Business finances are sometimes challenging to manage, and without a solid financial system and strategy in place, your business could fall into disarray. With the help of an automated payment solution, you may be able to save time, save money, and streamline operations – and in the age of AI, our automated payment technologies are more advanced than ever.
But how exactly do these platforms work and are they always worth using?
How Do Automated Payment Systems Work?
What is an automated payment system for business, anyway?
Your business is responsible for making payments to countless vendors and suppliers. If it’s a large business, or a complicated one, you might be responsible for processing hundreds or even thousands of payments every day.
Ordinarily, you’ll have to undertake this as a tedious, manual effort. People on your accounting team will be responsible for manually reviewing each invoice, submitting payments, troubleshooting issues, and so on.
An automated payment system attempts to make this much more streamlined, efficient, and (in many ways) touchless. Through this type of system, your business will be able to pay invoices electronically, instead of with paper checks. Your business will be able to process and approve payments for multiple invoices in batches, rather than looking at them one at a time. Your business will be able to use various payment methods, including wire transfers, virtual credit cards, and ACH transfers, to meet the requirements of your vendors.
As you might imagine, there are many different types of automated payment systems available for businesses to adopt. Features vary from platform to platform, but most automated payment systems have similar fundamentals.
The Pros and Cons of Automated Payment Systems
What are the pros and cons of using an automated payment system?
These are the advantages:
- Time savings. The biggest advantage is likely time savings. At the largest scales, and over a long enough time, an automated payment solution can save your organization hundreds if not thousands of man-hours. This could prevent you from needing to hire more people. It could free up your team members to focus on more important responsibilities. And perhaps most importantly, it saves you money on labor.
- Cost savings. Saving money on labor is just the beginning, however. Because these payment systems are quick, easy, and capable of batching payments together, they typically come with lower transaction costs. If you add up all the cost-saving elements of your platform, it’s not hard to see why an automated payment solution can pay for itself.
- Reduction of human error. Better financial technology can greatly reduce the role of human error in your daily operations. Obviously, errors are still possible, but they’re much less likely with an automated, efficient machine in place. Invoice mistakes could become a thing of the past.
- Improved transparency. Good automated payment systems have thorough tracking and reporting, so you have full transparency at every step of the process. If something goes wrong, you’ll be able to figure out why. If you’re looking for more advanced accounting analytics, you’ll be able to obtain them.
- Better security. In many ways, automated payments are much more secure than manual payments. There are fewer humans involved at every step, and the process is so fast and seamless that there are many opportunities for fraud.
- Faster financial closing. Some businesses love the advantage of faster financial closing. Thanks to all the time you’ll save, you’ll be in a prime position to close out your payments in record time.
- Better relationships with suppliers. Your suppliers are also going to appreciate your automated payment system; they get their money faster and they have less to worry about. In some cases, they can even choose how they get paid.
There aren’t many downsides to consider, assuming you choose the best platform:
- Price. Most automated payment solutions aren’t free. Depending on what you’re looking for, you could end up paying up to a few hundred dollars every month for this solution. But considering how much time and money you’re likely to save, this investment is usually worth it.
- The initial rollout. Some businesses have trouble initially rolling out a platform like this. If your team is used to issuing payments manually, or if you already have many different types of accounting software in play, this can be technically challenging and frustrating for the people in your organization who are resistant to change. Still, with proper preparations, you can mitigate this potential problem.
- Technical errors. Technical errors can be a complicating factor for almost any type of technology, and automated payment solutions are no exception. Programming errors, user misuse, and other glitches may occasionally present temporary challenges that need to be overcome.
How to Choose the Best Automated Payment System
One of the caveats here is that you’re only going to reap the greatest benefits of automated payments if you choose the best platform for your business.
These are the most important variables to consider on this front:
- Core features. Your most important consideration should be the core features associated with this platform. What types of payments are available? How do you set up automatic payments? What other features are available? What support is available for data transparency and reporting?
- Usability. Your automated payment system might be capable of doing most of the work regarding your payments, but human beings will still be responsible for using it on a daily basis. Accordingly, you also need to think about usability. Is it going to be relatively simple to train and educate people on how to use this platform? Will your staff members benefit from using it?
- Compatibility. What about compatibility? Does this platform integrate with other accounting platforms that you’re already using? How does it fit into the rest of your technology stack?
- Reliability. Automation is only beneficial if it’s reliable. Does this platform have a demonstrated track record of success? Are there ample good reviews and testimonials?
- Pricing. Obviously, you’ll need to think about pricing. Some automation platforms are more expensive than others; they may be worth the extra money, but that’s on you to decide.
- Support and troubleshooting. What happens if and when something goes wrong? Is there adequate customer service available to help you resolve potential issues?
- Developer roadmap. Finally, find and consider the developer road map. Does the development team seem focused on providing ongoing support for the platform? Are there interesting new features in the works?
Additional Best Practices
There are also some additional best practices that you should follow when using an automated payment system for your business:
- Ensure a smooth rollout. New technology isn’t always a purely good addition to your business. There may be certain challenges preventing your business from integrating this software into the other accounting software you’re using. It may be challenging to convince your staff members that this platform is worth using, or difficult to train them to use it. But with proper proactive planning, you can mitigate most of these issues and ensure a smooth rollout.
- Offer multiple payment options. Within your automated payments platform, you may have the option of what types of payments to offer. Generally, the more flexible you are, the better it is for your suppliers, so offer multiple payment options if you can.
- Test and monitor regularly. Automation is incredibly valuable, and in many cases, almost perfectly reliable. But it’s still a good idea to have some human checks and balances in place; test and monitor your software regularly to ensure it’s working as intended.
With better automated payment systems in place, your business can save time, save money, reduce human error, and make your suppliers happier. There are some costs, and initial integrations may be technically challenging, but this is an investment that can pay off for almost any business that makes payments on a large enough scale.