How payment automation streamlines AP workflows

Did you know?

Payment automation is the use of software and connected banking tools to process business payments without the need for manual oversight. It can reduce errors and free up time for higher-value work.

Manual payment processing is time-consuming, error-prone, and unsustainable as your business grows. The more time your finance team spends on manual processes, the more likely it is they’ll make mistakes and miss deadlines. By using an automated payment platform, businesses can streamline their accounts payable workflows while gaining better visibility into cash flow.

Let’s explore some key benefits and use cases of switching your business to an automated payments platform.

What you need to know

• Payment automation eliminates manual data entry and reduces errors by using software to capture, approve, and execute business payments.
• Automated payment systems enhance cash flow visibility, reduce processing costs, and foster stronger vendor relationships through consistent payments.
• Small businesses can start by automating high-volume payment types like recurring bills or vendor invoices, then expand automation as they grow comfortable.

Summarize in ChatGPT

What is payment automation?

Payment automation uses invoicing, accounts payable, and bookkeeping software that connects to your business bank account to send payments without manual entry. Instead of manually entering invoice data, printing checks, and reconciling multiple platforms, you can use payment automation to capture transaction details, route approvals, send payments on-time, and sync your transactions with your accounting platform.

Automating your accounts payable processes can make your business more efficient, and automation features are usually built into your accounting, accounts payable, or business checking platform.

How does payment automation work?

Payment automation receives and settles invoices without the need for manual oversight, using the following workflow:

1. Invoice capture: Your invoice arrives by email, a vendor portal, or scan. Your automated payments software uses optical character recognition (OCR) to scan the invoice text or syncs its details with your accounting platform to extract vendor, amount, and due date information.
2. Approval workflows: During set-up, you’ll have set thresholds for whether your software should automatically approve invoices or forward them for approval. For example, you may choose to automatically pay any invoices below $5,000, and forward invoices above $5,000 to a manager for approval. If you or your employees are unavailable or late to respond, your platform sends automated reminders or delegated approval requests
3. Scheduling payments: Your automated payment platform schedules outgoing payments based on the invoice’s net terms (due-on-receipt, net-30 days, etc.). You can also schedule early or recurring payments to capture discounts when available.
4. Payment execution: Your payment platform sends payments via ACH, check, wire transfer, or card, according to net payment terms and routing address.
5. Reconciliation: Your transaction syncs with your accounting and/or business checking accounts, reducing manual entries and discrepancies between accounts, which simplifies your tax reporting.

Common automated payment types

Here are some of the most common types of automated payment systems used by small businesses—choose one based on your payment volumes, most frequent transaction types, and what types your vendors can accept:

• Automated clearing house (ACH): First established in the 1970s by a collaboration between the Federal Reserve and the banking industry, ACH payments are a secure method for transferring funds between U.S.–based accounts. They typically process within 1–3 days.
• Direct deposit/direct debit: Direct deposits allow for easy payroll processing, while direct debits allow you to receive payments from vendors directly from their bank accounts.
• Online payment services: Integrate secure third-party payment processors like PayPal, Stripe, or Square into your website to receive online purchases. Businesses with merchant accounts that need to accept customer payments online should also set up on Shopify or a comparable platform.
• Credit cards and charge cards: You can use business credit cards with expense tracking for recurring payments. Pay your full card balance monthly to avoid interest charges.
• Point-of-sale (POS) systems: Retail POS systems automate customer payments while updating your inventory and sales records. These can typically sync with your automated payments to provide a holistic view of your business’s financial health.

Benefits of payment automation

Automating your payment systems will improve operational efficiency and give you more control over your company’s cash flow and finances in the following ways:

• Better cash flow visibility and control. Scheduled payments, centralized dashboards, and automated alerts give business owners an up-to-date view of their cash inflows and outflows, which streamlines financial planning and corporate decision-making. This increased cash flow visibility helps you plan for payroll, rent, vendor payments, growth investments, and other important financial plans.
• Time savings. Streamlining business operations with automated bill pay significantly reduces time spent on repetitive tasks like data entry, check runs, vendor follow-ups, and bank portal logins. This gives business owners and financial managers more time for analysis, forecasting, and strategic planning to grow and scale their companies.
• Lower payment processing costs. By shifting to electronic payments and automated scheduling, you’ll reduce or eliminate the costs of paper checks, late fees, and manual workflows. Plus, you’ll save more money the more your transaction volume grows.
• Stronger compliance. Standardized workflows and approval rules help ensure your payments are running smoothly and legally. Your transaction history also provides evidence that you’ve met obligations like SEC and FINRA reporting deadlines.
• Reduced payment risk and fraud exposure. Role-based access, vendor verification, approval thresholds, and a detailed transaction history all help reduce fraud risk. The latter also makes it harder for unauthorized users to initiate or alter payments.
• Stronger vendor relationships and satisfaction. Timely, consistent payments build trust, which can lead to better payment terms and flexibility during supply squeezes.

Common payment automation use cases

Payment automation delivers value in a few key areas:

• Vendor and supplier payments: Capture invoices, enforce approvals, and schedule on-time payments to avoid late fees and strengthen supplier terms.
• Recurring bills and subscriptions: Automate software, utilities, and insurance payments to prevent lapses and identify duplicate or unused subscriptions.
• Project-based and seasonal spending: Automate invoice routing and approvals during launches or seasonal inventory buys to avoid understocking, overstaffing, or missed payments.
• Multi-entity or multi-location payments: Standardize your payment processes across locations and platforms while remaining compliant and quickly converting international currencies.

How to choose a payment automation solution

There are no one-size-fits-all automated payment solutions, so consider which common benefits you want to maximize, and use the following guidelines when deciding which to use:

• Prioritize core features: Examine your current payment bottlenecks, such as late payments or slow reconciliation. Choose a well-regarded payment platform that prioritizes the features you need most.
• Assess integrations: Ensure your automated payment platform syncs with your accounting and business checking platforms to avoid mismatched records.
• Prioritize ease of use: Choose a payment solution with fast setup, intuitive interfaces, and low ongoing maintenance requirements. Demos and free trials can help you decide with hands-on experience.
• Assess security and fraud controls: Your payment platform must have encryption, role-based access controls, detailed activity logs, and vendor verification to protect your funds and data.

Automate payments today with Bluevine

Bluevine is the ideal partner for small businesses ready to automate accounts payable and bill pay. With accounts payable automation tools built directly into your business checking account, you can automate invoice capture, customize approval workflows, schedule ACH and check payments, and streamline vendor management from one integrated platform.

Bluevine is designed specifically for small business needs. You’ll also benefit from no monthly fees on our Standard plan, and the opportunity to earn high APY on your checking balance, helping your money work harder while you focus on running your business.

See why Bluevine is the largest small business banking platform in the U.S.^BVSUP-00186

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Payment automation FAQs

How do payment automation systems benefit small businesses?

Payment automation software benefits small businesses by reducing time spent on manual payment tasks, minimizing errors that lead to duplicate payments or incorrect amounts, and improving cash flow visibility through centralized dashboards. These systems also help maintain vendor relationships by ensuring payments go out on time, and they provide audit trails that simplify tax preparation and financial reporting.

What are the top payment automation platforms?

The best payment automation platform depends on your business size, payment volumes, and integration requirements. Leading payment automation platforms include:

• Bluevine, which offers built-in accounts payable automation features as part of its business checking account.
• Bill.com, which provides comprehensive accounts payable and receivable automation.
• Tipalti, which serves businesses with high payment volumes and global vendor networks.

How do you mitigate risk with payment automation systems?

You can mitigate risk by choosing a platform with strong security features, such as encryption, multi-factor authentication, and role-based access controls. Set up approval workflows that require multiple approvals for large payments, regularly review user permissions, and monitor activity logs for unusual patterns. Many platforms also offer vendor verification features that help prevent payments to fraudulent accounts.