Five reasons why AP software is better for payouts than your bank

It may seem convenient to rely on your bank portal for payables, but your business could be missing out on ways to ease work for your finance team and improve your vendor experience. Below are reasons why adopting automated accounts payable (AP) software is an excellent strategic move for your business. At the end, we offer tips on what to look for in an automated AP platform to get your search started.

1.  AP software offers a structured, seamless vendor onboarding process

Traditionally, AP collects vendor information through sending and receiving PDF forms, which often require printing, scanning and uploading to complete the process. In a digital-first world without printers and scanners, these legacy processes create needless time delays (and frustration) on both ends.

This manual process also lacks security, leaving vendors and suppliers at high risk of email fraud. Sole proprietors, for example, use their social security numbers for tax purposes. Vendors are trusting you to receive and store their financial data securely; any data leaks may possibly harm your relationship.

Additionally, gathering tax information from vendors can be difficult without an AP automation portal. Ideally, teams should collect tax documents before any payments are made to the vendor, but that doesn’t always happen. When tax forms aren’t collected early in the relationship, it can delay payment cycle.

Suggested reading: When do you need a W9 from a vendor?

AP software can simplify vendor onboarding by automating the process all within a secure, centralized platform. You can require vendors to provide their tax information at the start of the relationship before the first payment is even made.

2.  AP software offers better payment visibility with automated updates

Vendors like to know when they’re getting paid, but bank portals don’t commonly offer notification services to send those updates. Your business might get an email when you make a payment, but it’s still up to you to pass that information on to your vendor. This isn’t a thoughtful payment experience. When a vendor sends in an invoice, they trust your business to pay them on time. Leaving your vendors in the dark without payment status updates may lead to churn, especially if one of your competitors offers that option.

Suggested reading: Why real-time payments reduce gig worker churn

Lack of visibility also affects your finance teams, leaving them bogged down fielding inquiries from vendors about when they can expect their payment. Staying on top of these communications manually isn’t sustainable, especially during critical times like end-of-month reconciliation and tax season.

AP software provides full clarity into the payment timeline by sending automated updates to your vendors from the moment a payment is initiated to the moment it's deposited into their account.  

3.  AP software saves time when issuing checks and sending mass payments

Manually processing checks takes up valuable time your team could be spending on strategic tasks like forecasting and budgeting. To speed up the process, some automated AP software providers let you create and sign checks via their platform, and they’ll take care of printing and sending them out to your vendors.

Processing mass payouts also takes up lots of time when done manually. AP teams that manage a high volume of monthly payables navigate many details for each payment, such as verifying accuracy and adding remittance details. Monitoring all these data points while moving between a bank portal and accounting software is time consuming and inevitably leads to errors.

These processes are not sustainable at scale. A reliable AP team might be able to tackle a consistent payables volume month over month using a bank portal, but this leaves little room for new opportunities and growth. You’ll benefit from a solution that can smoothly transition into higher volume payables without bottlenecks.

4.  AP software gives you more payment options and faster processing speeds

Bank payment options can be limited and slow. Some banks won’t accept ACH, and those that do may have daily and monthly limits on the amount sent and received. For businesses that need to make cross-border payments, many foreign banks won’t accept a check for deposit, meaning that you’ll need a digital payment option if you want to work with foreign vendors.

Banks are also subject to business hours, which limits your ability to make payments promptly. Some payments will take three to five business days to process before they settle, especially if it's over a weekend or holiday.

Automated AP software can offer the fastest payment options available, including real-time payments (RTP). If you're unfamiliar, RTPs can be initiated at any time and on any day, including holidays and weekends, with funds instantly transferring from your account into your vendor's account.

Learn more: Make instant B2B payments a reality with Real-Time Payments

5.  AP software integrates with your accounting software

Bank portals don’t typically integrate with your accounting software, which means your finance team is likely spending time manually inputting data into your accounting software from your bank portal. It’s a pain to have to move back and forth between two or more systems to manage accuracy, and this ultimately leads to data entry mistakes.

Additionally, you don’t have a unified view of all your payables when using your bank because your finance team lacks access to remittance information. They may be able to see the recipient and amount, but there wouldn’t be PO or invoice numbers. This knowledge gap forces them to move back into accounting software to reconcile payments.

AP software can integrate with your accounting software or ERP to update data in real time: Any time you make a change in one program, the other will instantly update. Plus, you'll have a single source of truth for all your AP data.

Choosing automated AP software for your business

Automated software saves your team time, offers a better vendor experience and reduces data errors along the way. If you’re considering making the move to a centralized, automated accounts payable process, here are a few considerations to get you started.

A comparison of benefits that come with using AP automation software vs using your bank portal.

• Dig into the vendor experience. Some AP automation providers offer a white-label vendor signup process that can be tailored to your brand. Interacting with a signup process that includes your logo instills your vendors with trust because they instantly recognize they’re dealing with your brand and not a third party. Additionally, take a look at the AP provider’s notification setup including how and when they send out communication updates to your vendors.

• Look for time-saving features. If your team deals with high-volume payables, consider AP software that offers CSV-file uploads. And look for features like bulk actions that speed up approvals and editing tasks.

• Check for real-time, two-way syncing capabilities with your accounting software. Some providers may say they offer real-time, two syncing, but that’s not always the case. A great way to inquire about reliability is to ask a current customer. Also look for capabilities to sync any fields you create in your accounting software. Some providers allow any advanced or custom fields that your team uses in your accounting software to automatically pull into their platform.

• Review payment options that work both for your team and your vendors. Your AP platform should offer both traditional and digital-first options so that you can meet your vendors’ preferences. The platform should also offer fast payment speeds to help you maintain full control of your payables and eliminate late fees.

Don’t get boxed into relying on your bank portal for payables. Learn more about how AP automation software can help you access faster payments, seamless vendor onboarding and real-time data.

• Finance tech stack done right: Ensuring a two-way sync with your payables and accounting software

• The benefits of a real-time, two-way sync

• How to choose the right platform for high-volume AP