By JAY CORN
Many organizations are starting to see large organizations add third-party billing systems. They want vendors to sign up with a third-party website in order to get paid. These systems may seem great for the customer but adding a third party to the transaction can add a whole array of complications, liabilities and costs. Before you agree to use a customer’s third-party billing and payment system, consider the additional complications and costs.
Vendor Cost to Maintain usernames and passwords
Each of the third-party payment systems will require the vendor to subscribe to a website using a user id and password. They might even use a more secure method called multi-tier authentication whereby you have to receive a text code just to sign in.
If each customer implemented such a system, the vendor would potentially have hundreds of systems to track, update and maintain. Remembering that these systems often require the passwords to be changed periodically, a vendor would now need a software and a staff line to track all the different systems. That staff line is usually an accounting-based person of at least $30k per year. How does an accounting department share these usernames and passwords among staff? What happens when an employee leaves and all these passwords must be changed?
Additional Third-Party Legal Agreements
Online systems and websites all include end-user agreements. These legal agreements attached to these online systems are all different and must be reviewed by an attorney. The agreements typically add additional terms of payment and regulation that were not available at the time of quote. They may not be acceptable to one or both parties. Any third-party legal agreement may also change the intent of the transaction or even change the liability of the products and services involved.
Adding a third party to the Vendor/Customer Relationship
By adding a third party to the transaction, a whole set of legal ramifications are added. Having a transaction discrepancy or an issue with payment adds a third party to the legal side of things. If the product or service is not paid for in time, does the vendor take recourse on the third party or the original customer? Does the third party have any claim? Regardless, it will take additional time to identify the party responsible.
Adding cost to Invoice
These third-party systems often have fees involved that are not a part of the original quote or transaction. When a vendor quotes a product or service without knowing about the third-party fees, it can change the cost to the vendor after an agreement has been made. Now the third party may have a claim against the vendor for fees. This would be unfair to all parties involved and would start the relationship off in a negative tone. Obviously, if the vendor anticipates additional costs, the cost of the product will be affected.
Giving a third party access to your bank accounts
Often the third-party billing system wants to transact business using bank transfer. This means you must give a third party direct access to your bank account. Now with multiple third-party billing systems, how will you track who has access? Does access have to be renewed annually? Who at those billing companies has access to your account? Going a step further, when a transaction is made, a question of liability is introduced if the transaction is incorrect. If the third party deposits or withdraws the incorrect amount, who is going to correct the issue and in what time frame?
Before you start agreeing to these systems, ask yourself how many of these systems will you have to agree to and at what cost. In the end, using a third-party billing system may seem good for one party but for the other it can be an absolute cost and liability nightmare.
Jay Corn is Owner & Founder of Medical Check-In Systems. Contact him at: