Payment automation is an increasingly necessary business solution. Manual payment processes are time-consuming, costly, and error-prone, tying up top talent and creating bottlenecks.
Automating payments offers a wide range of benefits. These include reducing errors, improving working capital management, and offering more payment options to customers. But implementing and managing a successful automated payment system requires careful consideration.
Reduce the Risk of Errors
Whether a business pays by paper check, ACH, or credit card, an automated payment system reduces the risk of errors. This is because the platform integrates different payment types under one roof and enables account payable staff to work more efficiently by eliminating manual processes, paper handoffs, and duplication of efforts. It also provides built-in checks that compare payments to invoices and ensures data accuracy across the general ledger and sub-ledgers (e.g., accounts payable, payroll, tax).
Robust payment verification is essential to minimizing mistakes, fraud, and other security risks. Automated payment systems perform this validation automatically by comparing invoices and disbursements against purchase orders, goods/service delivery receipts, and supplier contracts.
A business can also reduce costs with an automated payment system by capturing more early-payment discounts and reducing late payment penalties.
Increase Customer Satisfaction
Whether customers call your company to complain about a late credit card bill or to ask how to pay their utility bill, dealing with billing issues is the number one reason that calls make it to a customer service department. That’s why it’s so important to streamline billing processes without compromising service.
One of the benefits of an automated payment system is that it allows you to set up recurring payments automatically withdrawing from your customer’s bank account. This reduces the time your team spends chasing down payments and helps you stay ahead of receivables so you can project cash flow more accurately.
Automated payment systems use ACH transfers to process invoice payments, and they have multiple levels of security to prevent fraud. They also can communicate with internal accounting software, treasury management, procurement, and other financial tools to ensure that the payments are processed accurately and quickly. This helps increase customer satisfaction by eliminating long wait times for the receipt of payments. The automation eliminates manual data entry, saving additional labor costs.
Streamline Operations
Using software tools, an automated payment system can streamline many processes involving submitting and processing payments. These include generating invoices, matching payments to corresponding documents like purchase orders, goods/service receipts, and supplier contracts, verifying invoice data (at the line-item level), regional e-invoicing compliance, and automating approvals for specific payment types.
This eliminates multiple bottlenecks in a company’s accounting and financial management that impact its time-to-pay metrics, reduces the number of disputed payments and follow-ups, and improves business-to-business relationships. It also allows accounts payable staff to focus more on other tasks that add value to the business, such as optimizing its cash flow further.
An added benefit of an automated payment system is capturing financial data that supports advanced payment analytics and provides better reconciliation information. Moreover, this visibility can allow businesses to leverage strategic tools that optimize their cash position, such as early-payment discounts and supply chain financing. This increased visibility can even help companies forecast their cash flow more accurately, which is essential for successfully managing treasury and corporate finance operations.
Improve Cash Flow
The ability to streamline payment processes speeds up the time it takes for expenses to be paid and helps your business improve cash flow. It also improves transparency and enhances security.
It’s much easier to track payments and invoices with an automated system than with manual methods, eliminating miscommunication. This makes it easier to avoid issues like missed payments or overdue invoices.
A digitized payment system gives you complete visibility into every transaction, which can help your accounting team resolve disputes quickly and efficiently. This lets you pay your invoices on time and improve your supplier relationship, resulting in better cash flow management.
Automated systems are less expensive than manual processes when processing payment transactions. You can expect to save money on credit card fees, wire transfers, and ACH fees. It also helps reduce staff costs by removing the need to travel to your headquarters to process payments. An automated payment solution can help you improve customer satisfaction, strengthen supplier relationships and boost revenue growth.
Minimize Downtime
A payment system brings together different invoices and payment types into one workflow. This enables accounts payable staff to reduce bottlenecks that slow down the time-to-pay metric and allows departments to work together for greater efficiency.
Automated payment systems also help companies save money and boost productivity. This is because they can reduce manual data entry and the likelihood of fraud. Additionally, they can help companies minimize unplanned downtime through robust backup and recovery systems.
Unplanned downtime occurs when an application or computer system stops working due to a cyberattack, zero-day exploits, phishing campaigns, power/network outages, or natural disasters. This can cause costly losses and tarnish a company’s reputation.
Companies can minimize downtime by implementing an automated payment system compatible with various existing applications and infrastructure. They should also ensure that a reliable support team backs their new payment system and provides real-time visibility into transaction statuses. This way, they can quickly identify and correct any issues before they impact customers. They should also promote the benefits of a new payment system to senior administration and influencers to get them on board and ensure that the change goes smoothly.