Many companies are taking part in a major digital transformation, redesigning vendor payment processes from traditional paper methods to digital payment solutions.
The benefits of going digital are far reaching, affecting departments from HR to marketing to sales. Companies may find themselves saving time and money, improving speed and experiencing greater accuracy.
There are many steps a business should take to digitize their accounting process, including the payment (accounts payable) system. Here are five tips that can help you ensure a seamless migration from paper to digital vendor payments:
1. Understand why it works.
To achieve the best return on investment, an organization must understand how and why to digitize their payments.
You may have plenty of questions about adopting a new process for vendor payments. Are you concerned about a potential loss of control over the process? Will the technology protect your data? Taking the time up front to ease your concerns will help you get on board.
To further illustrate why digital vendor payment solutions work, a company should return to its existing process. Determine how long it takes to handle each vendor invoice and what it costs the company in terms of labor, materials and time.
Sharing this information with the accounting department will also help you get buy-in. It will motivate the team to migrate to a digitized vendor payment process. It’s important to highlight how the process reduces their tasks without putting them out of a job.
2. Use a cloud-based vendor payment system.
This is an ideal approach for taking all your paper files and converting them to a digital platform. Many of the cloud-based accounts payable (AP) systems provide a way to scan all paper bills to help set up up a record of previous payment.
Going forward, digital vendor payments also enable companies to simply email their invoices for easier tracking, record keeping, and payment. Using a cloud-based system means that anyone charged with the responsibility of paying vendor invoices can do so from any device that can log in to the company’s system. The result is faster vendor payments. This goes a long way toward developing a long-lasting relationship with those companies or individuals.
3. Identify a digital vendor payment solution with scalable features.
Although the main component of a vendor payment process involves an invoice and payment, there are many related tasks that are critical to the digital vendor payment system.
Look for a solution that provides document management capabilities for filing and tracking invoices and payment records. The digital vendor payment process should offer workflow automation to reduce work time and automatic audit trails to review payment processes and vendor accounts.
Also, vendors can select from multiple payment methods like ACH or eChecks. Mobile access and integration with other types of accounting systems also ensures that the digital AP process fits within an organization.
4. Use automated workflows to secure digital vendor payment data and records.
When using a paper vendor payment system, a company may have had an informal workflow. The workflow ensures the vendor payment process involves the right decision-makers. But, it may not have been secure enough to protect information or facilitate fast payment.
For example, in a traditional vendor payment system, a company receives an invoice from a vendor and then an employee who used the vendor confirms the invoice amount. Then, the invoice goes to the accounts payable department. If the invoice is over a certain amount, it may also go to a company executive to approve it before it gets returned to AP for payment.
Although it seems basic, the problem is that if someone in that workflow is not available, the invoice is not processed. Later, there is no way to audit those invoices to understand how the workflow impacted payment cycles and performance.
This is why it’s crucial to leverage the automated workflow tools that are part of the digital vendor payment process. When the team and vendors learn to use a digital vendor payment system, the invoices move electronically through the automated workflow to get to the appropriate person. The system obtains the necessary approval before moving the invoice on to the rest of the links in the workflow chain. With automatic tracking of workflows, it’s also possible to leverage an accurate auditing process.
5. Start integrating for optimized productivity.
Although the digital vendor payment process already supercharges part of the accounting work, the next step is to raise the bar on productivity and help save more money by integrating it with other tools.
Since all accounts payable tasks take part in the overall financial framework, start with the accounting system. Integration can help avoid double data entry and eliminate human error. It will also maintain a more accurate view of your financial performance and simplify the entire accounting process.
Look for other tools to integrate, including the payment processing methods like online and mobile bill payment solutions, business bank accounts and security and identity verification software.
Time, Planning, and Communication
The transformation to digital payment solutions will not happen overnight. Be ready to commit the time, careful planning and teamwork that digitizing the vendor payment process requires.
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