Imagine how difficult it was to pay a bill back when livestock was the common form of payment. Since that time, many people have struggled to make bill payments easier, with tools ranging from leather bills to gold coins, to the introduction of credit cards. All often with mixed results.
Unfortunately, although we have more options and better technology for paying bills than ever before, it’s still a challenging process for many organizations. Just consider these stats from a Deloitte report:
- Cost of processing a typical supplier payment: $8.
- Percentage of that cost that represents AP labor time: 62%.
- Average time it takes the AP department of a middle market organization to complete a payment: About 30 days.
- Percentage of mid-market businesses who say the time it takes to process bill payments is a major productivity problem: 30%.
The irony is that although better technology for automating payments and streamlining accounts payable (AP) workflows is now available, many companies continue to use outdated systems. It may still be easier than herding cows, but they can create hours of unnecessary work and untold frustration. If your organization still uses legacy bill payment systems like Bill.com, it’s probably time to consider an upgrade to a more modern, comprehensive platform.
Why comprehensive spend management solutions represent the future of bill paying.
Spend management platforms optimize automation processes and advances in machine learning to reduce manual effort, provide accountability, and increase visibility. The result is a dramatic decrease in the time it takes to process bill payments. To name just one example, using automation to match invoices instead of doing so manually can save hours of tedious work.
Because they provide information across all purchasing functions, the benefits of incorporating bill payments into a comprehensive single platform extend beyond the time saved.
At a basic level, being able to view real-time financials for all spending activity is essential for knowing how much money is available before paying a bill. But the benefits can go even deeper, because having insight into spending across an organization in real time supports more informed decisions around payment terms and the timing of invoices paid. As a result, finance departments can play a more strategic role when they have a 360-degree view of spend activity.
Another, perhaps less tangible, benefit to having one central platform for all AP activity is the ability to create a more accountable culture for expenses and expense reporting. With a single platform, clearly defined approval policies, and intuitive workflows, all staff members are held to agreed-upon protocols and standards.
Is your bill payment solution keeping up?
It’s true that legacy bill payment platforms can get payments out the door. But if you’ve been using the same system for years, you may not realize how many ways that newer platforms can not just make life easier, but empower your finance team to play a more proactive role in managing employee spend.
Intelligent spend management solutions can:
Receive invoices with context. Are you tired of wondering why a purchase was made, or chasing down an employee to fill in some missing info? When an invoice is submitted with supporting documents, including the relevant email chain, you can find the answers at a glance.
Ensure payments are delivered on time. Timing is important for efficient bill payments. Being able to choose when you want a payment to go out helps you to maintain control, whether you want to pay immediately, by due date, or schedule a payment for a specific future date.
Expect the unexpected. In a perfect world, all vendors would pay the same way and never change their address or banking details. Employees would follow all corporate procedures with 100% compliance. And receipts wouldn’t be so easy to lose.
But most finance departments know that the world doesn’t always work that way. For example, an employee might pay a supplier by credit card while the invoice is being mailed to you. That could result in a double payment. On a similar note, an employee might categorize an expense incorrectly or put a receipt through the laundry. These very common occurrences lead to difficulties balancing the books and compliance.
To help deal with the unexpected, comprehensive spend management solutions offer:
- Details on vendor history so you can avoid duplicate payments or similar confusion.
- Auto categorization that uses machine learning to develop an understanding of spending patterns in order to correctly categorize an expense.
- A mobile app that makes requests for purchases on the go fast and efficient, and receipt submission as easy as taking a photo of the receipt on a phone.
- A vendor portal that lets vendors manage their own payment details, so they can update any changes themselves.
- A clear trail of how cash flows through the system by making bank withdrawals for each purchase, instead of consolidating all payments into one withdrawal at the end of the day, making bank account reconciliation a snap.
The importance of accommodating different forms of payment.
One of the most exciting recent developments in bill payments is the ability to pay with a virtual card. These cards allow bill payers to securely create a card, pay a bill with that card, and earn cash back for the transaction. It’s possible to optimize cash back by moving more payments onto virtual cards.
Of course, some vendors haven’t evolved as quickly, and still insist on checks. It’s a bit unclear when the first checks were exchanged, but one thing is certain: Checks are definitely an old-school payment method. They can carry extra costs to process (estimates for the cost of processing a check range from $1.50 to $11.00 per check), approvals can be complicated depending on who signs the checks, and they are more vulnerable to fraud. Nonetheless, some vendors insist on checks, so a good bill payment platform will allow this form of payment. Having clear approval workflows and the ability to stop payment on a check can reduce the risks this payment form can carry.
Bill paying platforms have evolved to enable accounts payable departments to do more with less, make fewer errors, and have more time to focus on higher-value work. If you’d like to learn more about the advantages of a spend management system for paying bills, contact Airbase.
