The more integrated and automated your payment system, the more strategically you can spend. This goal is increasingly important as you try to stretch out your cash to get through the pandemic, payment specialists said in a CFO.com webinar.
You're not using your finance team members' time efficiently if they have to go into the office to get invoices to pay suppliers, said Kelly Moore, director of global business development for American Express.
It makes more sense if those invoices come into your system electronically and if the end-to-end process for paying them — matching them with the purchase order, getting payment approvals, and so one — is integrated into a single automated system.
"Automation has become much more of a need because of the pandemic," she said.
Only about 8% of organizations have a fully automated payment system, but that could increase as remote-work exposes inefficiencies in companies' systems, Moore said. In data American Express collected, 86% of organizations say payment automation is a priority. The credit card company is involved in the business-to-business payment industry through a virtual card product it sells to finance organizations.
The payment system is still mostly manual for about half of all organizations, a poll conducted during the webinar showed. Only about 16% or organizations have more than 75% of their system automated.
Control over spend
One of automation's biggest benefits is improved payments control, which enables you to time your spend to maximize cash return and get early-pay discounts if suppliers offer them, said Dan DeVall, senior sales and business development director for payments company Coupa.
Suppliers see efficiencies, too, especially when automation is combined with a virtual card. The virtual card enables organizations to make payments even when they don’t have the working capital by charging the card.
Almost a quarter of supplier payments, by value, come in past the due date, Moore said, so speeding payments could be especially helpful to struggling suppliers with cyclical or seasonal business.
"They typically get quicker payments versus waiting for a check to come," Moore said. "That can be a couple of days, seven days, depending. And in this environment they don't have to get into the office, open the envelope, process the check."
Both the purchaser and the supplier can get better visibility, too, because both sides can access a platform showing when the payment was sent, how much was sent, and what it was for. "It reduces work on the supplier’s end," said Moore. "They don’t have to call you."
Security can be enhanced, too, the specialists said, because automation reduces keystroke errors and flags payments that don't look right. The virtual card can also help because it uses a token system that ties the payment to a specific transaction, making it hard to use the token for unapproved purposes.
"Suppliers aren't getting an open credit card number," said Moore. "These are single-use virtual tokens, generated for a specific invoice or set of invoices, with exact dollar amount, fixed expiration date, and can only be run once. If somebody tried to run it a second time, it wouldn’t work."
Driving Resilience with Payments: Accelerate Supplier Payments Without Impacting Your Cash Position is sponsored by American Express and Coupa.