Vendor payment automation streamlines the accounts payable process, reducing errors and boosting efficiency. If you’re looking to stay competitive, automation is one way you can achieve it.
Table of Contents
This article dives into just that, from the benefits, challenges and trends to why your manual process just isn’t cutting it.
Streamline vendor payments: Getting the most out of accounts payable
Why Manual Processes Slow You Down
Manual processes slow the vendor payments through now-unnecessary delays usually stemming from data entry errors, lost or misfiled invoices and sluggish approval workflows.
Time spent mopping up these issues is time wasted. These days, accounts payable (AP) automation does all this for you, rendering manual processes almost obsolete.
What’s more, a manual process lacks real-time tracking, is likely too dependent on physical documents and requires constant checking in from higher ups.
Inefficiencies like this lead to late payments, missed discounts and strained vendor relationships, ultimately harming your operations.
Common challenges in vendor payment workflows
The big challenge in vendor payment workflows is getting them to work smoothly and efficiently – not easy if you’ve got a lot of approvers and outgoing payments. It can be further confused by juggling multiple payment methods across multiple vendors.
How automation streamlines the entire cycle
Automation streamlines the vendor payment cycle by digitising the data entry part of your workflow. Automated invoice capture supports real-time approvals and integrated accounting systems, and that all leads to reduced input errors, accelerated workflows and added visibility up and down the process.
The result ensures timely payments which strengthen vendor relationships and give you a better look at your cash flow.
Simplifying your supplier payment process
The key components of a supplier payment workflow
To understand how to simplify we should first have a grasp of the basic supplier payment workflow. Most of these workflows look the same in any company. That’s something like this:
- invoice receipt and validation
- payment scheduling
- and of course, making the payment
Once that’s all done and dusted, it will also involve:
- updating accounting records
- reconciling payments
- sending remittance advice
Integrating accounts payable and supplier systems
One way you can streamline vendor payment is by integrating your accounts payable (AP) and your suppliers’ systems. That’s your internal AP software with your suppliers’ invoicing or order platforms. Doing so allows information (invoices, purchase orders and payment confirmations) to flow automatically between both parties without manual input.
This kind of integration is a popular way to create a smoother, faster, more accurate vendor payment process. It’s usually done by automation with accounts payable software that integrates with major business software like Xero, QuickBooks, Sage, etc. How do we know this? Because we make the kind of software we’re talking about. Here’s how it worked in the real world…
Real-world examples of simplified payment flows
Lush, a renowned cosmetics retailer, came to us aiming to improve its supplier payment process and achieve HMRC’s ‘Prompt Payer’ accreditation.
Using our accounts payable automation software, Lush transformed its inefficient, error-prone system into a fast, compliant, paperless workflow. On-time supplier payments were bumped from 80% to 95%. Lush successfully attained the ‘Prompt Payer’ status and smiles were had all around.
You can read more of our success stories here.
Try out the future of AP, register a Zahara trial for FREE.
Try Out ZaharaEnhancing supplier payment efficiency
Speed, accuracy, and transparency
Enhanced supplier payments efficiency all comes down to speed, accuracy and transparency. We might be re-treading old ground here, but if you’re looking to achieve greater levels of any of these elements of operational efficiency, you’ve got to iron out the problems caused by manual processes.
That involves automating workflows to increase speed and reduce manual errors for greater accuracy and ensure transparency through real-time tracking and clear audit trails.
The role of scheduled and batch payments
If you’re looking into supplier payments automation, you’ll probably be seeing the words scheduled and batch payments quite a lot. These types of payments are a big part of streamlining vendor payments.
They’re just simple functions that automate recurring transactions and group multiple payments. From that you get the edge on cash-flow management and a lighter admin workload. Your suppliers can also rely on consistent payments, which makes them happy.
Reducing errors and avoiding late fees
Speed and accuracy are shoot for the bullseye when it comes to error reduction. You don’t want to be stuck undoing slip-ups, and you certainly don’t want to be chasing payments that were sent accidentally.
In an ideal world, everything would fire off smoothly with minimal intervention and no errors. When this happens you’ll be able to avoid late fees and further save the company money.
Benefits of Payment Automation
Cost reduction and ROI
Payment automation reduces costs by minimising the errors in manual processes that lead to duplicate payments and late fees. With the added benefit of faster approvals and accurate data you can see a strong return on investment through lower administrative expenses and better supplier relationships.
Better control and visibility over cash outflows
Payment automation provides better control and visibility over cash outflows by centralising payment data enabling real-time tracking and enforcing approval workflows.
In automated systems discrepancies and errors will be flagged before they can become problems. Your finance teams will also have extra-detailed reporting, allowing them to monitor spending patterns and forecast cash needs more accurately. In short, what we’re looking at is tighter control over financial operations.
Strengthened supplier trust and compliance
If you want good relations with your supplier you’ve got to be reliable. In vendor payment, it is as simple as making timely, accurate payments. Make sure you stick to the supplier’s payment guidelines and you’ve got it.
With automation all this is taken care of. All you need to worry about is confirming the payments and maintaining consistent communication.
Statistics backing automation benefits
| Focus Area | Benefit |
|---|---|
| Invoice Processing | Up to an 80% reduction in processing costs |
| Increase processing speed by 9 times | |
| Supplier Relations | 64% of companies reported improved supplier relations |
| Time Savings | Manual data entry reduced by 85% or more |
Sources: Levvel Research, Zahara, Ardent
Choosing the right payment solution
What to look for in a vendor payment system
When choosing a vendor payment system you should prioritise a few things:
- real-time tracking
- integration with your existing finance tools.
- approval workflows
- fraud prevention
- customisable reporting
A user-friendly interface, scalability and strong customer support are also essential for ensuring long-term efficiency and financial control.
Questions to ask software providers
You’ll want to figure out which software suits you best, so we’d recommend quizzing software providers before you jump into a decision. Here are a few questions you should be asking:
- Does the system integrate with our existing ERP or accounting software?
- What payment methods do you support (e.g., ACH, BACS, card, SWIFT)?
- Is there support for scheduled or batch payments?
- What security measures are in place to protect financial data?
- Can you provide data or case studies showing ROI from similar clients?
- What is the onboarding process and time to go live?
Comparing popular tools: Zahara vs others
Perhaps you’ll allow us a few words on our own AP software. Here’s how it looks in a nice neat table.
| Company | Target Audience | Key Features | Pricing | Strengths | Weaknesses | ERP Integration | Invoice Processing | Purchase Orders | Integrated International Payments |
|---|---|---|---|---|---|---|---|---|---|
| Zahara AP Automation | Small to medium-sized businesses | Customisable AP workflow, user-friendly interface, strong support | Starts at £118/month | User experience, flexibility, customer support | May not be suitable for very large enterprises | Yes | Yes | Yes | Yes |
| Dext | Very small businesses (e.g., freelancers, one-person businesses) | Receipt scanning only | Starts at £27/month | Affordable for very small businesses | Limited to basic receipt scanning; lacks key features for broader AP needs | No | Yes | No | No |
| Lightyear | Small to medium-sized businesses with a need for integrations | Invoice scanning, approvals, integrations; lacks budgeting in core plans | Business package starts at £129/month | Good integration options, scalable for certain needs | No budgeting in lower-tier plans; purchase orders require higher package | Yes | Yes | Yes (Business plan only) | No |
| Tipalti | Large corporations with extensive finance requirements | Comprehensive system covering most finance functions, expensive for SMEs | Entry package with limited functionality at £129/month; additional fees for more features | Highly comprehensive for large corporations | Expensive for SMEs, no free trial available | Yes | Yes | Yes | Yes |
Improving cash flow with automation
Forecasting and payment scheduling
Automation enhances cash flow by providing accurate, real-time data for forecasting. This means you can work from a more precise payment schedule. When this is how you work your business can anticipate outgoing payments and time them to avoid late fees and align with income cycles. This predictability supports better budgeting and more informed decision-making.
Leveraging early payment discounts
With faster processing and real-time visibility you can meet discount deadlines and reduce payable amounts – ultimately lowering costs and improving overall cash flow and adding to your software’s ROI.
Preventing Cash Surprises with Real-time Reporting
Real-time reporting prevents cash flow surprises by offering instant visibility into pending payments, approvals and liabilities. Finance teams informed of current and future outflows make proactive decisions.
Maximising vendor relationships
Faster payments = happier suppliers
It doesn’t take the mind of Einstein to know that a promptly paid supplier is a happy one. Paying on, or ahead of time, is going to bolster your business’ good name and make you the kind of organisation people want to work with. You’ll see benefits in the way your suppliers deal with you: shooting problems promptly, handing out discounts and a tasty bit of preferential treatment.
Building trust through transparency
Suppliers value openness and clear, consistent communication. With the added visibility automation provides, you can give them what they value – in turn fostering stronger, more reliable business relationships.
Long-term gains from better collaboration
Better collaboration with suppliers leads to long-term gains through improved efficiency, stronger partnerships, reduced risks, and shared growth opportunities that support sustainable business success.
The future of supplier payments
Trends in B2B payment technology
B2B payment technology is rapidly evolving. Trends to watch are the adoption of real-time payments and automation, and most importantly, the use of AI.
The rise of AI and machine learning in AP
AI and machine learning are transforming accounts payable by automating data capture, fraud detection and, in some cases, decision-making. This tech is all geared at improving accuracy and reducing manual effort and error.
Preparing your business for next-gen payment systems
Naturally, you want to stay competitive. To do this you’ll need to keep up with the tech, and ahead of the competition. That means automating the parts of your business that will see strong ROI. Vendor payments could be the place to start.
A word from Zahara
We hope you’ve found this info useful. It’s drawn from the years of experience we’ve had in the industry. This isn’t a hard sell but if you’ve trusted us to inform you thus far, maybe you’ll trust us with your automation process too. Many happy clients already have. You can read about that here.
We offer free trials and demonstrations. That won’t be the hard sell either. We trust that our software will sell itself. Here’s a link. We’d love to hear from you.
FAQs
Vendor payment automation refers to the use of software to streamline and manage the process of paying suppliers. It reduces manual work, reduces errors, and improves payment accuracy and timing .
Automation improves efficiency, reduces human error, enhances security, ensures timely payments, and can help capture early payment discounts. It also offers better tracking and reporting for financial oversight.
Most payment automation platforms integrate seamlessly with popular accounting or ERP systems, syncing data in real-time to avoid duplicate entries and ensure consistency across financial operations.
Yes. Leading platforms offer robust encryption, fraud detection tools, and user permission controls to ensure secure transactions and protect sensitive financial information.
Absolutely. Automation isn’t just for large enterprises – small and mid-sized businesses can also save time, reduce costs and improve cash flow visibility by automating their payment processes.
