• 6 min read

How AP Automation Can Help You Improve Your Vendor Payment Process

Do you remember the satisfaction you get when you finally put the last piece of a jigsaw puzzle together, completing the picture and making it match the box's illustration? You take a seat, admire your work, and feel the satisfaction of a well-done job.

Think about how you would feel if your ongoing accounts payable (AP) processes were automated across the full cycle of managing invoices, from receipt to processing to payment. With automated payments, it is feasible.

Payment Automation – What is it?

Organizations can use payment automation, an integrated system, to make wire transfers and check and ACH payments. Sending payments to the suppliers after invoices have been received and processed automates processes beyond the "ok-to-pay" that purchase-to-pay (P2P) solutions offer.

What does a Supplier or Vendor Payment Entail?

Numerous vendors supply goods and services to companies and organizations of all sizes. The company receives an invoice from these suppliers or vendors, which must be paid by the accounts payable (AP) department. These invoice payments may be made in a variety of ways.

Checks, credit card payments, wire transfers, ACH (automated clearing house) payments, and virtual cards are common vendor payment methods. Checks continue to rule B2B payments, but an AP department's choice of payment method is dependent on several criteria, including cost, convenience, and vendor preference. Despite its disadvantages, 45% of firms still pay more than 50% of their suppliers through checks.

How to Use a Payment Automation Solution to Boost Vendor Payments

The proper Accounts Payable automation solution may benefit both AP departments and vendors by streamlining onboarding, enhancing communication, lowering expenses and the risk of fraud, and enabling centralized processing, reporting, and analytics. Here are some ways your team can manage AP more successfully with AP automation:

Enhance the Vendor Onboarding Process

The vendor onboarding process will be made simple by a good payment automation solution for both the AP department and the vendor. When a new resolution is adopted, robust supplier enablement begins with focused onboarding and becomes an ongoing process.

A continuous onboarding strategy streamlines the onboarding process for all new suppliers while keeping the door open for current suppliers who may modify their payment preferences later. Businesses must promptly complete automated onboarding processes to reap the rewards. Additionally, companies can achieve their objective of increasing rebates, security, and savings while considering supplier payment preferences. As a result, the AP process's friction is eliminated, which is advantageous for both sides.

The Functionality of the AP Solution Benefits People & Processes

A poor vendor payment procedure has obvious, immediate costs, including the likelihood of late fees and penalties. Then there are the indirect costs, such as the additional staff time required to answer concerned merchants' calls and the consistently missed discounts for paying invoices early.

In fact, research indicates that 23% have experienced missing early discounts. For businesses with a moderate to the large frequency of invoices, these reductions, which frequently range between 1 and 3 percent of the overall invoice amount, represent a huge source of savings.

Build Trusting Relationships with Your Vendors

Any time an AP department modifies its vendor payment procedure, there is a probability that it will either have a favorable or negative effect on that relationship. That is why it is crucial to pick the best AP automation service.

Take Advantage of Early Payment Discounts and Lower Costs

There are a few ways that AP automation might aid in cost reduction, which is a frequent objective in many AP departments. First, AP automation technologies reduce manual effort, freeing employee time for more productive activities. Second, virtual card payments, which are frequently a component of automation, often include cash-back rebates, just like credit cards.

Automation of AP also makes it simpler for businesses to benefit from early payment reductions provided by many vendors. Vendors need payments, and since many are accustomed to payments taking so long to arrive, they sometimes offer incentives for early payment.

Lower the Risk of Fraud

Automation of AP ensures the security of data and provides payment options with lower fraud risk. For instance, it is far more difficult for fraudsters to take advantage of virtual cards that are only used once. In addition, secure payment processing and supplier information management are made possible by additional internal solid controls and industry best practices.

Organize Reporting, Analytics, and Payment Processing at One Location

In order to develop reports and make prompt decisions that align with business aims, AP departments and vendors increasingly seek real-time insight and analytics. Access to real-time dashboards that display KPIs like invoice aging, payment mix, and collected rebates is possible via Aavenir's AP Automation Software.

Simplify AP Processes and Pay Suppliers Using the Preferred Payment Method

Historically, new payment methods led to new workflows for accounts payable, introducing additional labor-intensive processes that needed to be set up and maintained. Your team may use one AP workflow to pay suppliers in their preferred way by utilizing Aavenir's AP automation platform.

What are the Advantages of Payment Automation?

To complete the cycle, payment automation eliminates manual tasks from the last stage of the AP process. This improves the connection between your procure-to-pay (P2P) system and your payment solution and raises your level of automation.

Rapid Cycle Times

Time is money for AP teams. A process's return on investment and supplier payment speed increase with how automated and effective it is. Additionally, quicker processing of invoices and greater utilization of early payment incentives result in cost savings.

Lower Cost Transactions

Paper checks are much more expensive than electronic payments. However, due to the $20 average cost of processing and paying each invoice, businesses of all sizes can automate their accounts payable process and switch to electronic payments.

Lower Error Rates & Duplicate Payments

The AP process has errors that save time, harm supplier relationships, and can lead to double payments. Best-in-class businesses can lower the percentage of duplicates and overpayments by utilizing automation.

Higher Visibility

You can collect additional financial data by switching to automated electronic payments to enable advanced analytics and process improvement. Payments are becoming a key emphasis area to help finance leaders better analyze, predict, and forecast their cash flow. The availability of strategic tools like supply chain finance and dynamic discounting, which optimize cash position, is also made possible by this visibility.

Fostering workplace cooperation

All stakeholders engaged in capturing and approving invoices can have simultaneous access to necessary files thanks to the speed and visibility of a digital storage system. In addition, real-time cooperation and improved efficiency are made possible by this accessibility when sharing documents, verifying information, getting clarification, and resolving errors.

Select Aavenir AP Software That Can Grow as Your Vendor Payment Process Develops

AP automation system scales business by strengthening supplier-business bonds with timely payment. Aavenir Invoiceflow empowers your AP teams with 

  • Automated invoice processing
  • Timely payments & approvals
  • AI extraction with split invoicing 
  • 2/3-way match
  • Spend management and more. 

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