Every advantage counts in the business world. Automating payments is a surefire way to improve business efficiency.
Several things can help your business succeed, including automated payment solutions. Why should you automate your payments? For your business, what are the advantages of automating the collection and reconciliation of payments?
What is Payment Automation?
With payment automation, businesses can make payments to their bills electronically by using electronic payment systems.
Payment automation aims to automate, optimize, and streamline the previously manual processes relating to payments, such as communications, invoice matching, ACH transfers, and automatically approving and sending payments, which were previously performed by employees.
How Does Payment Automation Work?
An automated payment system works by implementing methods for processing a wide range of payment-related data and completing actions of this data with little to no human involvement.
Payroll automation involves processing invoices – taking invoices from different sources and formats, interpreting what information they contain, storing it, and then reviewing invoices to decide whether they should be approved and sent or held for manual review if there are inconsistencies.
ACH verification is another important aspect of payment automation. ACH, which stands for the automated clearinghouse, is a kind of payment that happens virtually through the transfer of funds from one account to another.
A payment automation software platform that does this seamlessly verifies and securely stores the recipient’s bank account information.
3 Ways Payments Automation Can Boost Business Efficiency
Improved customer service
Money could initially only be transferred between bank accounts with a BSB and an account number. Transferring money to another bank account usually takes a couple of business days. Using NPP, you can transfer money to another account with just your email address or phone number within minutes.
Faster transfers are made possible by NPP’s two components:
- Firstly, it is much faster for the customer as they don’t need to search for the right account number or BSB number and then double or triple-check that the money arrived at the right location.
- Second, due to its integration with other components of the NPP like Osko, PayID transactions go through quickly and 24/7, so customers spend less time waiting for a transaction to be completed, greatly streamlining the customer experience.
Surpass the competition
Customers who are paying through NPP can make payments to any financial institution that supports NPP-linked accounts in real-time. Businesses will be able to surpass those competitors who are slower to adapt by adopting this strategy.
The result has been a significant improvement in payment experiences for companies, especially those in the lending industry. In addition to facilitating faster, instant payments, NPP also makes it easy to share data between different bank accounts.
Taking all these factors together, open banking offers financial service providers an unprecedented number of opportunities.
NPP helps businesses automate business processes, which in turn allows them to reach a wider audience and work on other features within their systems to provide customers with a seamless experience.
An easy way to reconcile payments
Thanks to multiple updates to the past BSB and account number-only transaction systems, both business and consumer bank account holders will have more flexibility with NPP.
A PayID can now be created using an existing phone number, email address, or even an ABN instead of a BSB. There is now a 280 character limit on existing transaction descriptions, up from 18 characters.
NPP’s speed is one of its main advantages. Business owners also need faster reconciliation tools with faster payments.
By creating unique BSBs and account numbers for each of your customers, reconciliation is simplified. It is easier to track who paid you. Auto Matcher simplifies this process. Using Auto Matcher, large volumes of transactions can be reconciled automatically, and orphan transactions can be eliminated.
The client can generate a large number of unique bank account numbers using Auto Matcher. Using these unique account numbers, client can associate their customers with their bank accounts.
Why is Payment Automation Important?
Automating payments completes the AP process by removing manual steps from the final step. As a result, your procure-to-pay (P2P) system and payments solution are better integrated, increasing your automation levels, and reaping nine major benefits:
Quicker cycle times:
Time is money for AP teams. By automating and improving a process, a company will see a greater return on their investment, and suppliers will be paid faster. The faster processing of invoices also results in more early payment discounts and cost savings.
Paper checks are much more expensive than electronic payments. Businesses of all sizes can benefit from automating their AP process and moving to electronic payments because the average cost of processing and paying an invoice is $20.
Fraudsters and those attempting to commit fraud continue to target checks most often. 57% of respondents report having received a fake invoice or experiencing fraud.
The AFP Payments Fraud and Control Survey report that 81% of companies were victims of payments fraud in 2019. The frequency with which this occurs emphasizes the importance of securing your sensitive data.
Payment Errors & Duplicates Reduced:
Duplicate payments and wasted time are the results of AP errors. The percent of duplicates and overpayments can be reduced by companies leveraging automation.
You can capture more financial data with automated, electronic payments to support advanced analytics and process improvement. As finance executives seek better insight into, predict, and forecast cash flows, payments are becoming a strategic focus area.
By gaining visibility, supply chain financing and dynamic discounting become more feasible, as do other strategic tools that optimize cash positions.
31% of respondents were prevented from getting an early payment discount because of manual invoice processing. By automating payments, organizations can reduce the processing cycle and take advantage of more discounts available to them, thus optimizing their working capital.
Fewer inquiries from suppliers:
Supplier inquiries about invoice and payment status occupy a lot of AP time. A portal allows organizations to offer real-time visibility into transaction statuses to suppliers, thereby reducing the time spent handling inquiries from suppliers and strengthening supplier relationships.
Enhanced supplier satisfaction:
Payment processing is automated, which results in shorter payment cycles, allowing suppliers to receive payment faster and reduce their day’s sales outstanding (DSO). It improves relationships with suppliers.
How to Select Payment Automation Software
A healthy amount of research is always necessary when choosing payment automation software for accounts payable. Every business is different, and so are the payment automation platforms available today.
When selecting an invoice processing system, the most important factor to consider is its ability to handle every possible scenario your business may encounter. Invoices will be processed more quickly and at lower costs with a payment automation system that fails to automate all invoice processing tasks effectively.
The payment automation solution you choose should also be able to integrate with your existing enterprise resource planning (ERP) system. A successful automated accounts payable process relies on synchronizing data and automating the process as much as possible with little manual work.
The use of software and online tools to automate payments has many advantages, yet many accounts payable departments still process payments manually, entering data and entering invoices. That needs to change. Get started today.