Enterprise partnerships rely on the relationships between buyers and their vendors, and one critical aspect here is payment for vendor services. While this process may seem standard – vendors provide goods or service offerings, and their business customers pay them for these resources – there are some issues that can emerge here.
Late payments to vendors, for instance, can cause companies to miss out on important vendor discounts. Lost or misplaced vendor invoices, on the other hand, can wreak havoc on enterprise accounts payable (AP) processes, costing significant time, effort and money to fix.
Thankfully, the age-old, manual approach to AP vendor payments isn't the only choice for your business. Now, enterprises like yours can put in place an automated payment system to prevent any delays or hangups in your AP processes, and enhance relationships with your vendors.
How does vendor payment automation work?
Vendor payment automation eliminates the manual work involved in processing outbound payments from your internal ERP system, through your supporting bank.
In action, automated vendor payments work like this:
Invoice scanning: The vendor sends an invoice for goods or services rendered. The business customer then uses the automated payment system to scan and digitize the invoice. This helps standardize all invoices from disparate vendors, creating a single, digital format.
Invoice approval: Once scanned, the automated vendor payment system uses a predetermined approval process, set up by admins when the software was deployed. This process includes a direct notification for the specific employee in charge of invoice approval, letting them know that an invoice is ready for their review.
Processing: Once approved, the invoice can then be posted in the Dynamics platform, at which point, the automated vendor payment system automatically processes the outbound transmission to support the payment.
Direct bank communication: Because the automated payment system enables integration between Dynamics and the bank, payments are directly and securely processed, and the vendor receives its automatic payment.
Why consider a vendor automated payment system?
There are a few benefits to having an automated payment technology in place, and these advantages often drive enterprises to consider and eventually deploy the solution:
1. Maintain control of invoice approval processes
Automation in the accounts payable department doesn't mean that your business needs to relinquish control over its unique review and invoice approval process. Vendor payment automation enables IT administrators to configure a specific approval process within the automated payment system. When the business receives a vendor invoice, the correct employee is notified and can provide invoice approval in a seamless and timely manner.
The advantages here are three-fold:
Your company is able to maintain its regular invoice approval process, ensuring that vendor invoice approval isn't disrupted.
The existing approval process is more efficient, thanks to automated notifications from the automated payment system.
Automated notifications and a smoother approval process support the quickest and most streamlined payments for vendors.
2. Enable direct and secure communication with the bank
Best-in-class automated payment systems allow for a completely secure payment portal between your Dynamics system and your bank account. This means that all communications and electronic payments – including invoice and other payment information originating in your Dynamics platform and communicated to the bank – remain in a fully protected portal.
This helps support payment security, and additional, configurable security parameters within the automated payment system enable your IT team to adjust these settings according to your needs. Transmissions between your ERP and the bank are completely secure, and this protection can be aligned with your internal data standards, as well as industry compliance rules.
3. Support for domestic and international payments
Many businesses today now work with global partners. While these relationships can be incredibly beneficial, they can also create complications when it comes to supporting quick, seamless and secure vendor payments across borders.
One issue here is the fact that these payments must be in the correct global payment type. While American businesses may be familiar with the process for ACH payments, their global vendor partners might require vendor payments come in other global standards, like SEPA, CCD+, CTX or another international payment type.
A leading automated payment system can enable users to leverage these other, global payment types and ensure their vendors receive payment in the standard they need for their international banking activity.
4. Create a unified payment system
Within a disparate and disjointed payment system, invoices can fall through the cracks and approval processes can become long and convoluted. Unifying all these different elements, on the other hand, helps reduce instances of misplaced invoices and also reduces the chances of any human error.
Overall, a unified payment infrastructure means that your automated payment system can integrate with your Dynamics ERP and Finance and Operations platform. Every invoice is seamlessly tracked, from scanning and uploading, through approval and payment. And each of these activities is recorded, creating a holistic and comprehensive historical payment record.
Unifying your payment system through robust integration also means that you have the ability to consolidate outbound files from the different payment journals your company uses.
5. Prevent delays in vendor payments
"16% of all companies admitted that their vendor payments are consistently late."
One of the biggest advantages of automated vendor payments is ensuring that vendors receive their payments on-time and without delay. Unfortunately, this is something that many businesses struggle with, due to long approval processes fraught with manual work. In fact, one study found that 16% of all companies surveyed admitted that their vendor payments are consistently late.
Continual late payments can severely impact the vendor-customer relationship, and it's in your business's best interest to ensure that you pay your vendors on time. Automating these payments improves efficiency and eliminates time-wasting manual work.
6. Improve payment security
In addition to smoothing partnerships with vendors thanks to on-time payments, an automated payment system can also transmit payments in the most secure manner possible. This software creates a protected payment portal between your internal accounting platforms and your bank. This not only helps safeguard electronic payments, but can also reduce the chance of fraudulent activity with printed checks.
7. Eliminate inefficient, manual work
With a solution that enables automation in accounts payable, your internal accounting team will be freed up from the previously required manual work of data entry and invoice scanning. What's more, since the system automatically supports invoice approval, accounting employees need not monitor this activity and can instead devote their time to more value-added work.
An automated payment system that supports vendor payments and accounts payable can help improve your vendor partnerships, improve efficiency and strengthen security. To find out more, connect with us at SKG for a demo of the Vendor Payment Automation features of our robust Treasury Automation Suite today.