Being late for a meeting and keeping your team or partners waiting is something between an inconvenience and an embarrassment. Being late when paying a vendor’s invoice is an entirely different thing. It triggers all kinds of unwanted consequences for your organization and your suppliers. On the face of it, delays cost money in terms of late payment fees, lost discounts and time spent on answering inquiries.
On the vendor’s side, tardiness can translate into cash flow problems. Even worse, if the payment process for your suppliers is consistently out of whack, an organization risks squandering goodwill and may expose itself to bigger problems down the road: less beneficial terms or empty shelves when the next supply chain problem arises.
A smart payment automation solution will solve all those challenges. A business that has an automated end-to-end workflow in place can process invoices on time, every time - accurately, securely, and at scale. This makes your vendors happy and saves you significant amounts of time and money, boosting team morale and all-around job satisfaction.
Happy Vendor, Happy Management
From start to finish, payment automation helps to weed out errors and fraud attempts as part of streamlining the approval process. The real-time data resulting from digitalization creates an accounting information trail that helps establish and support a long-term relationship with vendors. One based on visibility, transparency, and trust. That’s an excellent insurance policy in these uncertain times when shipments can suddenly run dry or essential components may be stuck in some port or hub, throwing a wrench into your operations.
Of course, key to this is choosing the best AP management software for your needs. Let’s start with an overarching thought. A payment processing system that makes your vendors part of your AP automation workflow is a digital take on the notion of “paying it forward.” A cutting-edge platform with vendor payment automation like Yooz is built around this simple premise. It makes sense for all parties of a transaction to be in the know, from product to purchase to pay.
Technology can accomplish this goal while unlocking significant savings. Vendor payment software that automates the workflow end-to-end will cut processing time by 80% and reduce cycle times to hours. Paying invoices the same day they come in and delighting vendors with instant payments is no magic, all it takes is a cloud-based platform.
Go Digital: How Paper Invoices Slow Down the Accounts Payable Workflow
At its most basic level, AP automation limits - or ideally does away with - paper and all the downsides that come with it. Neither vendors nor the business they supply benefit from sticking to outdated practices in the finance function.
The price of invoices that are submitted by mail or fax, or even as email attachments is a slower workflow. That’s because staff members must open, scan, or manually enter data, increasing the risk of errors and oversights, from bungled due dates to incorrect SKUs. What’s more, it’s time-consuming to match those invoices to purchase orders and notes of goods received. Removing the paper aspect reduces associated costs (including storage). Removing the manual aspect removes the chance for errors and a lot of repetitive tasks.
What are the key accounts payable software features are crucial to leave the paper-based world behind and unlock the opportunities of a digital process? AP automation that works end-to-end relies on capabilities and features along five steps to speed up the process, starting with the purchase decision all the way to paying your vendors.
The Five Steps of Cutting-Edge Vendor Payment Processing Software
Capture and Extract: A modern AP automation solution streamlines the invoice capture process as much as possible, reducing human touch to the bare minimum. The ideal final state is “straight-through processing” where invoices arrive in either digitized format or pure electronic formats that are already machine-readable.
Machine-learning algorithms powered by AI will go to work, reading and extracting all relevant information. Doing so with a cloud-based platform has a key advantage. When a system has seen tens of millions of invoices issued by thousands of different vendors, it has a large enough training set to let it read, understand, and manage almost any invoice out there without human handholding. Only the rare exceptions are flagged and escalated for human review, drastically reducing processing costs by 80% and cutting cycle time to days or even hours. Even better, the platform learns as it goes along and gets better one invoice at a time.
Review: AP automation shines here as well, catching errors, duplicates and fraud attempts all by itself in seconds. Truth is, vendor invoices may contain any number of errors, for instance a reused invoice number, incomplete bank account information, or items billed for that weren’t delivered.
Thanks to automatic three-way matching, every invoice is checked for accuracy across several dimensions, reconciled with the corresponding PO and correctly GL-coded before it’s moved to the approval process.
Seeking Approval: Accounts Payable Software Keeps Humans in the Loop
Approve: Since it’s a cloud-based solution, AP staff can handle this third step from anywhere, including from a mobile device. Automation gives you the flexibility to configure and tweak the workflow as needed. If a team member is temporarily unavailable, if a vendor deserves some special treatment to make them happy, if some big invoices need to be prioritized for strategic reasons... The list of possible rules can go on and on. The bottom line is this: with AP automation, approval will be as fluid and customized as your company requires.
And since all needed documents are just a click or a keyword search away, securely stored in the cloud, it’s no longer a must to be in the office to do all that. When there’s no paper piling up, delays or misplaced invoices are a thing of the past.
Setting up payment: This is the crucial fourth step to keep your vendors happy and deserves a closer look. While many flavors of general-purpose AP software automate the previous steps to quickly get invoices into the system and reviewed, scheduling and initiating payment is still a hurdle for many.
Click and Done: The Amazing Pace of Payment Processing Software
It doesn’t have to be this way. An all-in-one solution that includes a payment module (such as YoozPay) makes it easy and fast to settle invoices right on time, either when they are due or by offering an early-pay discount, in the same browser or mobile interface that is used to capture and approve them.
All the team needs to do is select those vendor invoices, the amount to be paid (full or partial) and pick a payment schedule that’s either manually or automatically configured. Setting up rules that suit your company’s needs also helps, such as defining certain amounts as thresholds or designating preferred vendors. The result is an overall smoother workflow and optimized cash management.
On the vendor side, AP automation creates a vastly improved experience as well. Suppliers can be onboarded with a single email address and one-click choice of their preferred payment method. When vendors become part of your business network, they can easily see where in the pipeline their invoices are, when to expect payment, and how to get in touch with additional questions.
Creating Goodwill: Vendors Stay in the Know
Today, AP teams spend about a quarter of their time answering supplier inquiries. This is a significant waste of labor that’s no longer necessary. Once transactions become more transparent from the moment a purchase order is issued until a payment goes out, it makes for a better relationship and builds goodwill you can bank on.
If a vendor selects the most advanced form of payment in the form of a virtual credit card, payments will arrive instantly, letting you score additional happiness points. Additionally, if the AP department uses virtual cards, it can potentially earn cash back on each invoice paid.
Consider this... When an organization is dealing with a few hundred invoices a month, the additional revenue can quickly reach five figures a year. Plus, virtual cards processed through a secure payment gateway offer an additional level of protection against errors or fraud and create a fine-grained digital audit trail.
Export: Once the money has left your account and reached the vendor, AP automation has one more, fifth task to accomplish. That’s reconciling the invoice with the information stored in an organization’s ERP system or financial software.
Spreadsheets were yesterday. Today, a cutting-edge AP platform will mark the corresponding PO as paid, creating another breadcrumb for a transparent digital audit trail any compliance department will appreciate. There’s only one thing left for your team when talking about how easy it is to pay vendors on time, every time: adding a smiley face emoji to their chats about acing the AP workflow.
Curious to hear more about how automation technology makes a critical difference in the AP process? Check out our on-demand webinar!