Integrating Payment Automation with Accounts Payable (AP) Processes
Published on:4 November 2024
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When done manually, processing invoices, securing approvals, and executing payments on time are just a few of the daily tasks that can be prone to delays, errors, and inefficiencies.
The good news?
This is where integrating payment automation with your AP workflows comes in.
Payment automation doesn’t just speed up the payment process—it changes the way your entire AP department operates, making it more efficient, accurate, and scalable.
In this article, we’ll explore how payment automation integrates with AP workflows, tackle the challenges of integration, and highlight best practices to make the most of your automated system.
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How Payment Automation Works in AP Workflows
At its core, payment automation simplifies and automates your AP processes by integrating specialized software with your existing accounting or ERP system.
This automation helps reduce the manual work associated with processing invoices, obtaining approvals, reconciling payments, and executing transactions.
Here’s how it works step-by-step:
1. Invoice Capture and Data Entry Automation
Payment automation starts with the capture of invoices.
Instead of manually entering data from physical or emailed invoices, the automation software digitizes the invoices using Optical Character Recognition (OCR) technology, extracting key details like invoice numbers, vendor information, amounts, and due dates.
This process eliminates the risk of human error and speeds up the workflow significantly.
For example, a healthcare company processing hundreds of invoices from suppliers, automated invoice capture reduces data entry errors and minimizes the risk of lost or misplaced invoices.
2. Approval Workflow Automation
After invoice capture, payment automation routes invoices through predefined approval workflows. You can set approval rules based on factors like department, invoice amounts, or vendor type.
Approvers can access invoices and authorize payments remotely, ensuring bottlenecks are avoided.
For example, a hospitality company with multiple locations might set a rule that any invoice over $20,000 requires multi-level approval. The system automatically sends invoices to the correct approvers, whether they’re at headquarters or on-site at a hotel, ensuring timely approvals.
With Rillion, approval workflows are even more efficient, allowing you to customize approval chains based on location, department, or spending thresholds. This flexibility means that you get complete visibility into who needs to approve what, preventing bottlenecks and keeping payments on track.
3. Payment Execution
Once invoices are approved, the system automatically schedules and processes payments. Whether you’re using ACH, wire transfers, virtual cards, or other payment methods, automation ensures that payments are made on time and helps you prioritize based on due dates or available discounts.
For example, in manufacturing, automated payments can be scheduled to ensure vendors are paid promptly, reducing production delays caused by late material deliveries.
4. Payment Reconciliation
Automated payment reconciliation matches payments against corresponding invoices, purchase orders, and receipts. This ensures that every transaction is accounted for, and any discrepancies are flagged for review.
Real-time updates to your ERP ensure that your financial records stay accurate without manual reconciliation.
For example, a mid-sized manufacturing company using payment automation can reconcile hundreds of transactions each day without errors, improving transparency and minimizing the risk of financial discrepancies.
5. Vendor Portals
Many payment automation platforms offer portals where vendors can track payment statuses, and resolve any discrepancies on their own. This cuts down on back-and-forth communications between your AP team and suppliers, freeing up time for higher-value tasks.
For example, a large hotel chain can use a vendor portal to allow suppliers to check the status of their payments, eliminating the need for constant emails or phone calls to the AP department.
Benefits of Integrating Payment Automation with AP Processes
Integrating payment automation with your AP processes delivers significant advantages, enabling your business to operate more efficiently and improve financial outcomes.
Here’s how integrating payment automation with AP systems can benefit your business:
End-to-End Automation
One of the key advantages of integrating payment automation with your AP system is the elimination of manual intervention in critical steps, like invoice processing and payment execution.
With payment automation, invoices are automatically captured, verified, and matched with purchase orders (3-way matching). Once the approval workflow is completed, payments are executed automatically.
This reduces manual errors, speeds up the entire payment cycle, and ensures that all transactions are compliant with your company’s policies.
Real-Time Tracking and Visibility
Payment automation provides full visibility into every stage of the AP process—from invoice capture to final payment execution.
With real-time tracking, finance teams can monitor payment statuses, check approval timelines, and flag discrepancies immediately.
This transparency not only ensures accuracy but also allows you to address potential issues, such as payment delays or invoice discrepancies, early in the process before they cause larger problems.
With Rillion’s real-time dashboards (screenshot below), you can do more than just track invoice approvals or payment statuses. You gain access to key metrics that help you analyze your AP workflow performance, such as average approval times, current bottlenecks, and processing efficiency.
By turning raw data into actionable insights, Rillion helps your finance team make data-driven decisions that can improve overall cash flow and financial planning.
Improved Cash Flow Management
Integrating payment automation with AP processes allows businesses to better manage their cash flow by scheduling payments more strategically.
Automation helps ensure payments are made on time, avoiding late fees and penalties.
In addition, the system can help you identify opportunities for early payment discounts offered by vendors, giving you better control over outgoing cash flow and improving your overall financial health.
Enhanced Compliance and Security
Automated payment processes ensure that your financial operations remain secure and compliant with industry regulations.
Payment automation platforms often include features like role-based access controls, multi-factor authentication, and encryption, safeguarding your data from unauthorized access.
Plus, audit trails are automatically maintained, simplifying compliance with regulations like HIPAA, GDPR, or SOX.
Reduced Operational Costs
By automating repetitive tasks, payment automation reduces the need for manual input, lowering your overall operational costs.
In fact, businesses can reduce operational costs by 20% through payment process automation. The reduction in manual work also means fewer errors, leading to fewer resources needed for fixing issues or re-processing payments.
This allows businesses to allocate their financial and human resources more efficiently, leading to increased profitability in the long run.
By integrating payment automation with your AP processes, you’ll enhance accuracy, reduce costs, and improve overall operational efficiency.
The benefits go beyond simple automation—they ensure that your business is better positioned to manage its financial health, scale effectively, and maintain compliance in an increasingly complex regulatory environment.
3 Biggest Challenges of Integrating Payment Automation with AP Processes
Despite the clear benefits of payment automation, integrating it into your AP workflows can come with its own set of challenges.
Here are some of the common obstacles and how to address them:
1. ERP Integration
One of the biggest challenges is ensuring that your payment automation solution integrates seamlessly with your existing ERP system.
Compatibility issues can arise, and these can cause delays in implementation or force you to switch between different systems manually. It’s important to choose a payment automation platform that integrates easily with your ERP to prevent these headaches.
How to solve it:
Look for a platform like Rillion that offers seamless integration with major ERP systems such as SAP, Microsoft Dynamics, and Sage Intacct. By ensuring full integration, you’ll avoid compatibility issues and can automate your processes from day one.
2. Change Management Resistance
Any change in workflow—especially automation—can face resistance from your AP team. Employees used to manual processes may be hesitant to adopt new software, particularly if they fear it might replace their role or increase complexity.
How to solve it:
Invest in proper training and demonstrate how automation makes their work easier. Instead of replacing their roles, automation allows your team to focus on more strategic tasks, such as managing vendor relationships and optimizing cash flow.
3. Data Migration Issues
During integration, transferring data from your existing systems to the new automated platform can be complicated. If not managed properly, this can lead to data loss or corruption, causing delays and inaccuracies.
How to solve it:
Work closely with your software provider to ensure smooth data migration. Most AP Automation platforms, like Rillion, provide dedicated support teams to help manage data transfers safely and efficiently.
Conclusion
As your business grows, manual processes can’t keep up.
By integrating payment automation with Rillion, your AP department gains the ability to scale without added strain.
Whether you’re processing a larger volume of invoices or expanding your operations, Rillion’s payment automation platform can adapt seamlessly to accommodate new demands—meaning your finance team spends less time firefighting and more time contributing to strategic growth initiatives.
Curious to see how payment automation could improve your AP department?
Schedule a consultation today and one of our dedicated payment automation experts will guide you through the platform and discuss solutions tailored to your needs.
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