The AFP Payments Guide series examines payments-related topics that are developed via interviews with treasury professionals. Presented as quarterly case studies with practical applications and tools to help you make informed decisions about key payment services.
AFP Payments Guide to Dealing with Miscellaneous Payments
Underwritten by MUFG
As technology has advanced, treasury and finance have taken the opportunity to improve efficiency and enhance controls across the full range of financial activities. Payments management is no exception, with organizations constantly increasing control through the adoption of centrally set payments strategies and policies and, in many cases, the automation and standardization of payments management.
While the focus may be on automation and standardization, there will be some miscellaneous payments that remain outside the structure. These may be exceptions (payments that are rejected by the automated process) or the non-standard (those that cannot be standardized for some reason), and still need to be processed in a controlled manner. This guide examines what miscellaneous payments are and why they arise, before outlining a process that can help treasury and finance manage them effectively.
Guide Summary
1. Miscellaneous Payments Defined
All companies have miscellaneous payments. Some call them nuisance or exceptional payments, while others don’t classify them any differently. These are the type of payments that, because they are below a certain dollar threshold, it is not cost-effective to standardize.
2. The Characteristics of Miscellaneous Payments
Although miscellaneous payments are likely to be low value (all companies will have dedicated procedures for handling treasury payments because of their high value), they are still likely to need some form of manual intervention to resolve.
3. How to Deal with Miscellaneous Payments
Compared to standardized payments, miscellaneous payments generally represent a higher risk to an organization, not least because they typically require manual intervention. Although managed via standard payment procedures, it is still good practice to have a common approach for managing them.
4. Takeaways: Managing Miscellaneous Payments
All companies have miscellaneous payments; some are exceptions to automated, standardized processes, others are non-standard payments that fall outside the automated processes. However they arise, companies need to have clear process for managing them in a controlled manner. The following six steps will help.