5 Reasons Why Your AEC Firm Should Be Using Electronic Fund Transfers
Gone are the days of cash and paper checks – or at least they should be. Now, architecture, engineering, and environmental consulting (AEC) firms are making the smart switch to Electronic Fund Transfers (EFT) as part of the payment process.
What It Is
The definition of Electronic Fund Transfers (EFT) is pretty simple: it’s the electronic transfer of money from one bank account to another. And because cash or paper checks aren’t exchanged with EFT, when it’s used in the procure to pay process, it can be an efficient method to pay your vendors.
Why It's Important
Nowadays, more and more companies are using EFT, and in some countries, the paper check has even gone away completely. Here are a few reasons why AEC firms are switching over:
Convenience: It’s more convenient to submit an EFT to your bank than it is to use checks. With checks, you have the extra steps of writing it out, getting it signed, and then mailing it to your vendor.
Less Wasted Time: An added benefit of eliminating these extra manual steps is it frees up employees from doing routine paperwork and allows them to concentrate on other aspects of their job.
More Secure: Because EFTs are completed electronically, it not only means they’re quicker and more convenient than cash and paper checks, but it also makes them more secure. By taking people and paper out of the process, it reduces the risk of error, or even fraud.
Meet Vendor Preferences: Vendors typically prefer money to be put directly into their account – which is exactly what an EFT does: it puts the money right into their bank, so they get their payment sooner.
Less Bounced Payments: Paper checks can lead to bounced payments, since people can write checks all day long, without the money to back it up. EFT eliminates this issue as there must be money in the account in order for a payment to go through.
When setting up EFT, it’s important to consider that your bank will specify the format in which EFT payments are submitted. The standards used for these file formats will vary by region or country and in some cases, your bank may apply its own requirements.
For example, the NACHA (National Automated Clearing House Association) format is common in the United States, while in Europe, the SEPA (Single Euro Payments Area) format is widely used. But even with these broadly used standards, there are other variations that can apply. So, the best thing to do is consult with your banking institution to find out what those distinctions are before implementing EFT.
Feel like you’re ready to make the switch? Make sure you speak to your bank first to establish the format and method for implementing EFT. Then, reach out to your enterprise resource planning (ERP) software vendor to determine the best way for your firm to transition into using EFT for its payment process.
And if you want to learn other useful definitions like this, check out The Ultimate ERP Glossary for AEC Firms. This glossary covers 150 of the most commonly used terms in the AEC industry – including EFT – all in the context of an ERP solution. Covering the entire project lifecycle, you’ll learn about other important facets of the procure to pay process such as: purchase orders, vouchers, and much more.
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