The road to payment automation hasn’t been an easy one, with many organizations still battling outdated payment processes and exposing themselves to unnecessary costs, inefficiencies, and payment-fraud risks.
Some organizations are still working with manual, costly, and fraud-prone paper based accounts-payable processes, while others have started down the path of automation with a fragmented approach that uses a virtual card or automated clearing house solution. That path requires them to manage separate payment streams and vendor-adoption efforts and significantly decreases the efficiencies they set out to gain.
The opportunities for improvement in either case are massive. Integrated payables can make it happen. But how? Why?
Let’s take a look at what integrated payables really is and how it can (and should) transform your business.
Integrated payables is a solution offered by many banks and third-party providers, and that’s the start of the confusion. It’s hard to tell what integrated payables is exactly because the solutions vary dramatically depending on the provider. For example, some banks and providers use the term “integrated payables” to mean simply “virtual card payments.”
True integrated payables is a way to incorporate all payment types (including virtual card, ACH, and check) into a single, streamlined payment process.
The benefits of a truly integrated payables process are numerous. They include:
- Easy integration and streamlined payments
Organizations can process payments across systems and bank accounts in a single payment file by connecting easily and seamlessly to their existing enterprise resource planning or accounting system. This eliminates confusion and complexity from processes because [account payable] staff is no longer required to manage disparate file types and processes for check, ACH, and virtual card payments. That’s a huge time saver for most organizations.
- Optimized working capital and better AP revenue
Integrated payables makes it possible to improve control over payment timing, giving businesses the flexibility to pay vendors earlier while holding on to cash longer. Companies can also monetize a greater portion of their AP spend by optimizing vendor onboarding for electronic payments across card and other programs that offer rebates on ACH. This transforms AP from a cost center to a revenue driver, increasing departmental business value.
- Maximized efficiency, productivity, and cost savings
By outsourcing payments to a third-party through integrated payables, organizations can take advantage of economies of scale they couldn’t achieve on their own. External vendors that specialize in making payments can simply do it faster and more cost-effectively. With true integrated payables, a provider will have visibility into a company’s entire payment file, giving them the ability to settle transactions using the lowest cost/highest return payment type on their customers’ behalf. This not only significantly reduces overall costs, but frees up organizations to focus on activities that grow and optimize the business.
- Reduced fraud risk
According to a Strategic Treasurer report, 65% of organizations have been the victims of check fraud in recent years. Electronic payments, particularly those managed by trusted, established vendors that take advantage of leading machine-learning and artificial-intelligence practices, are far safer than any paper-based payment ever could be. Better yet, taking advantage of integrated payables through a third-party vendor removes the burden of securing payments from the organization entirely.
When choosing an integrated payables solution, it isn’t a case of “tomato” or “tomahto.” There’s a big difference in the solutions currently being offered, so make sure to thoroughly investigate any offerings your organization is evaluating so you can be sure you’re making the right choice for your organization.
—Jessica Moran is general manager, Paymode-X Business Solutions, Bottomline Technologies Inc., Portsmouth, N.H.