The Benefits of End-to-End Payments Automation

When your payments process is manual, it isn’t only the accounts payables department that feels the effects. Manual processes mean workflows take longer and are error-prone. Data about the process—and about the company’s money—can be difficult to access which means management can’t easily tell how much money is available and where it’s going. On top of this, suppliers don’t get paid on time and are therefore less likely to offer discounts for early payment.

So when you streamline the process by automating it, from receiving invoices and reconciling them against purchase orders through closing the monthly books and reconciling accounts, the benefits go beyond the payments department. Automation can help your business manage its money better and improve relationships with your suppliers. Optimizing your payments process means the business runs better and has more flexibility in making strategic business decisions.

The Scope of Payments Automation

Depending on your organization’s purchasing process, payments automation can extend beyond simply receiving and paying invoices and beyond your company’s employees. Automation can include allowing vendors self-service supplier portals for entering their information into your supplier database. The payments process can include validating invoices against contract terms, not just paying them.

That extended functionality has many benefits, including ultimately a fully integrated procure-to-pay process that automates the process from the moment the purchasing decision is made. For many companies, though, a process like that may not be practical to implement such major change straight away. To take advantage of many of the benefits whilst avoiding the commitment to a complete change, companies should look for automation to support specific payments processes like:

• Invoice management. Receiving invoices on paper, matching them to purchase orders, and entering them into the system means a lot of paper shuffling and file cabinets for storage. Receive invoices electronically instead, or use an image capture process to automatically convert paper invoices to images and extract the necessary fields to match to purchase orders.

• Approvals workflow. Automatically route invoices to the appropriate managers, including reminders and escalations when approval is delayed and payment due dates are approaching.

• E-payments. Make payments electronically to eliminate paper check expenses.

• Account reconciliation. Balance the account payables sub-ledger and general ledger through electronic downloads of transaction details.

• Reports to management. Produce monthly reports and analyze payments data, flow data through to corporate ERP applications, and automatically track metrics.

The Benefits of Payment Automation

Achieving automation requires incorporating new software and defining new payment processes. Companies that automate their payments process gain numerous benefits that help the entire business, including:

• Fewer errors paying invoices. Automation reduces the risk of paying inaccurate or duplicate invoices by comparing the invoices to other data sources. Invoices can be automatically matched against purchase orders and receipts to validate amounts, and duplicate invoices—whether containing a duplicated invoice number or a duplicated transaction—can be automatically rejected.

• Compliance with company invoice approval policy. Because automation routes invoices for approval directly and only to the authorized managers, the appropriate authorizations are always obtained before payment is made.

• Compliance with regulatory requirements. The improved storage, search and retrieval capabilities of digitized invoices means records are more easily retained and audited.

• Reduced costs to process payments. The streamlined process is more efficient, eliminates manual steps and frees up staff to work on other business functions.

• Data-driven decisions. With all information around payments stored in databases, reporting and analytics can help companies analyze their spending and identify areas that need improvement. Data is always up-to-date, providing real-time insight that supports business decisions. These data-driven decisions can be further enhanced by using virtual card numbers (VCNs) as the payment method, which enables companies to incorporate custom defined fields into the transaction data.

• Improved supplier relationships. On-time payments and self-service access to check status means suppliers are more likely to negotiate favorable contract terms.

• Better money management. Because the automated process is streamlined, payments are made on time and avoid late penalties. Management can choose whether to pay early to receive a discount, or take advantage of the credit lines obtained through using a VCN as the payment method.

Before beginning a payments automation project, identify the key metrics you want the implementation to improve. It’s probably best not to try to solve all your problems at once. Identify the key issues, and slowly evolve your processes to include automation and other best practices. Over time, you’ll develop a robust, automated process that offers you benefits through the entire payments lifecycle.