Money Movement

3 Strategies to Better Manage Patient Payments

    • zoucha-carrie-headshot.jpg
    • Carrie Zoucha

      Vice President, Commercial Payments-Centime Business Strategy
      Jun 17 2019

Today, many businesses still rely on manual processes for paying invoices and bills, but with more than 60 percent of companies using some form of accounts payable (AP) automation,[i] the time-consuming and potentially error-prone way of handling payments may soon become a thing of the past.

What Are the Benefits of Automated Payments?

If your business is still reliant on manual processes for making payments, you might benefit from evaluating your current AP process for automation potential. Automation can reduce a variety of risks associated with the payment cycle, including fraud, late payments, duplicate payments, processing and cash flow maximization.

When automating payments, invoices are scanned using optical character recognition. This approach has been shown to reduce staff workload in data entry as well as the risk of error since invoices are digitally matched to purchase orders, contracts and quotes.

From there, requests for payments move to approval. Each approval request is automatically sent with the attached invoice and can be easily approved by the appropriate and authorized approver. Once approved, your invoice is scheduled for payment. Two-way syncing between your accounting software and payment platform allows you to always stay reconciled with outstanding invoices and authorized payments. At this point, the approval record, receipts and payment records are all attached to the original invoice and filed electronically. If any of the information needs to be retrieved again, it is easily accessible across your business.

Best of all, the process happens with minimal staff intervention, freeing your employees to accomplish more value-added tasks, such as supplier and contract analysis or procurement discount negotiation.

When it comes to automating payments, improving efficiency should be your prime goal. Everything else, whether it be reducing costs, improving payment turn-around times or freeing up cash, all fall into line behind improved AP efficiency.

For instance, automating data entry allows you to free up resources for other tasks or to do more with fewer resources. This is of particular consideration if your business is growing and you are trying to decide whether to hire someone to take over your AP processes or gain efficiencies in other ways.

How Do I Know if Automating Payments Is Right for My Business?

One of the biggest reasons businesses adopt AP automation is to improve the efficiency of their payments process and to realize the associated outcomes. For instance, businesses that are automated report an average days payable outstanding (DPO) of 17 days compared to a DPO of 25 days for companies with no automation.[ii] It can make a major impact on your day to day cash flow.

Before it makes sense to automate payments, however, you need to be processing invoices and payments at an appropriate scale. Generally, if you don’t need to pay more than five to 10 bills in a month, automation may not make sense for you. The more payments you make, the better chance you will realize significant benefits from automation. If you are processing a significant amount of payments and you’re experiencing problems with your AP process, automating payments may ease the burden.

For instance, if you’re struggling to close your books in a timely manner, you may not be getting the right information at the right time. Payments must be tracked, received by the vendor, and then recorded before your reporting can be complete. A lack of real-time information delays this process, as well as introduces the potential for bookkeeping errors.

You’re also tracking an invoice across its entire lifecycle and during that process; there are multiple places where things can go wrong. What if the invoice is emailed to an approver who is on a two-week long vacation and no one follows up on the approval? What if a mistake is made when entering the information into your enterprise resource planning system (ERP) or accounting system?

Too often, businesses think that the problems they’re experiencing with their AP processes are just a normal part of doing business, when in reality; inefficient manual steps are to blame. Identifying areas of inefficiency and errors might just prove the case for automation.

Selecting the Right AP Automation Partner

When it comes to automating payments, change and control are often concerns that many businesses have. However, with the right system, a company should gain greater control and visibility into their AP processes, as well as gain confidence that payments are made the right way, to the right place the first time.

The key to well-executed AP automation is finding the right partner. The right financial institution can be a strategic partner in helping make and execute on this decision.

Your financial institution has your interests at heart and understands your payment process today. They are willing to sit down with you to understand your business. How many invoices you process a month, as well as the internal processes you already have in place, will play a key role in deciding which automation solution will provide you with the most streamlined and efficient environment.

If you’re thinking about automating payments, look for a partner who is knowledgeable about your business as well as AP automation systems. You’ll want someone who can guide you to the right decision based on your needs.

 

About the Author

Carrie has over 20 years of banking and payments industry experience. In her current role, Carrie has the opportunity to work with large corporate clients. She enjoys learning about their business and helping them grow by providing a range of solutions, including commercial card and corporate treasury services.

The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.