for that um, for that transaction. Um, when you then start to use multiple systems to to process transactions, whether you you're using your direct bank for bank account transactions, you're using a processor like Stripe for credit card transactions, you obviously are adding a tremendous amount of complexity to your existing invoices, and it's important to streamline that as much as possible, so that invoice reconciliation, your AR balance is streamlined as well as cash reconciliation is streamlined.

9:43 Um, there's also additional complexity around 1099s and proper reporting um to the IRS in terms of uh track record with these processors that that is important um item to note. Um, when you then also have different lines of business and maybe you have specific contracts that have recurring payments attached to them, also tracking that and reconciling that and ensuring that that's in line is also another key component.

10:16 Um, we're all obviously uh probably all on this call at least accountants and very familiar with, you know, we may not all be CPAs, but very familiar with um income statement and and gross to net calculations. And this is another piece that we always need to be wary of and cautious of, which is how are we um booking different transactional fees. Um, you may have some processors that pay you net.

10:48 And so your bank account actually says $97, but the invoice is for $100. And if you're booking revenue at $97, you're not obviously booking or taking it taking into consideration the transaction cost of that transaction. And so making sure that, you know, from a compliance perspective, we are reporting on our books and records in an accurate fashion um is important. There's also chargeback fees, there's dispute fees, there are a lot of different fees in this kind of credit card processing bank processing um arena, and ensuring that we're properly reporting gross to net revenue um is is certainly a a consideration from a compliance perspective.

11:31 Um, the third piece is really around just authorization. And so when we think about uh ACH transactions, whether you're pulling funds from your client, are you properly authorized to do that? Are your clients properly authorized to do that? As it relates to um recurring billing, you know, same thing within credit card transactions. So, if you do have a managed contract, are you contractually allowed to process his or her credit card on the 1st of the month?

12:05 Um and are we going all the way upstream to the contract process with your clients to ensure that that's all very, very organized on on your side. Um So, we've hit on a bunch of these compliance kind of components around payments. Many of these items are obviously subtle as it relates to payments. I think payment processing is one of the most important things um as part of a business because it's it's all tied to how you get paid and how you process payments.

12:37 Um but it also opens us all up to these compliance short or compliance challenges. And the key question is, well, are we utilizing the best system or the best platform or how are we plugging these gaps for ourselves? But then also given our relationship with all of our clients, are we plugging those gaps for our clients and helping that advise them on some of these some of this friction and and how to plug those gaps. Um now talking a little bit about what what does good look like, right? And and and what do we think best in class looks like? Um we think about it really in four key categories. The first is tokenization, right? So, all card data should be tokenized.

13:21 Um every single processor tokenizes it themselves, uh but if you have credit card information in an Excel file on a Microsoft Word document, in a PowerPoint, in a PDF, obviously it's not tokenized uh and and that can expose you to to risk. In the same light, um you know, it's super important that you're using a payment processor that is PCI compliant and is PCI certified. Um by definition, if they're PCI certified, then they are tokenizing the information um for you, but then also obviously for for your clients. Um third key piece is this unification process, right? So, if you are utilizing multiple sources of record software, do you have a unified source of truth from a card information, bank account information? Are you storing that information in one system that can then process transactions in a seamless in a seamless fashion? Um this is always a complicated one because you may also be using two source of record softwares, right? And so, how do you all ultimately um streamline this workflow and unify the workflow? Um and then the fourth piece is this audit trail component, right? So, every transaction that gets processed, every authorization, every um payment that's made by a client, you know, nine times out of 10, you won't need this information, but having an audit trail uh will help you um in the event that there are cases where there are concerns from your clients. I mean, we've seen this as a processor, we've seen this a lot where an end client didn't know they were being charged $15 or $1,000 or $5,000, and providing that audit trail to our clients who are utilizing our software, you know, can be really, really valuable as you think about how you position your business. Um So, who are we? What do we do? How do we fit into the market? Um we are a payments automation business.

15:28 Um very focused on creating a seamless experience for you and your clients. That solution is fully integrated into your current tech stack. So, we integrate with a lot of tooling so that the customer information, the invoice information that lives somewhere else is redisplayed in real time into our tooling. And so, that allows us to basically be an extension of your source of record software. Um your source of record software is obviously the most critical component of of payments, right? And of billing.

16:04 And this saves you a step of manually taking information from one record and sticking it into another service or software solution to then bill base off of. Excuse me. This integration ultimately streamlines that quote-to-cash process. That invoice billing payments and reconciliation process. Because every single time a payment's made, every single time a dispute happens, every single time a transaction's funded into your bank account, we are recording all of the information back to that source of record software, which makes managing receivables and invoices infinitely easier, which makes automating payments and auto pay infinitely easier, which makes studying emails and invoice reminders and summary invoices infinitely easier.

17:03 Um and that has allowed us to, you know, grow very, very quickly um within the services-based ecosystem, um but really specifically for accountants um and their clients Um, because many of our accounting partners love this software to utilize with their clients um, through a single pane of glass, which which I will get to in a second. Um, all of this data is tokenized on on our side. So, you know, from a PCI compliance perspective, you know, again, we um, we tokenize everything. We're encrypted.

17:40 We're PCI compliant, uh, which allows you to you know, process payments in a in a compliant fashion. Um, we uh, automate the entire workflow. So, the entire AR workflow. I'm sure many of you sitting here are like, "Oh my gosh, there's no way this can be automated." Um, it is and and it can be. Um, and it starts with invoicing and goes to billing, payments, and reconciliation, the entire process. Um, a lot of our clients are processing hundreds, if not thousands, of invoices a month. Um, and now that an entire process, that many notices, is is fully automated.

18:19 What does that drive? That really just drives this reduction in in collections. So, if you look at the industry as a whole, um, and SMBs as a whole, generally SMBs are getting paid in 35 to 40 days. Um, we're able to reduce that down to 5 days. Uh, and so, the actual tangible reduction in DSO and days sales outstanding is just is massive. Now, I'm going to walk a little bit through the product just so you kind of have a taste of kind of where we where we sit in and and and hit this hole a little bit. Um, you know, the first piece of this is the end client-facing portal.

18:59 And what do your clients really see and and how do your clients experience the brand itself? Uh, so, here what you'll see is a example end client-facing portal for a company called ISG technology. Um, it's fully branded their experience. It looks like um, it's part of your business and part of your brand. And then from there, what we're doing is we're redisplaying the invoices from that source of record software into this portal so that they can manage that relationship with your business.

19:34 Um, so right now there are three invoices that are outstanding. There are two invoices that have been paid. Uh, your end client can then view payment methods that are on file. They can opt into auto pay. They can add team members to the account. And they can obviously very, very quickly pay in in one to two clicks here. The other thing I'll mention that's interesting is this teams functionality. So, you know, you may support, um, let's say a a landlord. Um, and that landlord may, um, have multiple different locations.

20:09 And that landlord can then use different payment methods by location. So, we'll get into the multi-tenant experience in a second, um, but super duper valuable, uh, experience and feature, um, when it relates to this multi-tenancy. Now, how do we automate this is is the key question and and how do we govern the automation? Um, this is really the sweet spot for that automation's functionality and and where that sits in the landscape. Um, so automations and reconciliation, um, all of these email notifications that can be sent out from your domain, from your company email addresses. So, when a client replies, it goes directly to you. Um, and it creates them that connectivity, right? And that brand alignment, which will gets them to respond and engage with those with those email notifications.

21:04 Um, you can send those out in in fully customizable fashion. So, here you'll see a tremendous number of templates, you know, template number 1 2 3 4 5. You can set it up to different frequencies. You can customize these emails as you see fit. Um you can also send out summary emails. So, there's a difference between obviously an invoice reminder versus a summary email saying that, you know, there are multiple invoices that are outstanding. Um and then you can use one-off notifications as well. So, if you want to drive a big campaign to try to get payment methods on file, if you want to try to engage with your customers in different ways, you can use our solution as kind of a Mailchimp type comp comp um to again drive the engagement.

21:49 All of these emails are sent out and you can immediately reconcile who's received what, who's um whose emails have been read, whose emails have been delivered. So, you also never get into the circumstance where you have a client who says, "Oh, I never received your bill." Um or your client had a client who says, "Oh, I never received your bill." Right? And so, managing that experience is going to be super important um because it allows you to hold um hold your clients and your clients' clients um responsible for that engagement.

22:22 Um the other big thing is the reconciliation which we talked about, right? So, invoice reconciliation and cash reconciliation. Now, what does this all mean? I know I've only highlighted a few um few workflows um but what this really means is really three things as I think about it. Your time to pay gets reduced significantly, which we talked about. Um autopay is really going to be the biggest driver of that. So, the more clients you can get on autopay for recurring services, the more opportunity you're going to have um to bring down your days sales outstanding. Um and even in some of these email reminders features, some of you may be thinking like, oh, well, that's not going to have an impact. Um the data has an impact and the data will tell you otherwise that if you turn on email reminders in an automated fashion, your days sales outstanding will be reduced by about 66% you know, from 6 days to 2 days. Um and that incremental email reminder drives a tremendous amount of actionability uh within your business.

23:35 So, again, what does this do? This is saving you and your clients time from manual work. This is accelerating cash flow and it's also strengthening your compliance and your security and reducing risk and liability for your business. There's one question here. Um We're We're evaluating um a bunch of different integrations on the tax and accounting side. Um so, if there are integrations that you guys are utilizing that you want us to integrate with, um feel free to reach out to me. I'll share my email at the end of the call um and would love to hear that. I think right now where we just finalized integration with CCH access. Um we're we're talking to Thomson Reuters as well. Uh so, as these integrations come up, um more than happy to discuss and and figure out how to integrate with them. Um we integrate with all of the leading accounting software solutions. So, QBO, QBD, Xero, Wave, Business Central, NetSuite, Dynamics, like the list goes on. Um both at the ERP level as well as the accounting level.

24:50 Um Now, one of the things that we always like to address in these calls because this comes up frequently is well, how do you how do you really um Sorry, this is another question. Yeah. Um yeah, so one other question is transitioning from different providers. Um so, what we see a lot is it depends on the processor that you're utilizing, but companies like Stripe um will allow us to integrate quite seamlessly and grab all that payment method and do what's called a payment migration.

25:29 Um so, all of that credit card information that's on file, all of that ACH information that's on file, we can transition in a fully encrypted manner that up your account and so that your end client doesn't need to do anything um from a from a payment perspective. So, you know, think about it like this, your end client logs in to an end client experience um which looks like this and their payment method is already on file. All they have to do is is two clicks to make a payment and so it's a really really seamless seamless experience for them.

26:08 You know, a couple of the other objections that we hear because I think, you know, a lot of our clients are are processing payments online, but there are a handful of clients that are still processing via check um is is a couple things and I'm going to go over these each one specifically because I find them I find them pretty um real. You know, first one, I'm not comfortable entering my bank or credit card information online.

26:30 Um there there are two things that I think are really fascinating about this point. One is, you know, obviously we're PCI compliant and the data is fully encrypted and tokenized and we actually don't even have access to the data cuz the data is tokenized and then when the transaction occurs, we're just pulling that a token. You know, the second piece of this is when a customer sends you a check, they're actually handing you the keys to their bank account, right? If you look at the bottom of any check, you have an ACH and routing number on that check.

27:03 And with that information, you have the ability to pull funds directly from that bank account, which again exposes them to a tremendous amount of of risk. Um you know, another objection that we hear quite frequently is um I'm used to mailing checks and and you know, I want to stick I want to stick to mailing checks. Um and at the end of the day, right? The key piece here is um online payments are faster. They get you paid faster, and they also streamline the reconciliation um process much more easily. Uh so, you know, talking people away from checks, if you look at check usage in the industry, um it's um it's going down significantly. I think in 2005, check usage was at like 85% um of the entire B2B payments landscape, and now it's at 30%. Um so, again, gotten down and it's going to continue to come down.

28:04 Um you know, third kind of key piece is, you know, what if I forget to make a payment? Uh what if I forget to engage and this auto pay type of experience really reduces that complexity um and ensures that there's a payment method on file, and so you're paying your bills on time. And we all have these types of experiences, right? Where you forget to log in to the utility company, they shut off service, you forget to pay the cable bill, they shut off service, um or maybe I'm just talking talking for myself. Um but you know, it's obviously important for some of these services to to make payments on time, and and this gives you that flexibility and control to do so.

28:46 Um this is another really good one, which is you know, I like having a paper trail and physical proof of payment. Um and this is is a is important one I think for some people, but we have really really robust audit logs um and that you can download and you can engage with and you can really see who's doing what, when, where, why, uh which gives you that track record um and gives you those records. Um a few other things, right? From a customer success perspective, I really consider us just customer obsessed.

29:21 Um we build things specifically for customers um to build out our platform. Um we have best-in-class support. You can you know, talk to somebody uh on the phone. You can schedule Zoom with our customer success team. You know, we believe in that white-glove type of service to ensure that we're able to drive online adoption for your business. Um as online adoption increases for your business, you know, we obviously also get paid because of it and so we're incentivized to to drive as much adoption as as we can drive.

29:59 Now, the last thing I'll mention is really regarding our referral program. Um and so, you know, we built this specifically um for accountants, bookkeepers, CPAs, tax firms in mind around how do we incentivize you to offer a best-in-class service to your client while also receiving some sort of organization tied to it. Um managing accounts receivable through a single pane of glass makes your life a lot easier. It's another service that you can also sell and that you can monetize um assuming you've automated it with our software.

30:36 And so this creates the most the best connected type of relationship um between our business and and your business. And so we offer a referral revenue share of 10% uh which happens in perpetuity assuming that the client is still a customer. Those payments are made quarterly. Your referrals will also receive 10% off alternative payments and standard pricing for the first 12 months. So it's this give get dynamic right of of offering a discount. Um we've built in this one click experience on the referral side. So you can manage actually all of your referrals from inside your platform. You can see your entire customer base. You can click refer. You can streamline that workflow which is really really cool.

31:26 And then we also have a partnerships team that helps you with any materials or support information as to how do you drive the next referral and and how do you engage with with your clients in that regard? This is you know the second to last page here just regarding the snapshot of what this referral looks like and and how do people engage with it? So as I mentioned right all of your clients would get locked into this referral system. You can manage it really really easily. You can manage payouts. You can manage that engagement. You can manage if you've if you sent alerts or not. And then you can customize the entire referral experience for your client.

32:08 Um at the end of the day if you can manage your AR for your clients out of one pane of glass as well as managing your own businesses AR you know it streamlines the workflow for you and and takes something like payments which are really really difficult to manage in one seamless type of experience that benefit both sides both your business as well as your end client. Um in again you know the most compliant fashion that that exists today.

32:36 So with that guys we really appreciate all the time. Um, here's here's my information. Um, if you're interested in booking a demo or you're interested in getting touch, uh, feel free to reach out directly. Um, if you guys have any questions, you know, we'd love to connect, um, about any of this regarding the accounts receivable, um, invoicing, billing, and payments. And and thank you so much for all your time. And have a wonderful day.