I often counsel people looking for automation in accounting to brace themselves because they are about ready to get hit with a barrage of terms that will become more of a hindrance than a help.
Here are a few, AP Automation, Accounts Payable Automation, Accounting Automation, EIPP, P2P, Purchase to Pay, Payment Automation, Payable Automation, eInvoicing, Electronic Invoicing… and there are more, but I have gotten tired of thinking and writing about them. The problem with terms is they can have different meaning to different people. I try as hard as I can to help sales people be very aware that just because you drop a term, and that term has meaning to you, it may mean nothing to the person you are dropping it on.
In the spirit of staying out of that same trap and using a term that means a lot to me, payment automation, and to ultimately answer the question – why are people ignoring payment automation? here is a definition (and because I made such a big point about giving a term that may mean something different to you than me). Payment Automation is the optimization of vendors receiving money for their products and services.
If you look at my definition it “technically” has nothing to do with electronic payments. True, electronic payments are a big part of payment automation, but it is not the only part. Payment Automation, if done right, has mostly to do with (1) communication with the vendor and (2) using the best payment vehicle.
The basis of vendor communication is to create a two-way street that will allow the vendor and clients the opportunity to speak and listen to the vendor’s payment needs. If this is the first time you have been told that a vendor has payment needs, you have now been welcomed into the new age of payments. Vendor payment needs are an ongoing fluid condition, not a one-time event. Their needs are (but not limited to) timing, amount, remittance and type.
A lot of the people who I talk with believe there are only two types of payments, checks and ACH. It’s true that these are the top two with check having a very firm lead, but there are other types. The one type that is gaining momentum and can help the payer the most are payments to credit card accounts. Placing payments onto the vendor’s credit card account will gain you a rebate and folks always like getting rebates.
So why do people ignore payment automation. Well, it’s because they don’t know what it is and the advantage of getting rebates as well as having better communication with vendors.
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