Payment File

What is a Payment File?

A payment file is a document that contains information required to move funds from your account to the vendor’s account.

Data in payment files usually include the following:

• Payer’s bank details for the account used to settle payments
• Vendor’s bank account
• Amount
• Payment references such as purchase order and invoice numbers

Details required for creating the payment file may vary from one company to another.

How Do Companies Use Payment Files?

Companies use payment files when making batch payments.

In batch payment, companies consolidate all invoices ready for payment for a certain period, like daily or weekly. By paying in bulk, organizations create a more efficient way to process large volumes of invoices rather than paying invoices one by one.

The first step in making batch payments is to create a batch of transactions in a single file – this would be the payment file. Companies would then send the payment file to the bank, a payment gateway, or a payment processor that sends payments to individual recipients.

What Are the Benefits of Making Batch Payments?

With batch payments, companies make multiple payments to several vendors in a single transaction leading to the following benefits.

• Time savings. Sending payments in a single transaction allows companies to settle obligations to vendors, employees, and beneficiaries faster. Employees spend less time processing payments to multiple vendors by eliminating the manual process of sending payments to individual recipients.
• Fewer errors. With batch payments, companies can reduce errors since payment processors can review information from all approved invoices before scheduling payments.
• Better security. Most companies use a payment gateway when making batch payments, reducing fraud risks since the actual transfer of funds happens through an automated process based on the information added to the payment file. Since paying vendors requires fewer human touchpoints, fraudsters have fewer opportunities to tamper with transactions.
• Lower payment costs. Sending payments in batches reduces payment processing costs which could generate sizable savings for organizations.

Can Companies Create Payment Files Manually?

Companies can collect information manually to create a payment file, but errors can occur when employees perform data entry. If the company works with a bank that deposits payments to each recipient, the company still saves time since they don’t have to make multiple payments. However, the payment file itself is prone to errors. Companies are more likely to encounter issues like incorrect amounts or missed payments with manually-created payment files.

With payment automation, you can take information directly from your ERP or invoice processing software, creating a more efficient process with fewer payment errors.

How Are Payment Files Relevant to Payment Automation?

Payment files are the essential link between invoice processing and payment processing. Companies with automated accounts payable platforms use technology to speed up transactions required to reach the “ready-for-payment” status for invoices. Payment files use information from these approved invoices to enable payment automation.

The first step in automating payments requires payment files that will automatically be processed based on rules customized by organizations. Artificial Intelligence (AI) compares information from payment files with approved invoices and performs payment validation for all transactions.

Optimize Payment Processes With SoftCoPay

Managing all vendor payments through one payment file is possible with SoftCoPay. Simplify all administrative tasks required to speed up the process of paying vendors on time with automation solutions from SoftCo.

SoftCoPay, an automated payment solution powered by Corpay, creates an automated workflow to simplify payment processes. With payment automation, companies can increase payment security, create a single routine for paying vendors, eliminate human error, accelerate payment processes, improve vendor relations, and achieve real-time visibility over vendor payments.