Payment Automation: Meaning, Methods & Key Benefits

All of us are aware that paying bills on or before time is essential, as managing due dates can be extremely time-consuming and taxing. What can be the perfect solution for this? Automated payment is the answer. By processing automated bill payments, your organisation ensures that all the payments are made on time and offers you valuable time. This article explains what automated payments are, how they work, and the benefits of leveraging automated payment systems for your business.

What Is Payment Automation?

Payment automation is a tool used by businesses to automate their payments to vendors. This basically consists of payments using a check, virtual card payment, ACH transfer, or wire transfer. Payment automation not only includes managing payment processes for manual sending, but also completes the entire payment process after the approval. A payment automation tool makes payment processing faster and more streamlined for businesses and is also less prone to human errors. It also saves ample time that is wasted when working manually.

Payment automation helps businesses improve, optimise, and streamline the payment process, which was previously performed manually by finance team employees. In addition to payments, automated payment systems also process and match invoices, automatically approve and send payments, and track all payment data.

Payment automation promotes speedy and accurate payment to vendors, along with improving vendor relationships.

How To Process Automated Payments?

Payment automation functions by leveraging automated methods to process a diverse range of payment-related actions and data without major human involvement. A crucial aspect of payment automation is processing invoices. This involves utilizing invoices from multiple sources and in different formats, utilizing the information they contain, storing them, and then completing a process that results in invoices being approved or held for manual review for any inconsistencies.

A business can process automated payments in many ways. Another method is to utilise the ACH transactions that facilitate electronic transactions to and from any bank account. By setting up automatic payment using your credit union or bank’s online payment system, your clients receive your payment through ACH transfer. You get to decide the amount and schedule your payment every month, which gets authorised by your bank through your designated account, and the funds are transferred to the recipient. In this method, you get to set up payments in 3 ways:

• Using your credit card—To make automated bill payments using your credit card, you must provide your credit card details to process the payments.
•  With the biller, when choosing this payment method, you need to provide your bank information to automate the draft on the due date.
•  Through your bank’s online bill payment service -In this method, you must log in to your mobile banking or online platform to select the biller, schedule, payment amount, and account through which you make the payment.

Why Use Automated Payment Systems?

There are numerous advantages of payment automation, ranging from enhanced security of payments to logistical benefits and better vendor relationships. Some of the common benefits of automated payments include the following:

• Lesser transaction cost

Eventually, using an automated payment system that leverages digital payments instead of cash will reduce the cost. An automated transfer requires a much lesser investment than average manual payment procedures.

• Faster processing

The finance department of any business is concerned not only about making payments but also about performing each financial task efficiently to reduce cost and wastage. The faster payments are made to the vendor, the less time is wasted. In addition, timely payments also result in discounts and good relationships with vendors.

• Protection from fraud

Payment fraud is rising rapidly, and each business is in search of payment solutions that minimize the chances of fraud without compromising the speed or efficiency of the payment process. Hence, payment automation eventually reduces fraud in several ways. It also reduces fraudulent invoice payments and ensures that only invoices aligned with the purchase orders are paid with approval.

Conclusion:

Choosing the perfect payment automation software for your business requires extensive research and comparison. After all, every business and payment automation tool available in the market is unique. Overall, the most crucial point to consider while choosing automation payments software is its ability to manage each invoice processing scenario in your business.