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What is a Bill Presentment?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 14 September 2016
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    2003-2016
    Conjecture Corporation
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Bill presentment is the preparation and submission of a bill or invoice for goods and services provided to a customer’s bank rather than to the customer. This type of invoice presentation may be submitted by mailing the invoice to the attention of the bank. Today, it is more common for bill presentment to be in the form of an electronic submission to the bank, which in turn can pay the invoice with the use of an electronic funds transfer from the customer’s account to the bank account of the vendor.

With a basic bill presentment process, the receiving bank notifies the customer that the invoice has arrived, typically by posting a private message at the customer’s online account. This provides the customer with the opportunity to review the details of the invoice, confirm they are accurate, and authorize the bank to remit payment. Some banks also offer the option of pre-approving invoices submitted by specific vendors, making it possible to quickly pay monthly bills for ongoing services. Depending on the policies and procedures of the vendor, the customer may receive a hard copy statement each month, providing details about when invoices were submitted and when payments for those invoices were received.

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When the bill presentment process is structured to allow customers to review invoices before payment is tendered, this is known as a time draft. Essentially, this means the invoice is presented for acceptance by the customer and must be approved in order for the bank to process a payment. In situations where the payment is pre-approved by the customer, the payment process is known as a sight draft, meaning the bank submits payment shortly after receiving the electronic invoice. Some financial institutions allow customers to designate specific vendors to receive payments upon presentation of the invoice, while still requiring that the customer be allowed to review and approve invoices by other vendors before payment is tendered.

There are a number of benefits associated with electronic bill presentment. The process helps to minimize paperwork, since the information is transmitted via a secure connection directly to a financial institution. There are no worries of invoices failing to arrive at the customer’s address, and no delays in remitting payments. As a result, the customer is always current on his or her account, and the vendor enjoys receivables that are paid within invoice terms rather than stretching out past the standard thirty to forty-five day window.

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