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What Are the Benefits and Best Practices of Using Payment Automation

May 9, 2023

Modern computer technologies, banking systems and the internet have made payments and receipts of funds almost instantaneous. However, bulk of the internal processing of invoices is still manual, time consuming and often paper driven.

The shift to hybrid, remote-hybrid and remote work has compounded the problem for finance teams, adding unwelcome and potentially risky workflow snags and bottlenecks that are altogether slowing down the money movement. Manual, paper-based accounts payables and receivables environments, while they have been effective for many years, are starting to struggle to keep up today.

Slow and tedious distribution and failing to fulfill customer invoicing requirements are taking time away from the accounts receivable team, directly affecting the corporation's cash flow.

Why is this a serious problem?

Manual processes are time-consuming

Manual and paper-based processes are time-consuming and susceptible to costly human error. Firms that rely on manual processes were found to be taking 67% more time to follow up on their overdue payments and had 30% longer average DSO than the firms that relied on medium or high levels of automated processes for collecting receivables. As companies mature, the AP and AR offices can quickly become overwhelmed, creating a maelstrom of needless expense, restricted cash flow, and damage to vendor and customer relationships.

Frauds are on the rise

Paper invoices often go through many hands, both in your company and outside of it, before reaching the AP department. That increases the risk of losing an invoice or that of it being sent to the wrong customer. It also gives scammers a chance to intercept legitimate invoices and replace them with fraudulent ones. According to JP Morgan’s AFP 2022 survey, 71% of companies were targets of payments fraud in 2021.

Solution

RPA-based automation tool

By leveraging cloud-based technology and RPA in the AP and AR process, corporations can bring together vendor and customer communications, documentation, corporate credit cards, and ACH or check payments all in one place, allowing full control and visibility over the corporate cash flow.

By integrating automation into payment processes, corporations can take a hands-off approach to managing their accounts payables and paying their suppliers, employees and international clients. This solution will provide a more efficient, expeditious and accurate way to handle back-end financial processes. By eliminating manual processes and stacks of paper, AP automation can improve your relationships with suppliers and partners while saving time and money, reducing days sales outstanding (DSO), thus improving cash flow.

AR automation can help corporations streamline their collections process, comply with local invoicing legislation, and distribute all their customer invoices electronically. With automated reminders and auto-handling overdue payments , teams can reduce the time they spend on each invoice marginally.