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Higher education institutions are at a pivotal juncture. Colleges that want to address low enrollment numbers may not want to raise tuition to make up for their declining revenues. Particularly as some prospective students are comparing various education price tags – and scrutinizing every dollar and the potential ROI on their educational investments.
Still, universities can consider creative opportunities while minding the budgets. Many institutions may find it challenging to clarify where funds are allocated in real time due to disparate vendors and antiquated payment systems.
Modernizing AR/AP processes may offer universities a better way to track their budgets. This can also help build strong relationships with their suppliers and free up time to focus more on their core mission – educating students.
Here are four potential benefits of an updated payment system.
1. Increased flexibility
Higher education institutions are complex operations with a variety of functions, from foodservice, housing, and recreation to facilities management and information technology, along with providing top-tier academic programs.
With this dynamic and diverse vendor ecosystem, institutions must contract with a wide range of partners. This might leave executives to contend with different compliance regulations and varied vendor requirements, including payment preferences and terms.
For example, a regular supplier might have a “service level agreement” (SLA) that calls for regular payments, incentives that kick in when a university pays invoices within a specified timeframe, and penalties for late payments.
On the other hand, when working with a one-time vendor, such as a guest lecturer or training provider, a university might deal with fixed prices and discrete purchase orders.
Innovative payment platforms might allow your institution to automatically determine the nuances of various vendor agreements.
2. Streamlined administration
Manual vendor payment processing, budgeting, and other administrative tasks have the potential to limit efficiency and may lead to inaccuracies and delays.
With modern payment systems, administrative tasks like invoicing, reconciliation, and record-keeping can often be streamlined. This reduces bottlenecks and offers faster processing times that can translate to more reliable payments to suppliers.
Another potential byproduct to consider is the ability to allow your administration to better serve students through simplified systems. Streamlining administrative tasks, such as through a more advanced accounting function and redirecting that staff to more student-oriented initiatives might help universities improve the overall student experience.
3. Enhanced security
Universities may rely on various technologies to enhance not only their student offerings but also to fulfill their administrative duties. That can create vulnerabilities.
One approach that might decrease risk is to adopt up-to-date security modules. Modern payment systems, like ones that deploy tokenization or other encryption protocols, may help protect your data and your suppliers' data. They also typically allow real-time monitoring and detection of suspicious activity, potentially helping to prevent, report, and manage breaches or fraudulent transactions.
Having stringent safeguards in place often provides vendors with added value and confidence that executives have considered the necessary security to protect their sensitive information.
4. Improved financial visibility and control
In the modern university, the multitude of functions and departments might contribute to silos that lead to fragmented information. Unifying the payment systems to support comprehensive reporting and analytics tools may provide better visibility into spending and cash flow system-wide.
By coordinating payments across departments – and even with partner colleges – universities could take advantage of economies of scale with specific vendors, while promoting the opportunity for these suppliers to enjoy additional collaboration and better sales.
Integrated payment solutions also may allow departments to leverage group purchasing and provide visibility into where there are opportunities to negotiate discounts. Bulk buying or more attractive terms that might benefit suppliers can further build these relationships. It also might allow them to find and eliminate redundancies and map a better experience for all parties.
The Takeaway
Timely and accurate payments might be a key lever to strengthen relationships with vendors and suppliers, which may pave the way for possible discounts, improved terms, and better service levels. A modern AP system might also provide an advantageous way to provide transparency into payment status and facilitate communication with vendors, fostering trust and collaboration both internally and externally.
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