B2B Payment Automation: How Businesses Can Streamline Vendor Payments

From tax filing to reconciling invoices, computers are faster and less error-prone than human workers. One way you can improve your company’s internal processes is through business-to-business (B2B) payment automation. These automated tools can deliver more accurate results with fewer labor hours than manual processes.

In one study, just 17% of businesses reported that they had fully automated their payment processes and procedures. However, 91% of companies believe that automated payments are easier, more streamlined, and more secure. 

As your company grows, your payment volume and the number of transactions will naturally increase. By deciding to automate B2B payments, you can ensure you’re paying legitimate vendors accurately and on time. 

To learn more about B2B payment automation, read on.

TL;DR

• With B2B automation, you can replace your manual payment processes with automated workflows.
• Automated payments are faster, more accurate, and less prone to errors.
• Through automation, you can avoid duplicate, fraudulent, and delayed payments.
• Automation allows you to instantly match purchase orders, bill of ladings, invoices, and receiving documents.
• These systems provide transparent oversight, so you can easily track where funds are in the payment process.
• The latest technology ensures regulatory compliance and advanced fraud prevention.
• With payment automation, you can scale your company without having to add more staff or hardware.

PayCompass can help you set up automated tools at your company, so you can enjoy better payment accuracy and efficiency.

What Is B2B Payment Automation?

With B2B payment automation, businesses can use Enterprise Resource Planning (ERP) integrations, software, and workflows to streamline all of their payment processes. This type of program can improve the efficiency and accuracy of your B2B payments while reducing the likelihood of human error. It automates your entire B2B payment workflow, including your invoicing, payment reconciliation, payment execution, and compliance.

Common Types of B2B Payments

B2B payment systems incorporate your e-commerce platform, credit card payments, Automated Clearing House (ACH) payments, and more. Here are the most common forms of B2B payments that businesses use to pay their vendors. 

• ACH Payments and Wire Transfers: ACH payments and wire transfers are two of the most common kinds of B2B payments. They are low-cost and secure, making them ideal for large transfers. However, they can take a few days to process.
• Debit and Credit Cards: Card payments are a popular option because of their convenience. Thanks to billing statements, it’s easy to track spending and reconcile payments.
• Invoice and Purchase Orders: If you want to order five super sacks of 10-10-10 fertilizer, you generally don’t just show up at an agronomy center and swipe a card. Instead, you submit a purchase order to the company. Once the shipment has arrived, this purchase order is reconciled with the accompanying invoice.
• Checks: While ACH transfers and credit card payments are faster, many small businesses still use checks. This option is fairly inexpensive, but it can be prone to fraud. 
• Direct Debit: If the other company sets up direct debit with your business, they can debit your account directly to process the amount owed.
• Digital Wallets: Google Pay, Apple Pay, and other digital wallets are increasingly popular forms of B2B payments.

How B2B Automation Helps Businesses Streamline Vendor Payments and Reduce Manual Work

By choosing to automate your company’s vendor payments, you can significantly reduce the amount of manual work your employees have to do. Automation streamlines your B2B payments, so they can be completed faster and more accurately than before.

The End-to-End Vendor Payment Cycle

Normally, vendor payments follow a clear trajectory. After sending in a purchase order, you receive the product at your place of business. Then, you confirm receipt of the product and receive a bill of lading. 

At some point during this process, you’ll also receive an invoice. Depending on how your company handles its receiving process, you’ll likely create receiving documents that get attached to the bill of lading, invoice, and purchase order. 

How Automation Improves This Process

Each step of this process is simplified and sped up when you automate B2B payments. While each automation system is a little different, the following processes will typically be incorporated into the system.

• Automatic invoice capture
• Payment scheduling
• Recurring payments
• Intelligent document extraction
• Invoice validation and verification
• Contract, purchase order, and invoice matching
• Invoice exception management
• Payment optimization 
• Vendor onboarding
• Payment status tracking 
• Payment processing
• Settlement monitoring
• Accounts payable (AP) reconciliation
• Audit trails
• Regulatory compliance

All of these processes can be simplified and improved through automated tools. A blend of ERP systems, approval workflows, invoice automation features, banking integrations, and payment platforms seamlessly work together to process, settle, and record incoming invoices.

What Type of B2B Payment Workflows Can Be Automated? 

With B2B payment automation, you can automate many different payment workflows.

• Recurring Payments: As a business, you can set up the system to send recurring payments. Then, the system chooses the best payment method and optimizes the timing of the payment.
• Payment Processing: All payments are processed safely and securely. After processing, the data is encrypted and stored so that it can’t be accessed by unauthorized users.
• Invoice Capture: Through information from email or electronic data interchange (EDI), the automated system can transmit and capture data. Modern systems have optical character recognition (OCR) technology, which allows them to easily gather data from paper invoices.
• Invoice Approvals: Once the data has been captured, it is automatically matched up against receipts and purchase orders. Then, the matched documents are sent to the appropriate personnel for final approval.
• Reconciliation: Following the payment of the invoice or recurring vendor payment, the system reconciles the payment. It matches it to the correct invoice and then records the entire transaction.
• Advanced Reporting: Automatic reports are generated using advanced analytics, so you can easily track spending patterns and notice anomalies.

Besides automating these workflows, automated B2B payments also ensure your regulatory compliance and deliver superior fraud prevention. These systems automatically check payments for compliance with local taxes and Anti-Money Laundering (AML) laws. Plus, each transaction is protected through the latest encryption and multifactor authentication (MFA) tools.

The Benefits of Using B2B Automation at Your Company

If you frequently process B2B payments at your company, you are likely devoting more labor hours, energy, and attention to the task than you need to. By switching to B2B payment automation, you can enjoy several valuable benefits.

Less Manual Work

Your AP department can spend days processing an invoice manually. Depending on your standard operating procedures, they may have to wait for the purchase order, product, and invoice to arrive before they can submit the payment. 

When you automate B2B payments, you can shorten this cycle. Employees don’t have to manually monitor which invoices and purchase orders have arrived. Instead, the system tracks incoming AP documents, so your workers can do less manual work and devote fewer labor hours to B2B payments.

Fewer Human Errors

Automated tools are effective at reducing transcription errors. As a result, you can ensure better calculations and improved compliance.

Faster Processes

If you’re still using workers to perform all of your AP tasks, you are likely wasting time. When you automate B2B payments, you can speed up payment processing and decrease the likelihood of late payments.

Enhanced Real-Time Tracking

Automated payment systems allow you to track payments in real time, so you can see the payment as it leaves your company and begins the settlement process. If a vendor has a question about their payment, you can easily look up exactly which stage it is at in the process.

Better Transparency 

Switching to automation can improve your transparency with suppliers, ensuring open communication throughout the process.

Improved Adaptability

As your company grows, you’ll need to hire new workers, train them on AP processes, and add additional computer hardware. By opting for automated systems, you can decrease the workers, training, and supplies you need to grow your company.

Increased Compliance

More importantly, the latest software programs are designed with local, national, and international regulations in mind. As a business, it can be challenging to navigate the constantly changing laws in each area. With automated systems, you can be assured that your payment protocols, data storage, and rule-based workflows are fully compliant.

Better Fraud Prevention

Additionally, B2B payment automation can improve your company’s fraud prevention. Many cybercriminals target small businesses with 1099 scams. Often, the criminal will say they performed contracting work that wasn’t paid for. 

Unfortunately, 1099 scams and other payment-related frauds tend to be fairly effective. The good news is that automation can flag these types of scams. The automated tools can spot outliers and anomalies, such as new vendors or invoices that lack purchase orders. Through these advanced tools, automated systems can prevent duplicate and fraudulent payments.

How PayCompass Supports Automated B2B Payments

At PayCompass, we have years of experience working with B2B payment automation. We can help you set up recurring billing, so you can prevent delayed payments and late fees. Through automated and recurring payments, you can free up your AP department and finance team for other tasks.

Our flexible payment solutions are convenient and effective for B2B transactions. Whether you want to pay with ACH payments or a digital wallet, we can walk you through the entire setup and integration process.

Throughout the process, we can help companies transform manual, fragmented payment processes into fully compliant, automated workflows. Our experienced payment processing experts will help you achieve the maximum level of transparency, convenience, and reliability from your payment solutions. 

Final Thoughts

Whether you’re buying drill bits in bulk or need to pay a recurring SaaS bill, the right B2B payment automation is essential for your company’s success. Automation can change the way you receive, process, store, and reconcile invoices and vendor payments. 

From validating invoices to vendor onboarding, payment automation can improve your company’s operations. This simple change can reduce the amount of labor hours and effort required for day-to-day payment processing. Additionally, it can decrease the chance of errors, improve compliance, and boost your data security. 

If you want to automate B2B payments, our team can help. Reach out to our experienced payment processing experts today to learn more about the latest automation tools.