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Payment optimization is a strategic approach a business takes to streamline payments in the accounts payable workflow to:
Accounts payable teams select appropriate payment methods and timing according to the invoice or vendor. Payment processes also need to comply with applicable laws and regulations, which may change across borders.
Prioritizing payments in the accounts payable workflow requires a systematic approach to making critical payments on time, optimizing cash flow, and maintaining positive relationships with vendors. Aligning payment priorities may also require collaborating with other departments.
Implement payment automation to streamline processes, reduce delays, avoid errors, and have full visibility over all outstanding payables.
Here are some criteria that AP departments can use to prioritize payments:
Payment optimization plans often involve the following strategies:
Processing invoices with payments on a single platform offers a seamless way to keep track of the status of all ready-to-pay invoices and schedule them for payment. If you can transfer ready-to-pay invoices in bulk, you can also pay vendors faster through batch payments. Streamlining payment batches through automation minimizes manual errors and fraud risks.
Advanced analytics generates spend analysis per vendor, accurate payment trends, and real-time data that can improve cash flow forecasts. Identify ways to cut unnecessary spending using artificial intelligence that can process vast amounts of data.
Payment options like virtual cards offer rebates, providing an additional revenue stream to offset costs with no additional investment.
Vendors often offer incentives to pay early by offering a discount. In addition to maximizing cost savings, you avoid late fees and interest on overdue accounts and can also improve your relationship with vendors.
Automation empowers AP departments to send secure payments in a productive and cost-effective manner. With automation, you can make data-driven decisions, forge stronger vendor relationships, control expenses, and increase efficiency in the AP workflow.
Organizations aim to create efficient payment processes. However, roadblocks to fully automated payment processes include:
Automation can effectively address challenges and issues with data security by using robust security measures such as encryption and user authentication to maintain a secure environment. Using automated workflows to replace manual processes also limits access to sensitive information and creates a full audit trail.
Unlike manual processes that make compliance challenging, automated systems come with built-in solutions to maintain data security and generate reports required by regulation and industry standards. Systems can also be updated or integrated with other software to comply with new requirements without resorting to manual report generation.
Understanding the return on investment (ROI) for any technology investment is critical. You may end up with a greater return than expected from the cost savings.
Prioritizing efficiency in payments starts with streamlining payment processes, reducing manual tasks, and cutting transaction costs while maximizing rebates. Manage all business spending wisely through a single payment workflow using SoftCoPay.