A process improvement consultant recently asked me if there was a way to truly automate the payment process so that a vendor could be paid using a procedure that is "untouched by human hands." As in many finance applications today, the answer is yes, with one important caveat: You can't buy it; you have to build it. While the tools exist, straight through processing (STP)–a concept that came into vogue toward the end of the last century–can only really be achieved by an enterprising treasury willing to commit the resources and know-how (forgive me, Don Henley of the Eagles) to "Build… the Perfect Beast."

Moving toward STP, the first hurdle for any treasury is accommodating its customers' various accounting systems. This has become much more scalable, thanks to the evolution of enterprise resource planning (ERP) and other commercially available accounting systems over the past several years. Now, most possess the capability to create electronic data interchange (EDI) payment advices and the means to generate Automated Clearing House (ACH) files that can be sent to the customer's bank for processing.

With the consolidation of the banking system, many more banks also have become EDI capable, offering "integrated payables" products that accept an EDI file and translate the messages into ACH, wire transfer and/or check payments. Some of these ACH payments can even include remittance information for transmission into the vendor's A/R system, if bank and vendor systems permit.