To confront today’s financial challenges, every college and university needs to create more operational efficiency. Some of these efficiencies start in the business office.
For instance, key aspects of higher education financial management are paper-intensive and outdated —a stark contrast to the first-class technology used in campus classrooms. A primary target for business officers should be eliminating paper checks, which simply are not efficient — in terms of money or time — for vendor payments, student tuition refunds, or employee payroll.
Automated, electronic processes for transactions can greatly reduce these costs and increase accountability, with an audit trail providing more accurate spending data. Given the potential benefits, more institutions are implementing solutions that focus on the specific needs of college and university management.
Options for improving the efficiency of transactions to vendors include Automated Clearing House (ACH), purchasing cards (P-cards) and virtual card payments. These solutions are faster, more secure and more transparent, and offer greater fraud protection over paper checks. Supplier account information is more secure than with paper records, and vendors can access transaction details and spending information in real time. Electronic payments can be integrated with existing financial management or ERP software for easier and more accurate budgeting, financial planning and future strategy. Some of these solutions also offer welcome rebates.
Despite these benefits, institutions have been slow to adopt electronic payment solutions– mostly due to suppliers. With many vendors hesitant to change familiar systems, even inefficient ones, a comprehensive approach is needed. That means offering virtual card, P-card and ACH options to vendors up front, and clearly communicating how vendors and suppliers also can benefit from such systems.
Financial services firms can help manage this outreach to increase participation. They often help vendors learn the benefits of electronic processes, as well as the steps necessary to enroll. Some can connect administrators with a network of vendors who already are engaging in electronic processes – helping establish a relationship that uses these processes from the outset.
Paying students and employees
All the disadvantages of using checks for vendors also apply for student payments and employee payroll (outside of direct deposit). Prepaid debit cards can eliminate these disadvantages, establishing a direct deposit account and debit card without a formal banking relationship. These cards can be issued once or reloaded, and offer students and campus employees all the convenience and security of a debit card, including ATM withdrawals, point-of-sale transactions and online account access.
One new leading-edge solution for student payments, Digital Disbursements, allows transmitting funds using only students’ mobile numbers or email addresses. Money can be sent to any domestic bank account without gathering personal financial or bank account information. Instead, after a one-time registration students receive an email or text message with instructions for receiving their money, and their funds are deposited in their account by the next day using similar technology as widely-used P2P (person to person) payments. Here again, the potential for reducing paper checks is considerable.
Implementing new and different processes is challenging for any organization. Clear communication is vital to gaining acceptance of any new initiative. All stakeholders – administrators, vendors, students and employees – should understand the benefits for themselves and the institution, and know how to voice questions and concerns. Maintaining this communication throughout implementation keeps enthusiasm high and roadblocks to a minimum.
Ultimately, the rewards of improved efficiency will have measurable benefits for the institution and will free up resources for teaching and learning – the ultimate mission at every college and university.
John Lenckos is a senior vice president at Bank of America Merrill Lynch who works with U.S. higher education institutions.