Accounts Payable Headache Remedy: Easing the pain of 1099 compliance!

Those tasked with the job of processing 1099's know the pain of compiling all the necessary information to comply with state and federal reporting regulations.

If your business handles multiple accounts with a variety of vendors, it takes a substantial amount of time for your accounts payable department to process the information required and submit the forms in a timely manner. 1099 processing is especially challenging for businesses using multiple payment systems in multiple departments.  Insurance carriers, for example, often have many systems capable of issuing payments.

Is there anything available to streamline 1099 processing for companies in this situation?

Unlike issuing payments from just a single AP system, companies that have multiple application silos producing payment requests will benefit from a centralized disbursement hub.  Prelude Software's PayPilot® disbursement hub solution includes a 1099 Processing module which works well for this purpose.

Because PayPilot integrates seamlessly with any core system you are currently using that originates the payment request, it coordinates information across your entire payment environment over your enterprise. This means that information concerning vendors to whom you owe 1099s can be accessed easily and quickly.

Rather than a painstaking, manual approach to gathering the information needed for 1099 processing,PayPilot provides a set of exports and reports which clarify and streamline the process.

As easily as PayPilot seamlessly integrates with the carriers core systems, it also can interface with third-party 1099 solutions, like 1099 Pro and Sovos (Convey).  All of the foundation work begins with PayPilot for more efficient handling. For a listing of vendors to whom you owe 1099s, PayPilot can provide an export that can easily be handed off to your third-party 1099 solution.  Similarly there are two reports available. The first report is a summary of all payees whose total payments for the reporting period meet or exceed the specified legal 1099 reporting threshold. Additionally, a more detailed report is available, which lists both the payees and their associated tax ID numbers. This report is invaluable to accounts payable departments, as it aids in the quick identification of information needed to fully comply with state and federal regulations. It also provides a quick way to find gaps in any information needed, such as tax ID numbers. Having this information readily available enables your AP staff to quickly reach out to any payees from whom more information is needed.

The 1099 Processing module also generates reports on non-reportable payment amounts. With the detailed version of this report, distinction is made between whether the payment itself is not reportable or the payment is reportable but the total payments for the payee for the period is under the 1099 threshold amount.

Check Fraud Prevention with Positive Pay

Positive Pay Processing

Proactive Fraud Protection Made Easy

Check fraud is a real and growing problem for businesses. By industry estimates there are more than 500 million checks forged each year, with losses totaling more than $50 billion.

Prelude Software’s payment processing application, called PayPilot, provides a security feature called positive pay to combat check fraud.  Positive pay gives you the means to combat check fraud by easily and efficiently verifying issued checks before the checks are cashed. When checks are printed in PayPilot, a file containing information such as check number, date, amount, and payee is automatically sent to your bank. When a check is presented at the bank for payment, the bank reviews the positive pay file to see if the check is valid. Funds are released only when the payment details match the exact items on the check file. Any exceptions are automatically flagged for special handling.

Be proactive in the fight against fraud! Positive pay is simple to set up and much less expensive than a check fraud loss. In fact, stopping just a few fraudulent checks more than pays for the feature.

The Power To Be Bank Agnostic

PayPilot features a built-in suite of banking functions that can be added one at a time or all at once, at installation or anytime you choose. Use one or all of the functions to streamline processes, lower costs, and reduce your risk. With cost containment a business priority, it is not surprising that bank fees are in the spotlight. Prelude’s solutions allow you to be bank neutral. You have greater leverage to negotiate fees with your bank when you have the power to change your formats as easily as you do with PayPilot.

MICR Check Printing

Using pre-printed checks for your payment processing sounded like such a good idea at the time. Your customers, agents and vendors all receive a professional-looking check, complete with your logo, address and bank information.  And then you acquired a subsidiary or add a new division with a different address. Soon one inventory of check stock became four inventories.  And that is when you started noticing problems.  Prelude's MICR check writing software enables MICR check printing on an laser printer.  

MICR (Magnetic Ink Character Recognition) check printing on blank check stock offers clear advantages over its pre-printed counterpart.  With the PayPilot MICR check printing solution, yhou can centralize all of your payment processes using one blank check stock and apply data-driven check layouts for all of your different operations.

Some of the advantages of Prelude's MICR check writing software include:

• Changes:  Any changes to your bank, address, or logo require you to replace your entire pre-printed inventory (and wait for its arrival). With PayPilot MICR check writing software, an authorized user simply updates the check layout in the database and the change takes effect immediately. 

• Errors:  Check numbers on pre-printed stock can easily get out of sync with what your software expects them to be. This is never an issue with blank stock. 

• Voids and Re-Issues:  Voiding and reissuing checks a chronic problem made needlessly more complicated when dealing with pre-printed checks. 

• Security:  Pre-printed stock can be stolen, and the party responsible can easily issue their own checks simply by filling in the blanks. PayPilot MICR check printing solution, along with the use of blank stock, negates this risk and adds further security through the use of authorized system access and detailed audit trails tracking all issued payments. 

• Hassle:  If you employ several payment systems today, you know how cumbersome it is to manage your processes using multiple printers, multiple checks stocks, accommodating batch and hot runs, etc. Blank stock drastically simplifies your payments, eliminating complex and hard-to-maintain disbursement processes and reducing costs.

PayPilot’s MICR check printing software adapts to any set of systems that issue payments: general ledger, claims, policy, accounts payable, and more. For insurance clients, the software also handles specific lines of business such as property & casualty, workers’ compensation and disability, among others. 

Perhaps the best feature of Prelude's PayPilot MICR check writing software, however, is its ability to let you set the pace of your conversion to MICR check writing and check printing. Implement payments via MICR check writing and MICR check printing one department at a time, or company-wide—it’s up to you! Prelude's MICR check writing software is agnostic and can be configured to enable MICR check printing on whatever MICR printer or printer that accepts MICR ink of your choice.

Switching from pre-printed to MICR check printing on blank safety stock can save 70% of processing costs on every check issued. The savings are greatest when checks are printed for multiple companies and/or multiple bank accounts. Incorporating digital signatures further extends the cost reductions by eliminating key manual steps in your process.

With PayPilot processing your checks by its MICR writing software on blank stock, you also have at your disposal a number of easy-to-add expansion modules that can significantly increase your payment capabilities. Bank reconciliation, positive pay security, electronic payments, virtual card payments, escheat processing, and OFAC compliance are just some of the features that can be included with the initial PayPilot MICR check writing solution implementation, or added over time. Pre-printed checks for payment processing may have sounded like a good idea at the time, but now, with PayPilot MICR check printing solution delivering such compelling benefits, blank stock is the preferred way to go.

PayPilot Enables ASO's Use of Electronic Payments

Many large businesses have decided to utilize a self-funded health insurance plan, administered through Administrative Services Only (ASO) from a health insurance carrier, to cover the medical expenses of their employees.  ASO plans help businesses control cost, offer flexibility and retain employees.

Many health insurance companies offer ASO plans, delivering administrative services, such as claim processing and billing, to employers.  For example, with an ASO plan the employer funds the claim payments but pays an insurance carrier to process the claims.  This provides a valuable service to the employer to control costs and improve retention of key employees.

Traditionally, ASO claim payments have been made via check.  The insurance carrier issues the claim payments on behalf of the employer in the form of a check to the provider.  Using MICR check printing technology, the insurance carrier is able to generate these checks using the employer’s bank account without having to purchase pre-printed check stock with the employer’s bank account information.

However, using checks as the method of payment can still be costly and inefficient.  As an example, checks must be printed, stuffed into envelopes and mailed.  Checks also need to be reconciled.  And sometimes, these checks must be stopped and reissued.  Or checks may need to be included in escheat (unclaimed property) reporting.  The costs of check printing are significant and the use of checks as a method of payment is declining in popularity for most demographics. Today, there are more efficient ways to make payments.

Electronic payments provide a more efficient, less expensive and more secure method of payment.  And new payment vehicles, such as single use accounts (SUA) and tokenized payments, provide additional benefits:

• SUA payments are virtual credit cards that are only good for a specified amount.  The credit card number is provided electronically to the provider.

• Tokenized payments provide the ability to make payments to email addresses and cell phone numbers.

SUA and tokenized payment methods offer the added benefit of not requiring the insurance carrier to store and maintain provider bank account information.

Unfortunately, these more efficient payment methods are difficult to implement for ASO payments.  Unlike checks, electronic payments cannot be issued by the carrier from an employer’s bank account to the providers.  And all of these modern payment methods require special accounting procedures.

PayPilot® is a software solution created by Prelude Software that addresses these issues along with many others.  PayPilot offers the flexibility and capabilities often inherently missing in carriers’ existing source systems. PayPilot can scale to work as narrow or as broad across the client’s enterprise to fill the functionality gaps in the existing payment processing workflows.  By linking your existing siloed systems to the PayPilot solution, workflows can easily be automated, from payment request to payment creation and reconciliation.  Reducing the manual steps in your payment process decreases handling costs and increases efficiency along your entire payment workflow.

For ASO payments, PayPilot automatically generates funding transactions in the form of ACH debits to transfer money from the employer’s bank account into the insurance carrier’s bank account.  These funding transactions correspond directly to the outbound payments made to providers on behalf of the employer.  PayPilot also generates the necessary general ledger transactions and reconciliation records for these payments.

ASO plans provide a great opportunity for businesses to design their own health coverage plans and control costs. And Prelude’s PayPilot software give insurance companies the ability to utilize modern payment methods to make efficient, cost-effective and secure payments.

From MICR Checks To Electronic Forms Of Payment

Recently, in the CFO Journal, a section of the Wall Street Journal, an interesting article regarding “Why Can’t We Get Rid of Checks” highlighted that U.S. businesses still pay half of their bills with paper checks.

Being a software solution company that provides outbound payment processing solutions, Prelude Software can confirm that statistic. Although Prelude’s PayPilot® solution enables far more payment method options than MICR check processing, we understand the nuances around the MICR check process that companies require. It is far more than just check layout and proper placement of the MICR line. Along with many self-service features, Prelude can help with anything a company would desire in design, layout and printing.

When people talk about real-estate, the familiar and apropos phrase is, “... the three most important things you need to care about are location, location, location”. In payment processing, we have our own mantra, “... the three most important things you need to care about are safety, security and control”.

With Prelude’s software application, PayPilot, businesses across many different industries feel they have more safety, security and control because of the features and functionality we have built in to them. As an example, user authentication, user permissions, signature authority, fraud protection (e.g. Positive Pay) and approval processing are all fully met using the best practices Prelude helps establish and administer.

Along with the stated top three things, it might be argued that flexibility would be a fourth item of equal importance. PayPilot is robust in features and functions that allow significant flexibility. One particular example of flexibility is the notion of being “agnostic.” PayPilot allows businesses to have the flexibility to bebank agnostic (add or change banks within minutes, at their discretion, with self-service capabilities) andprinter agnostic (use any printer that supports MICR toner or ink). These two examples represent amazing flexibility that businesses typically do not have on their own. By contrast, without PayPilot many companies have interfaces between their core, originating system and their bank(s) that make it difficult to add or change because of the time, resources and cost necessary. Similarly, without PayPilot, many businesses are pigeon-holed into a particular family of printers because it is all that the originating core system was enabled to handle, therefore narrowing any options for better performance and disaster recovery.

Related, Prelude’s solutions also help with all of the necessary ancillary processing like syncing with other backend systems, like general ledger or web portals, or third-party software for escheat, document management, 1099 or estimating, and the U.S.Government for OFAC scrubbing to be compliant with the U.S. Patriot Act.

As the WSJ article attested, most companies are paying up to $20 per check to process. PayPilot enables multiple ways to bring the cost down and be more effective and efficient. One way that clients benefit fromPayPilot in this regard is the ability to bulk payments. In essence, payments that are to a recurring payee, like a glass vendor or rental car company, can be aggregated and sent out as one payment instead of hundreds.  PayPilot will also send the EOP (explanation of payment) or stub info for each of the individual payments that roll up to the aggregate.

Getting back to the main point of the WSJ article, why it is difficult for businesses to get rid of paper checks, we at Prelude recognize that one of the biggest barriers is the limited payment capabilities in existing infrastructure at many companies. Many legacy applications do not include the ability to make electronic payments. Upgrading or replacing these legacy applications can be expensive and time consuming. PayPilot provides the ability to bridge this technology gap.

Prelude has tremendous experience and expertise in helping companies to migrate payments from paper check to other, more efficient and cost-effective payment options. PayPilot can help extend the life-cycle of existing core, originating systems that may be incapable of requesting more than a paper check process. As an example, the core system still thinks it is sending the payment out as a check, while PayPilot recognizes and processes payments as an electronic payment. This allows for significant cost savings and processing time savings. From ACH, debit cards, virtual ghost cards (single use accounts), to tokenized payments,PayPilot enables multiple options beyond MICR Checks for issuing payments.

PayPilot is used by savvy businesses like AAA Insurance Exchange, ConEd, Country Financial and Esurance. For more information how you can benefit from PayPilot, contact Bill Clausen at 508.650.0033 x321 or bclausen@preludesoftware.com.