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Education

Intermediary account versus

direct debit in accounts payable

Some solutions use intermediary bank accounts, others
use direct debit to make supplier payments. There are rea-
sons for both, but the decision can have a big impact on
payment timelines, supplier relationships and cash flow.

AP solutions that use intermediary or FBO accounts to
make supplier payments are akin to connecting flights.
Funds are moved from the business's bank account to the
processor's account before making the payment to the
supplier. Solutions that use a direct debit method are like
By Jill Rosenthal direct flights, that is, authorized payments are debited
MineralTree straight from the business's bank account to the supplier
via their preferred payment method.
hen businesses automate their accounts pay-
able (AP) processes, a number of consider- Which is right for your business?
ations come into play. How well a solution There are four core factors to consider when deciding whether
W integrates with existing finance systems and to use an intermediary account or direct debit funding model:
AP workflows, supplier acceptance/onboarding and staff
training are all important factors. But one decision that is 1. Cash flow impact: Intermediary account models
often overlooked is the payment funding model. debit money out of the user's bank account before pay-

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