Weekly Bulk Payments
How to reduce the stress in your company’s payment approval process
A few days ago I met with a client of mine to go over her action plan for the next 3 months. This is one of those clients that has everything in order, creates budgets (and actually uses them), is very clear on the direction they want to take and have been growing organically throughout the years. There was one thing however that she felt was taking up too much of her time and did not know how to fix it: approving all company payments.
The Situation
Emergency payments. Unforeseen payments. Requesting they be made as soon as they are delivered. I’ve seen too many small businesses like this. What usually happens is that every single day of the week owners and managers receive request after request of payments that need to be made right away. It’s easy to get sucked into this because as business owners, we don’t want to be the bottleneck of our businesses. So day after day requests go in and payments go out.
The problem is when these requests get in the way of our real work, allowing us to only focus on strategic issues after 5 pm (when the bank closes) and robbing us of our personal time. The question is…how do we put a stop to this? In the case of my client, due to past experiences, she didn’t trust anyone else to approve payments when she was present. Given that she wanted it to remain that way, the solution I offered came in three words: weekly bulk payments.
Weekly Bulk Payments
Long story short, what you have to do is determine a day of the week when you want to approve your weekly payments. If the request arises before that day, it will have to wait a day or two. If the request arises after, it will have to wait until the following week (unless, in both cases, it is an actual emergency). To do this, you need to demand three things from your team:
- Weekly planning of all payments. This means that each week, all departments will make a list of everything they want/have to pay the following week. This list should be final. Be doubtful of “emergency” payments. Sometimes employees negotiate for weeks with a supplier and only request the payment be made after the contract has been signed. This is not an emergency…this is a lack of communication. The question to distinguish between a real and a fake emergency is to ask “when did you first know we might have to make this payment?”;
- Everyone on your team should inform their corresponding suppliers that all payments will be made on one day of the week. Not before nor later. This goes for your employees as well. Reimbursements requests should be planned for and expected to be paid one day of the week; and
- Maintain this list on your desk or on your computer. This will be the only way you can actually control that you pay what was actually planned.
Possible Roadblock
One final word of advice. You will receive confrontation from your team if they are used to requesting payments every single day for too long. The only way this will work is if you as the business owner or manager demand it be made this way. This will fail if you give in to every single payment your team requests to you personally with an explanation of why it should be made this week. Inform your team of the new procedures, decide on the day and don’t back down. This will be the only way you can focus on strategic issues on the other days of the week during actual work hours.
How about you? Is your payment approval process taking too much of your time? Tell me about your experience in the comments below or write me an email at info@thefinancecourse.com.
Giancarlo Jiménez, founder of The Finance Course, is a Finance Professional with more than 11 years of experience in the field of Finance and more than 4 years of experience teaching about Corporate Finance in a Business School. Want to learn how to interpret Financial Statements & Ratios to make decisions at your small business? You can Sign Up To The Free Course by visiting this page.
