As the coronavirus pandemic unfolds, the nation has lauded the bravery of healthcare professionals, grocery store clerks, over-the-road truckers, teachers, delivery drivers, nursing home employees and everyone else working on the front lines to save lives and keep us all going right now. We owe a deep debt of gratitude to them all.
We also know that their employers—along with the leaders of companies not on the front lines—are worried. They worry about their workers’ health and wellbeing. They worry about underlying weaknesses in our economic system exposed by this pandemic. They worry about their ability to ensure their operations and core business functions are not severely impacted by what is happening now… and whatever comes next.
One thing many will not have to worry about during this crisis, however, is their ability to maintain payment operations—especially when physical access to their bank is limited. That is because many businesses are now equipped to manage almost all financial transactions online through a reliable electronic payment system that largely did not exist during previous economic crises. The modern-day payment system was, over the last two decades, tailor-made for the shelter-in-place conditions many now live and work under today.
Prepared for the Pandemic
Thanks to strong leadership by the Federal Reserve Bank and more stringent post-recession policies, the banking system overall is better prepared for the current crisis than the Great Recession of 2008. For one thing, banks are more highly capitalized now than they were then. In recent weeks, the Fed has also pumped a record amount of money into our nation’s financial system to support the short-term lending needs of businesses implementing their resiliency plans.
Importantly, the Fed was also an early and powerful advocate of the electronic payment strategies that now keep money moving and businesses productive at a time when many storefronts, offices and bank branches are closed.
It’s easy to forget just how much banking systems have evolved over the past two decades. Think back to September 11, 2001. When planes stopped flying in the days following the attack on the Twin Towers, the nation’s check-clearing network shut down as well. Why? It depended on dedicated air couriers to speed the transport of paper checks back to the issuing bank for clearing.
That event, more than any other, fueled the Fed’s push in the early 2000s, via the Check Clearing for the 21st Century Act (Check 21 Act), which paved the way for alternatives to paper checks and the manual processes and procedures required to produce, distribute and process them. In addition to reducing dependency on paper, the nation’s central bank advocated for automated solutions that would speed payment processing, improve reliability and protect against fraud.
That is when banks stepped up to take a fresh look at the payment system, leveraging current solutions like ACH payments and card networks, and kicked electronic payment innovations into high gear. Commerce was among those on the forefront. Among the factors initially driving our approach was the volume of mergers and acquisitions taking place across the industries we serve. Workers were being dispersed geographically, and their employers needed ways to connect their accounts receivable and payable systems across locations. Commerce, in other words, invested in electronic payment solutions to support a distributed workforce long before the current pandemic made them indispensable.
Enabling Business Operations
Your business, whether a large corporation or a small business, likely depends on many of these products and services. For example, you may be familiar with remote deposit, a technology developed so companies can scan, digitize and deposit electronic versions of paper checks without leaving their premises. (If you don’t have remote deposit but wish you did, it is easy to get started, even in the current COVID-19 environment. A remote deposit scanner can be shipped to you, or you can leverage a mobile device to begin digitizing and depositing check payments within hours.)
Or you may be in a business that opts for integrated receivables and payables solutions—a combination of check, electronic and card-based systems to make and receive payments that can be managed from virtually anywhere while pulling in the necessary reconciliation data to maintain accurate accounting records. Our bank, for example, created a virtual payment hub where businesses can send payment information from their ERP accounting systems to make vendor payments—even consumer payments and refunds—digitally through automated payment files. Integrated solutions like these include the security checks and balances a business needs to help protect against fraud, while virtually eliminating manual processes.
The beauty of an integrated solution for payables and receivables is not only the consolidation of payment types, but outsourcing the handling of business payments to a financial institution. So rather than staff spending their precious hours manually entering payments and tracking down invoices or remittance addresses, they can focus on more strategic business initiatives.
Along with e-commerce, electronic asset management, video conferencing and other game-changing technologies, today’s payment systems make it possible for workers across a large swath of the economy to pack up their traditional offices and work safely and productively from home. They’re robust enough to operate smoothly, even in the midst of a pandemic. And they’re agile enough to help you get back to business as usual once these uncertain days are past. PM