Why your accounts payable team should embrace modern payment solutions

Like other business processes, accounts payable teams (AP) are changing to become more streamlined and integrated. Traditional AP practices involve a lot of manual and disjointed steps, are prone to human error, increase fraud risk, and lack clear visibility over cash flow. Adopting more efficient payment methods and processes can address these issues while making your accounts payable teams’ workflows more efficient, freeing up time for higher-value tasks. Keep reading to learn why AP teams should embrace modern payment solutions.

The risks of outdated accounts payable processes

Many parts of legacy AP processes require manual intervention, increasing the risk of errors and fraud. In fact, the average processing time for an invoice to be paid in Australia is 22.6 days. When a business receives an invoice, several steps need to be followed to process payment. If the invoice doesn’t arrive directly to the AP team, the contact person will need to forward it to the right people for processing. From here, the invoice gets manually entered into the company’s accounting system before payment is made. Payment is most likely via an electronic funds transfer. Before payment is made, the invoice may also have to go through numerous rounds of internal approvals. Once the invoice is paid, it then needs to be manually reconciled with various other systems across the business.

The key inefficiencies and risks caused by traditional invoice processing and payment processes are:

• Manual work and slow processing times: Manually sending the invoice to accounts payable, making payment and completing reconciliation are manual processes. When business systems aren’t integrated, the relevant stakeholders need to complete up to 10 hours of manual tasks each week.
• Error-prone and vulnerable to fraud: With human intervention comes an increased risk. These risks can be data entry errors and even fraud, as there is no single source of truth for data.
• Lack of visibility and control: When invoicing and payment data aren’t readily available across a company, it’s difficult to see the status of an invoice and proactively manage cash flow.
• High processing costs: The cost of manually processing an invoice is $27 to $30, compared to $10 for automated, integrated methods, such as eInvoicing.

Modern payment solutions make accounts payable workflows seamless

There are many advantages to implementing modern payment solutions. These solutions reduce the risk of data entry errors, provide better fraud protection, allow for faster and cheaper invoice processing. This delivers a better customer experience.

When modern payment solutions are implemented, AP teams can expect:

• Automated workflows and faster processing: With an automated solution in place, most invoices won’t require manual intervention, apart from tasks such as approvals, which can be preset based on the company’s risk mitigation parameters. This saves time and resources for AP teams, leaving more capacity available for strategic tasks and projects.
• Access to more payment options: Integrated payment solutions offer a range of payment options to both suppliers and customers. This can include credit and debit card payments, and access to early settlement discounts and third-party finance, which delivers win-win terms for both parties. For example, by taking advantage of credit card payments or third-party finance, companies can extend their payment terms while the supplier still gets paid on time.
• Improved security and fraud protection: Modern payment solutions also offer better fraud protection. Features such as tokenising card payment data and authentication measures that prevent unauthorised activity provide more robust security and reduce fraud risk.
• Greater visibility and control: With real-time tracking and reporting, AP teams can enhance their payment management. At a glance, teams can see what needs to be processed. Being able to see which invoices require intervention and what’s been paid to provides better visibility over cash flow.
• Reduced costs: The reduction in manual tasks and lower cost of automating invoice processing lowers a business’s expenses while delivering efficiencies beyond financial savings, such as the ability to do more strategic work and strengthen customer loyalty through improving the payment process.
• Ledger-to-Ledger integration: By securely passing data between two companies’ ledgers, all necessary data is shared with the other party, reducing the risk of errors and providing a single source of truth for invoicing and payment data.

Reduce your AP workload by 70% with Spenda

AP teams are transforming the way they work with automated systems and processes. Spenda’s Accounts Payable solution  enables users to efficiently view and manage supplier invoices. We have a single intuitive dashboard as well as streamlined payment processing. We also significantly reduce the steps required for managing AP processes.

AP teams can use Spenda to:

• View supplier invoices that need to be paid
• Easily assemble and securely authorise payment batches
• Seamlessly integrate into small business accounting systems for fast reconciliation
• Process payments immediately or in the future
• Make payment via a combination of card, bank transfer, or third-party finance
• Apply for an unsecured line of credit to pay business expenses
• Securely and quickly authorise payments using companion app, Spenda Wallet

Spenda is an integrated business platform that enables businesses across the supply chain to sell better and get paid faster. We serve as both a software solutions provider and a payment processor. We deliver the essential infrastructure to streamline business processes before, during and after the payment event. Our connected platform displaces multiple disparate systems in favour of one collaborative solution that improves transactional efficiency between businesses. 

This article is for general information purposes only. Consult a qualified financial advisor regarding any changes to or decisions about your business’s finances.