Automated Payments Explained
An organization is only as strong as an efficient accounts payable team. They do the heavy lifting when it comes to receiving and processing invoices, paying suppliers, and managing expenses.
However, many of the processes involved in accounts payable are traditionally tedious, time-consuming, and prone to errors because they’re done manually, tying up your resources and potentially developing bottlenecks throughout the process. A payment that should only take a couple of days to process can be dragged out for weeks, but it doesn’t have to be this way.
There are modern solutions that can reduce these problems by increasing efficiency and eliminating the often monotonous, manual processes involved — enter payment automation.
What are Automated Payments?
In a general sense of the concept, automated payments are automatic transfers made from a bank account to pay bills. When you automate your payments, you’re agreeing to have your bank transfer a certain amount of money on a certain date to pay an invoice.
When talking about automating payment execution, it refers to technology that increases efficiency by eliminating the monotonous, manual processes involved with making payments. Often, automated payment offerings are part of a holistic accounts payable automation solution that integrates with your ERP to streamline the whole AP process, from capturing invoices, to coding to payment processing. These solutions can reduce the risk of fraud, improve cash flow, streamline reconciliation, and help to scale your business more easily because of the visibility and centralized control they provide.
How Does Automatic Bill Pay Work?
When it comes to automatic bill pay with MineralTree, we make it easy by providing an end-to-end AP automation solution in four easy steps — Capture, Approve, Authorize, and Automatic Bill Pay.
Capture
First, you simply scan or have suppliers send invoices to a unique email inbox. There’s no need for manual entry, which is tedious and prone to errors. We extract the header and line-level invoice details using advanced OCR technology with human verification for 99.5% accuracy. We also provide API-level ERP integration in order to sync invoice and payment data to your accounting package — all with unlimited document storage.
Approve
We provide a way for you to instantly route invoices for online review and approval from anywhere, using your current workflows and best practices. You can use in-application tracking to monitor the workflow and approve with one simple click. The elimination of paper processes gives you a centralized control for review and scheduling. We also provide automated reminders to ensure approvals are received in a timely manner.
Authorize
Whether you’re in the office or on the go, you can quickly and securely authorize payments. With segregation of duties and two-factor authentication, we reduce any risks, and even support single or multiple authorizers with enhanced security.
Pay
The entire AP automation process ends with automatic payment execution. No more printing, signing, and mailing checks, or worrying about payments fraud when you make all of your payments from one place. With MineralTree, customers can execute payments using various payment methods including: checks, ACH, virtual card, and FX. Whether you’re paying via ACH or check or modernizing with virtual cards for improved cash flow, security, and maximum rebates, MineralTree ensures you can use the same simple, electronic workflow to get bills paid. Plus, electronic remittance details are sent to your suppliers once the process is finalized.
The Pros and Cons of Payment Automation
Of course, there are always two sides to every situation, and that includes payment automation.
The Pros of Payment Automation
Save Time and Money
A main benefit of payment automation can be found in cost reduction. Businesses spend $510 billion each year on manual AP processes — a significant portion of which is generated by paper checks, which can cost between $5 and $12 to process. And a study by The Street found that it takes an average of six days to process a paper invoice at a cost of $16 to $22 per invoice. Not only does payment automation speed up the process and increase efficiency, but it does so in a more cost-effective manner.
Business Continuity
Payment automation solutions help to support your organization’s business continuity plan by enabling your team to execute their payments process anytime, and anywhere. The ability to facilitate this process remotely has proven to be especially helpful in recent times as many organizations have gone completely remote.
Control Outgoing Cash Flow
With payment automation, organizations can determine precisely when and how they pay their vendors to ensure maximum control over outgoing cash flow. This allows businesses to capitalize on early-pay discounts and virtual card rebates, while also avoiding late fees and duplicate payments.
Payment Visibility and Automatic Reconciliation
With complete visibility into the payments process, accounting managers are able to maintain a 360-degree view into the status of all payments at any given time. Automatic reconciliation capabilities allow for a fully automated daily bank reconciliation of your cash accounts, eliminating the need for manual intervention.
Reduce Fraud Risk
According to the AFP, a record 78 percent of businesses were somehow affected by payments fraud last year, and hired and trusted employees have been involved in more than three out of every 10 instances of payments fraud. With automated payments, all invoices travel through one online process. Because of this, accounting managers have complete visibility into every payment, at every step of the process, allowing them to more effectively mitigate fraud risks as they arise. Further, integrated payables solutions can help to reduce the risk of fraud by maximizing e-payment methods and leveraging security features like encryption, two-factor authentication, audit trails, and fine-grained access controls.
The Cons of Payment Automation
Transitioning to a New System
There are always some growing pains as you make the transition to a new system. While cloud-based automation is generally quick and efficient, you also have to take into account the fact that employees will need to be brought up to speed. However, the time saved in the long run will make the initial time investment worth it.
MineralTree offers rapid implementation and time to value through its proven methodology. We’ll guide you through every step of the process, from implementation and configuration, to user training and test file submission. We’ll even be with you as you schedule your first live payment run.
Perception of Loss of Control
One of the common myths about automated payments is the fear that you will lose control in the process. However, in reality, you get to decide when suppliers get paid, and actually have more control and increased visibility into the payment process. With MineralTree, you can search for and retrieve invoice and payment information at any time, from anywhere.
Issues with Integration
You may encounter problems integrating with your ERP, as your provider of choice may not have integrated their payments automation solution with a particular accounting package before. Be sure to ask the AP software provider the necessary questions about supported ERPs, as well as possible roadblocks and solutions. MineralTree supports hundreds of ERPs and accounting systems to help you effectively integrate with your system of choice.
Why Use a Payment Automation Solution?
The manual payment process is not only tedious, costly, and inefficient, but it also brings with it certain layers of risk that can be mitigated with an automated solution. Businesses that invest in MineralTree Invoice-to-Pay see a 60 percent increase in efficiency for both AP and payments processing. In addition, by building simple, repeatable, and scalable payment controls into their supplier payment process, they’re greatly reducing their risk of fraudulent activity.
By investing in a payment automation solution, you’re also freeing up your staff for more strategic thought and initiatives, centralizing all of the accounts payable operations, making room for more timely payments and effortless follow-up with customers, and simplifying transitions between each step of accounts payable.