You know how it feels when you’ve been working on a jigsaw puzzle for hours and finally put that last piece in place, making a full picture that precisely matches the image on the box? You sit back, admire your work, and feel the sense of success that only comes from a job well done.
Imagine feeling that way about your ongoing accounts payable (AP) automation project, with automation encompassing the whole invoice handling process from receipt to processing and payment. It is feasible when you use automate payments solutions.
Payment automation is a comprehensive system that enables businesses to accept cheques, ACH, virtual cards, and wire payments. This goes beyond the “ok-to-pay” feature of purchase-to-pay (P2P) systems, which provide payment to suppliers after invoices are received and processed.
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Payment automation eliminates human tasks from the last stage of the AP process, bringing the complete cycle full circle. This improves the connectivity between your procure-to-pay (P2P) system and your payments solution and raises automation levels, resulting in nine primary benefits:
Reduced Errors and Repeat Payments: AP process errors waste important time, degrade supplier relationships, and can lead to repeat payments. Best-in-class organizations that use automation can minimize the number of duplicate and overpaid transactions.
Increased Visibility: By switching to automated, electronic payments, you may collect additional financial data for sophisticated analytics and process enhancement. Payments are becoming a strategic priority for finance professionals looking to analyze, anticipate, and forecast their cash flow better. This information also allows for strategic cash-position optimization strategies such as supply chain finance and dynamic discounting.
Faster Cycle Times: For automated payments and teams, time and money are necessary. The more automated and efficient a process is, the higher the return on investment and the sooner suppliers get paid. This also translates into cost savings via speedier invoice processing and obtaining more early payment discounts.
Cheaper Transactions: Electronic payments are significantly cheaper than paper checks. The average cost of processing and paying an invoice is lower, creating a significant opportunity for businesses of all sizes to automate their AP process and transition to electronic payments.
Fraud Prevention: Checks remain the most common payment method targeted by individuals who commit or attempt to commit fraud. The frequency with which this occurs emphasizes the need to ensure that your sensitive data is completely protected.
Increased Supplier Satisfaction: Automating payment processing shortens payment cycles, allowing suppliers to be paid sooner and reducing their days’ sales outstanding (DSO). This significantly improves ties with the supplier base.
Additional Discounts: The manual routing of invoices for payment and approval can prevent an early payment discount. Payment automation can shorten the processing cycle and allow organizations to take advantage of more available discounts, maximizing their working capital.
Fewer Supplier Enquiries: AP spends a significant amount of time responding to supplier inquiries regarding invoice and payment status. Automating the payment process allows businesses to give suppliers real-time access to transaction statuses through a portal, decreasing time spent fielding supplier inquiries and boosting supplier relations.
User Convenience: Automated payments save time by decreasing human processes and ensuring that suppliers receive payments on schedule. As a consequence, payroll, vendor payments, and taxes may all be arranged ahead of time, making it easier to manage.
Easy record-keeping and compliance: Every automated transaction is recorded digitally. This makes it easier to trace payments and follow financial requirements. Digital records also make audits easier and verify that all payments are correctly documented.
What are the effects of automated payments?
Automatic payments may be performed in various ways, allowing you to manage your monthly obligations more efficiently. The most popular technique is ACH transactions, which are electronic payments to and from your bank account.
Payment automation may make a significant difference for your organization. It allows you to avoid late penalties by paying bills on time, which improves your credit and fosters confidence with merchants.
It also saves time for your finance staff, allowing them to focus on other vital activities rather than payment processing. However, verifying these payments is critical to catching any errors or unexpected costs.
AP is fast evolving; this is not new knowledge; industry experts have long stated that the boom in automation and technology is paving the way for a more strategic future for accounting professionals.
Payment automation is another example of progress in that approach. So, finance directors should consider how to turn their AP departments into the heart of financial data and cash management while also equipping their personnel with the skills required to serve the business in this way.
