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How AP Automation Creates a Better Payment Experience for Businesses and Vendors Alike

It might (or might not) surprise you that many B2B businesses are still using outdated payment methods like paper checks for their accounts payable (AP) processes. In fact, according to a study from PYMNTS, “25% of B2B payments are made via paper checks.”

As we all know, checks can be inefficient, time-consuming, costly, and challenging. Having the ability to reconcile payables immediately after approval rather than waiting weeks for vendors to cash checks is an infinitely better solution.

However, to understand the problem these manual processes can create, let’s first define what “AP” is.

What is Accounts Payable (AP)?

AP is an account within a business's ledger that details an obligation to pay off a short-term debt to its creditors or vendors who have provided the business with various goods and services.

For example, an auto dealership might utilize multiple vendors to ensure they have all the materials in stock to fix and maintain their customers' cars. These vendors could include glass windows, tires, spare parts, etc.

Whether a business has a dedicated AP department or not, being able to track, report, and pay these vendors is a crucial part of day-to-day operations. With so many moving parts, it’s easy to see how things can get chaotic. Now, add a 1 – 2 week wait time for vendors to receive a check, process it, and send an order; you might be left with a compounding problem that only worsens over time.

Payment delays and inefficiencies are why so many businesses choose to outsource their accounts payable to a third-party application or software that can automate some of these organizational and logistical processes.

Here we analyze what AP automation solutions offer and how they can benefit your business.

What is AP Automation?

AP automation simply refers to tools and technology that can help businesses automate paper-heavy, manual processes to reduce the strain on their staff and minimize the number of human-made errors.

Automation solutions typically support any of the following functionality:

Faster Digital Payments

Using paper checks to pay your vendors gives you little control and visibility over the payment and can hold up funding for as long as 7-10 business days. To ensure faster payments, Automation Clearing House (ACH) or virtual cards are becoming increasingly popular payment methods preferred by vendors. Buyers can use their preferred payment method, whereas vendors can minimize drawn-out and costly paper payments.

Digital payment methods happen in near-realtime and offer many benefits over paper checks as they are a safer and more efficient way to pay. There's no risk of them getting lost in the shuffle, and virtual cards even earn rebates that can be put back into your business. In fact, forecasts that the global virtual card market will reach $740 billion by 2025.

Seamless Integrations

While many companies offer an AP automation platform, few exist that can also integrate into existing systems, including accounting software and dealer management platforms. An effective AP automation tool works within your existing platform, so there’s no need to migrate data or train your staff to use a different system.

Vendor information can be sent via a prebuilt integration to your accounting system, a simple file feed sent via SFTP, or payment file uploads. One single interface can enable all vendor payments.

Realtime Transaction Reporting

Some platforms might lack extra features, such as realtime tracking and custom data reports. Payment platforms that offer realtime reporting and data usage insights enhance the payables experience. Reporting is automatically updated when the invoice is fulfilled, simplifying reconciliation and reducing time spent on tedious calculations.

With easy-to-integrate dynamic features, comprehensive reporting can be customized to any business need. For example, the data compiled from outgoing and incoming invoices, bills, and payments can be used in cash flow forecasts and projections and aid decision-making processes.

Additionally, built-in robust search capabilities provide visibility into payment data. A business owner can search by date range, vendor name, payment amount, invoice number, payment type, payment status, etc., and easily export data to Excel for simple analysis.

Payment Batch Approval

AP automation platforms can help businesses manage payment approvals more efficiently using batch approvals. The batch approval process triggers an email sent to the designated approver(s). The email includes a CSV file to quickly and easily view payments and invoices included in the payment batch.

What’s the Lack of AP Automation Costing You?

Over the years, the number of errors from mailing to receiving to processing paper checks will likely increase as you expand your operations. The longer it takes to send a physical check and receive payments, the larger the divide.

Large organizations have been known to spend thousands of dollars per month on a fully automated system. While you do not need that level of automation to succeed, companies that are less successful waste millions of dollars per year on resources and lost payments.

How Payment Automation Can Transform B2B Transactions

So why the push for an AP automation solution and virtual payment acceptance?

As we covered above, a comprehensive AP solution offers many benefits for your business, including:

  • On-time payments for improved vendor relations
  • Reduced paper processes and manual data entry
  • Automated payment tracking and reporting for easy reconciliation
  • Monthly rebates from virtual card spend
  • Single source for payment management

On the surface, automation eases the strain on your AP departments and eliminates unnecessary errors. However, when you look closer, AP automation provides a seamless end-to-end vendor payment process  to increase efficiencies. 

Payment technology providers like REPAY offer robust tools to enable AP automation for any business. Start supporting digital vendor payments to simplify outbound payments and get back to what matters.

Learn more about AP automation for your business today.

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