Accounts payable (AP) departments are responsible for paying an organization’s bills, but due to work from home measures, employees are now having to process payments in new, unexpected ways.

In addition, very few organizations had factored payment security processes into their continuity plans. Paying vendors is a business-critical function that relies on AP departments to keep business moving forward. AP automation can seem like a nice-to-have when all is going smoothly, but the present moment has shed light on how operating without it impacts business continuity.

Top priorities and challenges

There is a tremendous amount of soft costs that go into running vendor payments. Companies should always be looking for ways to make that process less costly and more efficient. Payable automation does just that. It provides a solution for businesses to work smarter by maximizing efficiencies and visibility. It also streamlines and accelerates all paper types and leverages a single solution that integrates with your enterprise resource planning. The result? Ease of payment, cost-savings due to eliminating paper checks, rebates and the ability to push payables to cards.

While there are many benefits, AP automation is not without its challenges. A lack of insight into reporting and data makes it harder to make sound decisions and tools and workflows that aren’t automated and don’t support the demands placed on AP can cause barriers to growth.

Additionally, many organizations are still making many manual B2B payments through a variety of disparate systems. They may be entering wires or ACH payments into an online banking portal or cutting checks in-house, or maybe even using a physical checkbook. These processes not only slow down the overall time it takes to process a payment, they also make reconciliation a challenge. A single solution to automate all types of payments helps solve this challenge.

Inefficient and efficient AP automations

An inefficient solution may require you to develop multiple integration points to support all the payment methods you’re looking to leverage. It may not provide effective remittance information to your vendors and it may not give you the information you need to effectively reconcile payments within your internal systems.

An efficient, best-in-class solution is going to require a single integration point to help ease the strain on your IT team. It’s going to provide adequate data to your vendor, as well as you for reconciliation. Additionally, a best-in-class solution can provide a wide variety of payment methods to best meet your goals, whether it’s maximizing rebates or driving additional automation. It also ensures the enterprise resource planning platform is respected as the system of record.

Managing supplier relationships during the pandemic

Payer and supplier mindsets have shifted recently when it comes to payment methods and it’s crucial that you understand and react to these changes. While this shift was happening prior to the onset of the pandemic, it has accelerated as clients have had to adopt to new ways of doing business while many companies’ workforces are operating remotely.

Suppliers are becoming more open to new payment types that they may not have otherwise been willing to accept, but they are still looking to plug into their existing reconciliation processes when accepting these new payment methods.

In many ways, COVID-19 has been a wake-up call for many companies. One aspect of this is that companies that are either experiencing financial distress, or serve customers that are experiencing financial distress, are much more likely to be flexible about their preferred options to receive payments.

Building resilience

Those who work in finance, especially in AP, are still adapting to remote work and searching for options to move physical, paper-based processes online. The good news is there are easy alternatives to automate payments that can be implemented quickly – no matter where you are located.

By converting to an entirely automated AP system, finance departments can maximize efficiency, visibility and security. These automated payment systems enable easy access to payment data, ensuring business continuity for your virtual employees and vendors. Another added benefit is that these systems are also managed by your bank and their project teams, leaving little room for error or confusion on your part.

Tips for becoming best-in-class

  1. Think and manage holistically. Work with your financial institution to develop a complete plan based on the “big picture” and have an integrated strategy with your treasury and finance department, procurement, lines of business and suppliers.
  2. Prioritize automation. Organizations that have prioritized automation have also prioritized the implementation process, something that is often overlooked. They’ve worked with the right teams internally to ensure they are integrating with an AP automation solution in a way that’s in line with their own best practices and helps them achieve their end goals, such as better reconciliation and visibility.
  3. Reduce fraud risk. Fraud prevention has evolved significantly over the past several years. What was once considered best-in-class is now industry standard. A best-in-class solution provides additional layers of security to keep you and your vendors safe through secure communication tools and risk scoring strategies.
  4. Use data to build intelligent operations. Cash flow is a company’s lifeblood and an effective payables system can help support cash flow. Making decisions based on cash flow analysis, forecasting, budgeting, invoice exception handling and fraud compliance management will ensure smart business-making decisions.

Now that you know what a best-in-class AP automation looks like, it’s time to take the next step. Work with a financial institution to asses current payment processes, develop a holistic treasury strategy and evaluate your payment mix. Last but not least, make sure you are developing a fraud mitigation strategy that includes technology and policy controls, employee training and an incident response plan.

An automated payment system, such as Integrated Payables, enables easy access to payment data, ensuring business continuity for your virtual employees and vendors.  L

Learn more about UMB’s integrated payables solutions and how they can help streamline payments and drive revenue.

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