How Automated Payment Services Can Improve Your Business

Oct 3, 2023 by Zazil Martinez

Automated payment services have many benefits. They help reduce costs, process invoices faster, and prevent errors. Integrating payment automation with ERP systems reduces friction, lowers costs, and boosts efficiency. Platforms like Paystand help transform AR management and improve cash conversion cycles.

If your payment system can't process payments quickly enough, the whole organization stops working. Automated payment solutions expedite the payment process and provide a stellar customer experience. But there are many other benefits to automated payment systems, as well.

Invoice payment automation cuts invoice processing costs by 50% and speeds up collection time by 62%. Businesses spend $2.7 trillion annually chasing payments and manually processing invoices. The Street reported that each invoice costs $16 to $22 to process.

Worse, it can take up to six days to process a single invoice completely. And if an error needs to be corrected, organizations lose even more time and energy.

Automated payment systems solve challenges faced by AR teams and finance departments. Each year, they become more of a necessity than just a competitive tool.


What Problems Does Invoice Payment Automation Solve?

Accounting departments have many tools, but finance teams still spend most of their time doing tasks manually. These include handling transactions, making payments, collecting checks, organizing financial data, and matching transactions. This process is long, complex, and prone to mistakes, causing delays and displacing skilled workers.

This manual effort is costly and inefficient but also creates an unnecessary risk of errors. Mistakes can occur easily when comparing many transactions and matching bank records or invoices. Also, accounting departments often have to input data into other systems like ERP, point of service, and inventory management solutions. This makes the risk of errors even worse.

Additionally, the office must complete the manual payment processing method. Even if your team digitizes each payment by entering data into their ERP, they must be on-site to process paper checks and invoices. As a result, the old-fashioned payment system is difficult to achieve in remote work.

Many financial tools for businesses don't work well together, lack clean data, and replicate manual processes. The capabilities could be more advanced than current marketing or CRM technology.

As a result of these challenges, the finance team is often overworked and unengaged. Automated payment solutions can reduce or even eliminate these common problems.


What Effect Did COVID-19 Have on Payment Processing?

The COVID-19 pandemic caused economic challenges worldwide. As a result, businesses needed to invest in touchless payment processing. Executives faced supply chain issues and price increases, so they made tough decisions to survive. The decisions involve a financial restructuring to improve cash flow: optimizing accounts receivable functions. C-level executives want more precise financial information to allow CFOs to focus on analysis and long-term strategies instead of daily tasks.

A study by Fundbox found that accounts receivable departments hold up to $3 trillion. This creates a negative effect in the industry. The study showed that 68% of late-pay companies had cash flow problems.

Additionally, as more employees prefer to work from home, it makes sense to upgrade to an automated payment system, at least part of the time. It is both practical and financially beneficial.


What’s The Difference Between Digitization and Automation?

Although digitization and automation are often used interchangeably, they're different.

Digitization refers to converting information from a hard copy to a digital format. Accounting departments often manually transfer financial information between spreadsheets and separate systems. This ensures that the data is available where it is needed. Let's take accountants as an example. They manually record time-sheet information from one digital tool into their ERP. Or AR professionals who compare digital statements from corporate bank accounts and credit card payments.

Some digitization can be done automatically through a computer. For instance, you can move specific data from one system to another or synchronize it regularly. However, this still needs manual intervention and can be easily forgotten.

Automation is the next level. It improves existing processes by using software and specific rules. This allows accounting tasks to be completed without humans. Automatic reconciliation is one such example.

Many companies think an ERP system is crucial for accounting and has improved payments as much as possible. The problem is that it only provides your finance team "full visibility" of their data operations two or more weeks after the month's end. This limits the CFO's visibility for planning and forecasting.

Despite the availability of cloud ERP systems, many teams still manually handle AP and AR processes. This keeps the team occupied with number crunching instead of higher-level strategic work.

Automating invoice payments can take your ERP digitalization to the next level. This will save you money, speed up collections, and reduce repetitive tasks by over 70%. Smaller organizations can use manual payment processes, but it can limit growth.


How Automated Payments Work With Your ERP

By pairing up invoice payment automation with your ERP, your organization can reduce friction in various areas:

  • No more missing or mishandled invoices. Human beings make mistakes, and late payments can occur if a customer fails to receive an invoice or doesn't see a reminder. An invoice payment automation solution allows you to tie your ERP data together to track and report the status of invoices easily. You'll be able to see when invoices were sent, schedule automated reminders, and flag problem accounts.
  • Lower DSO. Every team wants to reduce their day's sales outstanding (DSO) or past-due invoice rates. However, it takes time and effort to chase down delinquent accounts manually. Combining the data from your ERP and your payment solution makes it much easier to automate the collection process. You can collect data to analyze and report, which helps your team focus on high-risk accounts.
  • Cost-effective invoice processing. Even with an ERP system, roughly 86% of all organizations still submit invoices by paper and fax. By using an invoice payment automation solution, you can cut down on manual tasks like handling paper, filing, scanning, and mailing by 70%. Paystand customers have reduced processing costs by 98% by digitizing and automating payments.


9 Benefits of Invoice Payment Automation

Automated invoice payment solutions provide a fast return on investment and help companies grow. Here are some key benefits you can expect:

  1. Accelerated time-to-cash. Improving your cash conversion cycle, or faster time-to-cash, lets you collect payments more quickly. By providing additional resources, you can fund future growth and pay suppliers. This also saves money by processing invoices faster and receiving early payment discounts.
  2. Reduced manual work. Automating payments reduces manual work for your finance staff. For example, one customer recently eliminated 95% of reconciliation-related data entry. Imagine the benefits of freeing your staff from hours of entering figures and checking whether they're accurate.
  3. Lower payment costs. Digital payments are far cheaper and easier to collect than processing paper checks. Research by Ardent Partners shows that automation can cut costs by 80% compared to manual methods.
  4. Minimized errors. Mistakes in the payment process waste time, harm relationships, and cause duplicate payments. Reliable payment automation software can help you improve effortlessly. It validates data entry and finds exceptions.
  5. Faster financial close. Automated payment tools can simplify financial close by instantly reconciling three-way transactions. Your payments are checked against ERP records, and reports are quickly added to your ERP system. The finance team then obtains a consolidated view of all accounts.
  6. Fraud prevention. You can use an automated system following PCI-DSS rules to control user actions. This system also finds and reports any incorrect invoices or payments. These capabilities help safeguard against fraud and related threats.
  7. Increased visibility. Companies can collect more data to analyze payments and improve reconciliation information. To help finance executives, payment automation is becoming a strategic focus. It helps manage and forecast cash flow.
  8. Centralized data. You no longer need to invest in multiple applications using a comprehensive payment platform. Instead, your dashboard becomes the center for managing your payments. You can see revenue details like customer value, average revenue, and recurring revenue.
  9. Stronger supplier relationships. Businesses can use automated payment solutions to see transaction statuses in real time. This saves time by reducing inquiries. Instead, you have more time to improve overall relationships with your suppliers.


A Step-by-Step Guide to Setting Up Your Payment Automation System

Significant transformations can result from small changes. If you use automated payment solutions with your ERP, expect ongoing benefits. Here are some ways to start:

  1. Evaluate solutions to automate accounts receivable. First, you'll want to weigh all your automated payment system options. Paystand offers a convenient payment method with "pay now" buttons in invoices and reminders. Customers are immediately connected to a payment portal, making it easier to pay quickly.
  2. Offer more than one payment option. The more payment options you can offer your customers, the fewer excuses your customers will have to delay payments. You can instantly reduce reliance on paper checks by accepting electronic payments, such as ACH payments. You can also process credit and debit cards with a convenience fee.
  3. Automate flexible payment scenario. You can automate collections if you have solutions that accept recurring payments or manage subscription-based plans. This way, you only have to bill once manually.
  4. Redirect team focus to a strategic initiative. Give your team more time for high-value and engaging work once automation occurs. Increased transparency into accounts receivable data can help direct those higher-level initiatives.
  5. Set up effortless customer follow-up. Automated collection processes mean more timely payments and more effortless follow-up. Your payment system will automatically send reminders for payments at regular intervals, including easy-to-use payment options. In addition, problem accounts can be flagged for more dedicated attention.
  6. Eliminate transaction fees. Paystand encourages customers to use its bank network with fee-free transactions. At the same time, you can pass on some of the credit card transaction fees to customers who use that payment method. This way, you can recover these costs.
  7. Optimize financial close. Instant three-way reconciliation means accurate verification against ERP records.
  8. Enhance security. Paystand has built-in protection and automation tools. These safeguard your transactions, customer payment information, and cash flow from fraud and online threats.

Transform Your AR with Payment Automation

Paystand is a platform that helps businesses with digital payments, making processing and managing AR easier. We integrate with most ERP software systems and offer flat-monthly pricing to keep your costs low and predictable.

Paystand has improved how businesses manage their finances, including invoicing and AR management. For example, Choozle's automation led to a 50% drop in the cost of receivables over 90 days and a one-third reduction in DSO.

If you are looking for ways to manage, optimize, and automate your cash conversion cycle, our experts are here to help your business. To learn more about supercharging your payment process, grab your free copy of our ebook about the competitive advantages of digital payments.