Automating B2B Payments: Why Do It And How To Do It?
For business transactions, we already had enough of the traditional payment methods such as checks or wire transfers. Thankfully for the modern online and mobile payment solutions, we have already left such times behind. Fortunately, for processing business-to-business B2B payments in a straightforward and instantly reconcilable manner we have payment automation options.
Understanding the promises offered by B2B payment is extremely important for automating transactions in a never-before manner. Here we are going to explain the key reasons for embracing B2B payment automation tools.
Saving Business Resources And Time Through Streamlined Data Entry
In the traditional payment processing system, as soon as an accounts clerk gets an invoice, they just enter the data in the respective accounting system. But the manual data entry only gets prone to a lot of data entry errors or other mistakes such as erroneous aiment against duplicate invoices or misplaced invoices. Such errors mostly happen because the accounting clerk finds all these tasks irrevocably boring and tiresome.
Just think how by avoiding these repetitive tasks a payment processing system can save huge resources and time for the company. The most important thing is one error in data entry often leads to a chain reaction of errors as the invoice moves through several systems. There can be hardly any enterprise that didn’t experience the downside of such errors. From mistaken duplicate invoice processing to paying an incorrect amount, there can be too many errors.
This is exactly where payment automation tools can play an effective role. The automation software for payment can make use of character recognition technology to enter B2B payment data fetched directly from invoices right into the accounting software without needing the slightest manual intervention. This completely prevents all the data entry errors and instances of processing duplicate or wrong invoices.
Ensuring Frictionless Payment Automation
The frictionless processing of payment is a key value proposition offered by automated payment systems. Since the pandemic gripped the world throwing regular life and businesses into drastic turmoil for months, the check transfer all over the world went down and facilitated automated payment with even more gusto. In the US, the National Automated Clearing House Association (NACHA) declared that ACH payments dropped around ¼ times between 2019 and 2020, while check payments decreased almost in half.
There is no surprise that most people consider making a payment with checks or manual wire transfer involves a lot of pain, especially during the pandemic when contamination is a real threat and so-called social distancing is a real necessity. Electronic payments gained more popularity than ever before and the pandemic only pushed this further.
But there are still businesses that have preferences for traditional payment such as paper checks. Can there be any solution to automatically print physical checks and mail them to the target recipients without any exposure to human touch? Fortunately, there are already such services that can still accommodate check payment while ensuring the least exposure to contamination through touch.
Enhanced Control On Payment Processing
In such tough times when businesses and public life are crushed under the pandemic, having increased stress levels at homes and workplaces is quite usual. Some people just worked longer than average because of the increased demand for certain services while there are too many others who either due to lack of engagement or due to decreased income have been subjected to increased stress levels.
According to researchers, decreased control over business tasks and outcomes often results in higher stress levels among professionals. The uncertainty concerning the processing of payment also results in increased stress levels. This is where payment automation can really play an important role in streamlining transactions and ensuring predictable business outcomes. Payment automation can easily give you better controls on when and how payments are processed.
Business process automation coupled up with streamlined transactions and payments can do away with a lot of bottlenecks that are common to many industries and brands. B2B payment automation by offering optimum control and transparency to the payment processing helps businesses to transfer the early payment advantages to the customers through adequate discounts and offers.
Finally, for a business, it has become a lot easier to evaluate the invoices and bills before processing just because payment automation helps them choose their preferred payment methods and modes based on the client and available time to meet the committed payment deadline. Simply, the faster and streamlined payment processing gives them a lot of flexibility that traditional processes could never provide.
B2B ePayment Solutions: How They Really Work?
As of now, you have a comprehensive idea about all the impetuses that make B2B payment automation so popular. Now it is equally important to understand how these systems really work.
Systematic Payment Automation
In the case of many businesses the delay in processing invoices and approving them used to be considered normal. The delay can partly be explained by the time-consuming manual processes. The preparation of the physical invoice copy and then getting it approved by several officials and in between the movement of the invoice file from one department to another, all these add to the processing time. The absence of signatories alone can let an invoice sleep on the table for days. The process can literally be elongated beyond any general assessment.
This is where the automated payment systems provide a smarter and brisk solution. According to globally renowned investment firm Goldman Sachs, payment automation can make a whopping 70% to 80% time savings for all staff in the accounts payable section. On the other hand, some payment solutions coming with Software as a Service (SaaS) models can ensure much faster approvals.
Automated payment processing is fast-paced as they rely on electronic means. They can also be integrated easily with financial systems and easily pull open purchase orders to make it easier to attach invoice documents for future references. Thanks to automation, there can be many streamlined approvals based on specific organizational processes. Naturally, processing that is likely to consume weeks or even months can be completed in just a few days. This positively impacts time and money-saving for the companies.
Key Functions Of Ideal Payment Automation Systems
In this respect, it would be wise to admit that all payment automation systems are not equal and some are super-efficient and do a lot more than just replacing manual paper invoicing with electronic and streamlined ones. According to leading financial institutions, all payment processing solutions are not comprehensive enough and only the ones using advanced technologies and tools also have more features and capabilities than the rest. Solutions that are highly flexible in accommodating different types of payment at variable speed stay ahead of the competitive curve.
- AI-powered character recognition
- AI capability to recognize invoice or claim patterns
- Converting both invoice data and payment data to the accounting function codes.
- Scheduling timely payment delivery with streamlined approvals of invoices and notifications.
- Variety of payment methods and payment flexibility to pay outside the system.
Finally, before embracing any payment automation solution making tall claims, consider how they can be smoothly implemented and how they can allow processing payment just the way you need. You need to make a shortlist of such solutions and explore their strengths and weaknesses one by one.
Mrudul Modh is the chief NetSuite Consultant of VNMT, A Netsuite Alliance Partner with years in NetSuite implementation services across diverse industry niches.
B2B payment stock image by Marharyta Gangalo/Shutterstock