A Simpler Way to Navigate Business Payments

by Scott Thompson, Division Head, Treasury Services and Jamie Bankert, Treasury Services Senior Sales Manager

When a business payment needs to go out, the most important question usually isn’t which payment rail to use. It’s when the money needs to arrive.

But as payment options have expanded, deciding how to send that payment has become more complicated. Standard ACH, Real-Time Payments® and Instant Payments® options each offer different combinations of speed, cost and availability.

Emerging payment technology is helping businesses manage those choices without requiring their finance teams to become experts in every payment method.

What Is Intelligent Payment Routing?

Intelligent payment routing allows a payment platform to determine how a transaction should be sent based on what the business needs the payment to accomplish. Instead of asking your finance team to choose a specific payment rail, the technology lets them focus on a more practical question: When does the payment need to arrive?

A business might choose whether a payment should arrive immediately, later that day or in the future. The platform can then evaluate factors such as cost, availability, the receiving bank’s capabilities and applicable cutoff times to determine how the payment should move.

Depending on when the payment needs to arrive, the platform may route it through FedNow®, Reat-Time Payments®, or Standard ACH. The user doesn’t have to make that technical decision each time. They simply choose when the funds need to arrive.

Why That Matters

Intelligent routing helps balance speed and cost while simplifying the decisions that come with managing multiple payment types. As payment options continue to expand, the technology can handle more of that complexity behind the scenes rather than asking finance teams to manage each rail individually.

Centralized payment platforms can also bring several electronic payment methods into one place, creating a more consistent way to initiate payments with greater visibility and control. 1st Source Bank’s Payments Hub uses this approach, combining multiple electronic payment options with intelligent routing in one central platform.

Centralizing payment activity can also enhance security by giving finance teams greater control and visibility over how payments are initiated and sent, while reducing some of the risks and manual handling associated with paper checks.

Another Reason to Reconsider Paper Checks

Electronic payment options also give businesses an opportunity to reconsider transactions still handled by paper check. Checks require printing, handling and mailing, and they can carry risks that aren’t present in the same way with controlled electronic payments. For appropriate transactions, Standard ACH often costs less than a postage stamp needed to mail a check, and electronic payments can deliver significant savings when you consider the cost of check stock, printing, and the labor required to prepare and mail payments.

That doesn’t mean every check should disappear. It means businesses have more ways to choose a payment approach based on what each transaction requires.

As payment options continue to evolve, the opportunity isn’t simply having more ways to move money. It’s making those choices easier to manage.

Take a closer look at how your business handles payments today. Your 1st Source Bank Treasury Services representative can help review your current payment process and discuss whether the Payments Hub could simplify the way your business moves money.