What are payment operations?
Payment operations, or PayOps is the facilitation of money moving in and out of a company. This involves tracking orders from initiating vendor payments through to reconciliation. Today, payment operations also involves implementing and maintaining various payment types, including electronic payments, and providing payment analysis to colleagues, clients, and partners. With so many crucial responsibilities, it’s common for payment operations teams to recruit the help of various tools or external business partners to streamline their work. A provider that can deliver both AP automation software and managed services has become one of the most popular resources for improving payment operations and unlocking additional efficiencies.
Key takeaways
- Businesses are under pressure to become more strategic, and many are looking to digitize their payment operations to help strengthen vendor relationships and improve cash flow.
- Through AP automation, businesses can unlock several benefits, including better visibility and cash flow management, increased accuracy, and reduced time and error.
- Managed services from MineralTree allow teams to embrace the future of digitization and seamlessly optimize payment operations.
The future of payment operations
Today’s finance teams are under immense pressure to be more strategic, requiring them to unlock clear visibility and accurate financial data. According to Harris Poll, 84% of organizations face problems such as slow payments, high rates of payment failures (or returns and refunds), and data quality errors. In short, firms are experiencing widespread payment operations issues.
To address these gaps, teams must first get a clear picture of their finances, which is why many teams are turning towards AP automation to help. In the latest State of AP Report, four in five finance professionals believe their organization needs automation to reduce inefficiencies and costs created by manual processes.
In recent years, ongoing supply chain disruptions, which have increased invoice processing and payment delays for finance teams, have been another source of AP automation’s growing popularity amongst teams looking to optimize their payment operations. Even as things begin to slowly stabilize, these payment delays have finance leaders placing even greater weight on vendor relationships than ever before. Looking at some of the biggest pain points for vendors, roughly 59% point to late payments from customers, and 25% said that following up on invoice payment status was among their biggest concerns. Thankfully, an AP automation tool can help strengthen supplier relationships with faster payments and increased visibility for vendors.
Best practices for payment operations
Here are a few key best practices for payment operations:
- Leverage automation
- Payment diversification
- Prioritize fraud prevention
- ERP integration
1. Leverage automation
Automation helps reduce manual errors and accelerate the accounts payable process. It allows teams to streamline invoice capture, approval workflows, and payments to speed up processing and provide better visibility into cash flow, which improves control over payments and strengthens vendor relationships.
2. Payment diversification
Payment diversification, including methods like checks, ACH, virtual cards, and wire transfers, offers flexibility and improves security. It allows companies to align with vendor preferences, reduce delays, and optimize cash flow.
3. Prioritize fraud prevention
Fraud prevention is a critical component of payment operations as it can help prevent significant financial loss, which can not only impact business operations but also damage reputation. By prioritizing fraud prevention, businesses can proactively help mitigate unauthorized transactions, prevent data breaches and invoice scams, ensure compliance, and maintain customer and vendor trust.
4. ERP integration
ERP integration helps automate manual processes like invoice approval and payment reconciliation, which can reduce time spent on manual tasks and errors. It also improves real-time visibility and makes it easier for businesses to drive scalability, maintain compliance, and streamline operations.
Benefits of using AP automation to optimize payment operations
As mentioned above, AP automation is one of the most common tools for teams to optimize their payment workflow. It offers a compelling range of benefits, including:
- Better cash flow management
- Visibility into the payment process
- Increased accuracy & reduction in human error
- Time savings
- Vendor management
- Increased rebates
- Reconciliation
- Optimized payment routing
Better cash flow management:
AP automation unlocks incredible visibility, making it easier than ever to pull relevant payment metrics. In turn, teams can easily capitalize on early payment discounts and rebates to further improve their bottom line. These analytics also make it easier for teams to optimize their payment mix and negotiate better supplier terms. By shifting the role of AP to be more strategic, AP automation enables businesses to better manage their cash flow and improve the financial health of their company.
Visibility into the payment process
Without AP automation, it can be difficult to discern where an invoice may be in the payment cycle. While manual processes require teams to sift through piles of papers or email inboxes to determine payment status, AP automation provides finance teams with key visibility into the payment process, thereby organizing all documents and simplifying the follow up for vendor payment inquiries.
Increased accuracy and reduction in human error
Automation reduces the risk of human error in the entire payment process. With increased accuracy, teams can reduce late payments while ensuring their data is reliable. With MineralTree, teams benefit from 99.5% accurate invoice capture, thanks to the power of OCR technology with human review. This data can also be used immediately for reporting, so teams don’t have to wait for an updated view of the financial health of the company.
Time savings
Recent economic instability has prompted organizations to prioritize efficiency gains across departments to improve overall cash flow and reduce operating costs. AP automation helps reduce redundant tasks, saving both time and money for AP teams to expand their work capacity.
Vendor management
MineralTree fields payment questions, resolves payment exceptions, and collects vendor bank account information on behalf of clients so their team doesn’t have to worry about keeping vendor payment information up to date.
Increased rebates
MineralTree can help route more payments through SilverPay to provide increased rebates to customers. MineralTree can also help teams enroll strategic vendors in virtual cards, relieving AP teams of the time-consuming communication required to update supplier payment types.
Reconciliation
Payments made through MineralTree Managed Services allow us to handle exceptions and field supplier questions, making reconciliation easier than ever. This allows your team to focus less on the small stuff and invest their time in more strategic projects.
Optimized payment routing
MineralTree evaluates which payment method is most advantageous for both the customer and their vendor, prioritizing the most efficient, secure, and cost-effective route.
Why AP Automation and payment operations go beyond just software
While software is an important component to improving payment operations, Managed Services from MineralTree can further extend the capabilities of your AP team to harness more value from your team. For example, working with MineralTree’s Managed Services team can help you easily earn cash back rebates by enrolling more vendors in electronic payment methods.
In the past, many companies noted that the ability to contact and enroll suppliers was a key obstacle to adopting electronic payments and optimizing their payment mix. In the latest State of AP report, resistance may be waning due to managed vendor enrollment programs by software vendors. With MineralTree Managed Services, for example, our team offloads these hours by cross-referencing our list of vendors who accept virtual cards with a client’s list of existing suppliers to identify any overlap. Additionally, we help clients by evaluating their current payment mix and suggesting ways to improve it.
One way we do this is by helping teams increase their use of virtual cards for payments. Companies who prioritize virtual cards reap the benefits of cash rebates and increased security measures. For example, Quartzy, a life science distributor, is on track to make $100,000 in rebates from virtual cards, resulting in an impressive revenue stream for its business.
AP automation case studies
cCARE reduces manual processes to improve its AP workflow
cCARE, a full-service, private oncology and hematology practice in California, previously relied on a manual AP process. These manual tasks created challenges for the team, such as decreased visibility into payment status and wasted time. With 1,000 invoices to process a month, the AP team was consumed with tasks related to managing invoice payments. As a result, cCARE looked for an AP automation solution to help them improve their invoice process. “MineralTree helped both AP staff members save 80% of the time we used to spend on our manual process,” said Ruby Linkins, cCare’s Accounts Payable Specialist. “This time savings has allowed us to spend more time focused on other high-value initiatives we simply couldn’t do before, such as reconciliations, expense analysis, and even helping to define a new purchasing process.”
House of Cheatham gains more visibility into the invoice payment process
House of Cheatham is one of the oldest continuing manufacturers of personal and beauty care products in America. Their team is committed to excellence, but their manual processes were too time-consuming and lacked visibility. By partnering with MineralTree, their team was able to get more insight into why certain invoices were taking longer to approve and what the AP balance was. David Carter, House of Cheatham’s Staff Accountant noted, “MineralTree makes all invoice details very visible and saves a lot of time. Where our previous payment process took at least six hours a week, our payment runs in MineralTree now take all of five minutes.”
Simple Mills uses AP automation to gain new insights
Simple Mills, a leading provider of better-for-you crackers, cookies, and snack bars, leveraged AP automation to not only improve its AP process, but to gain more powerful insights into improving their payment process. They can now evaluate metrics such as spend-by-vendor, and use this information to model specific business scenarios. “We look at what could happen if we extend payment terms or ask for early-pay discounts with certain suppliers,” said Maddy McGannon, Simple Mills’ Controller. “MineralTree gives us the insight to analyze our payment data and use it to improve business decision making.”
Final thoughts
At MineralTree, we empower clients to optimize their payments with a data-based strategy and seamless experience. With our Managed Services offering, we help customers optimize their payment methods by enrolling and managing vendors, monitoring payments, resolving any issues, and educating customers on how to make their payments more efficiently. To learn more, schedule a demo today.
