Let’s face it, handling B2B payments can be tedious. Manually tracking down invoices, gathering approvals, and processing payments一all while attempting to avoid late fees一is enough to stress out even an experienced AP leader.
But payment processing doesn’t have to be so challenging. With the right software, automating B2B payments is easy. Automation cuts down on manual labor, prevents human error, and protects against fraud. Ultimately, automating B2B payments can save companies money, while positively impacting the AP team’s morale and productivity.
In this piece, we’ll delve into B2B payment automation, and offer eight concrete benefits to implementing it in your AP organization.
What Is B2B Payment Automation?
B2B payment automation is a technical process that enables organizations to send payments to other companies electronically in exchange for providing goods or services. Unlike manual processing, payment automation software organizes invoices as they come in, routes payments for approval, and completes payment transactions on time, all without human interference. As such, payment automation platforms reduce the chances of paying duplicate invoices, sending payments without authorization, missing payment deadlines, and more.
1. COST SAVINGS
Simply put, electronic payments are cheaper than paper checks. According to a 2019 report by Levvel Research, companies that employed highly automated accounts payable processes spent, on average, only $2.36 per invoice. Companies that relied on minimal automation, on the other hand, spent $15 per invoice一over six times more than their counterparts.
One of the reasons why manual payments are so expensive is that mailing checks require printing supplies, stamps, paper, and, of course, employee labor. With the increased visibility of electronic payments, it is far less likely for payments to fall through the cracks, which ensures companies don’t incur late fees.
2. FASTER PAYMENT PROCESSING
When B2B payments are executed manually, invoices can sit on desks or wait in email inboxes for approval for days, if not weeks. Payment automation cuts through those delays by standardizing the approval process. With automation tools, AP departments can dictate who approves which invoices by when and sends reminders or error messages when those rules aren’t followed.
The best B2B payment automation platforms come with customizable dashboards that give a high-level, real-time overview of invoice processing, offering AP leaders instant insight into any outstanding invoices.
3. INCREASED PRODUCTIVITY
B2B payment automation eliminates manual steps. Not only does this help AP team members operate more efficiently, it also gives them the time and energy to focus on more strategic activities that can scale the business. In addition, modern B2B payment automation software is built on the cloud, giving AP teams the flexibility to work together or individually in a secure environment, regardless of their location or device.
4. FRAUD PREVENTION
Manually tracking check payments is tricky and tedious. When you’re processing checks by hand, it’s easy to miss red flags. This is particularly troublesome when you consider that checks are the payment method most frequently targeted by those committing or attempting to commit fraud.
Falling victim to fraud can be a financial nightmare for your company, but B2B payment automation mitigates the chances of fraud by:
- Flagging invalid invoices
- Enforcing payment reconciliation systems
- Controlling which users are authorized to do specific functions
- Providing visibility into total transactions
- Catching missing or incorrect data
Without shoring up vulnerabilities against fraud, your AP team has peace of mind and a potential boost in the odds of pulling ahead of the competition.
5. STRONGER VENDOR RELATIONSHIPS
Having an all-star reputation for paying bills on time sets you apart from other companies and deepens your relationships with suppliers. Developing strong vendor relationships is crucial to your business functioning properly. B2B payment automation fortifies already solid vendor relationships in several ways, including:
- Faster service – Automating payments reduces the amount of time that suppliers and AP team members respond to inquiries around invoice and payment status.
- Real-time visibility – B2B payment platforms come with an ACH portal to provide suppliers with real-time visibility into their transaction statuses.
- Shortened payment cycles – With B2B payment automation, suppliers get paid faster, decreasing key KPIs like Days Sales Outstanding (DSO).
- Correct payments – Mistakes happen, but far less often with automated payments.
- On-time payments – B2B payment solutions send payments on or before their deadlines automatically.
- Avoiding penalties – Nothing damages a buyer-seller relationship like incurring late fees, but with B2B payment automation, you can maintain a positive working relationship.
6. ERROR REDUCTION
As you already know, manual data entry is far from a perfect process, and even the smallest errors can take valuable time away from pressing projects, damage customer and supplier relationships, and result in duplicate payments, overpayments, or underpayments. B2B payment automation highlights minor issues before they turn into major problems. With the proper software, mistakes will be few and far between.
7. ENHANCED INSIGHTS
B2B payment automation software inherently captures financial data, which is critical for performing advanced analytics. Analyzing AP operations can reveal areas for process improvement and inspire ideas for reducing the payment cycle.
For example, B2B payment platforms clearly show which stages of the cycle take the longest, locate approval bottlenecks, and who to contact when there are delays. Moreover, financial data can be imported and exported with real-time access, which gives AP teams the information they need to complete quarterly reports on time. Enhanced insights and increased visibility can open the door to integrating other strategic tools that optimize cash flow, like ERPs or human capital management platforms.
8. EARLY-PAYMENT DISCOUNTS
According to PayStream Advisors’ Payables Insight Report, 31% of respondents said manual routing of invoices for payment and approval stood in the way of an early-payment discount. Payment automation shortens the processing cycle, empowering organizations to take advantage of available discounts and save money. Over time, early payment discounts contribute to better cash flow, giving the company more working capital to achieve its goals.
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Streamline Your B2B Payments with MHC NorthStar
B2B payment automation has countless benefits一from capitalizing on cost-savings, to curtailing fraud, to cashing in on early-payment discounts. And that doesn’t include the satisfaction AP teams feel after switching to a B2B payment automation platform.
AP team members will no longer waste time sifting through invoices or waiting for days to get proper approvals. They’ll also be less worried about making mistakes and have a faster, more accurate quarter-end close. But to reap all the benefits of a B2B payment automation partner, you have to pick the right one.
MHC NorthStar, a cloud-based intelligent AP automation solution, offers the flexibility of configurable workflows and ease of self-service access. It frees you up from the tedious, everyday tasks and allows you and your team to focus on more value-added work that moves the needle for your business.
Leverage MHC’s proven technology to eliminate the need for manual intervention, streamlining your entire process, while improving efficiencies throughout your team and, ultimately, your entire organization.
Schedule a personalized demo today and see how AP automation software can enhance your work.