Today, digital payments are paving the path to the AP future. Around 95% of companies still pay their vendors by check. Tech-savvy businesses are cutting ties with the traditional payment processes and turning to quick digital methods.
Implementing e-Payments, such as virtual cards, ACH, real-time payments, and more empowers you to boost effectiveness, insight, and security while reducing expenses and saving time on conventional procedures.
Here we present various aspects why digital payments are critical for the modern AP and finance departments.
Understanding Digital Payments
Electronic payments are done without exchanging checks/physical cash. Rather, the payments include transferring of money from one account to the other through any transaction or smart device.
Because it is easy to use, many forms of digital payment can incur a transaction fee, but is inexpensive than check payments or physical cash because of the reduction in labor and expenses related to printing, faxing, postage, and more. Plus, they are safer and need less involvement from the finance team members to execute.
- Credit Card
This is often utilized for making online and retail purchases. The card allows spending of borrowed amount till a predetermined limit.
- ACH Credit Push
It is commonly used for the repeat supplier payments. This credit push leverages electronic batch payment system where the payer needs to initiate transaction by pushing the funds into payee’s account.
- ACH Debit Pull
It is often used for the payroll, online payments, and more. This depends on e-Payment solution where a payee requests for a pull of funds from the payer’s account.
- Virtual Cards
It is a non-physical card and works almost in the same manner as the other cards. But they allow tokenized payment through a single time use sixteen-digit code which authorizes a specific payment amount.
Many organizations end up leveraging various payment types as every supplier has multiple requirements. It indicates that AP staff should be able to handle every type of payment process effectively with robust accounts payable software.
Integrated AP solution aid companies streamline their payment methods and select the effective means for every transaction. By optimizing the payables method and consolidating various types of payments into a single payment workflow, you can minimize expenses, boost security, maximize card rebates, and maintain good relationship with service providers.
Digital Payments in AP
1. More Security
Making digital payments leaves no room for payments fraud, but the paper checks can be easily intercepted. E-payments are encrypted by robust technology available in the market. A few digital payment methods like virtual cards are safe because of their one-time use numbers which don’t reveal any kind of sensitive information.
2. Internal Controls
By leveraging online accounts payable tool where digital options are integrated, it is simpler to maintain control over the payment authorization and approval of invoices. Payments which are digitally issued using modern technology further limit the payments to the pre-approved transactions.
3. Granular Insight
Cloud-based e-payments solutions offer more visibility into the complete accounts payable procedure for your suppliers as well as the business. AP application allows centralized management of the invoice-to-pay method, thus ensuring consistency and insight across user roles, business locations, and enables them to check the payment status along with critical account entries.
4. Global Payments Made Simple
Digital payments are electronically made, and so there is no need to worry on the distance/location or oversee mailing of the checks. Currency conversions occur automatically. Accounts payable automation software boosts insight and traceability when we talk about international payment. E-payments also minimize the time taken to receive the payment that can be long for the old payment processes, specifically at the time of navigating regulations and institutions.
AP solution supports digital payments including ACH, checks, virtual cards, and so much more. The solution makes it simple to integrate with the existing accounting and ERP systems for you to take complete advantage of digital payments while keeping the invoices/payment data synced with the record.
Virtual card payment process also enables you to generate revenue stream by paying your service providers. These cards are delivered to the suppliers through email or self-service portal and processed like credit cards. It is safe and fits into the present workflow seamlessly. And if the AP department lacks the ability to connect with the vendors on accepting the electronic payment process, then AP software manages supplier enrolment for you.