Many treasury managers are at a crossroads in their accounts payable (AP) operations:

Do they continue down a path of traditional paper-based AP processing? Or do they take a turn and automate payments?

There’s a solid argument to be made for automating payments. In an era when working capital is king, traditional AP processes built around the onsite printing and mailing of checks are time-consuming and costly.

Meanwhile, fraud risk has risen to become a top business concern, and checks remain the payment method most targeted by criminals. Reducing and/or outsourcing check issuance would mitigate that risk.

In many industries, vendors are expressing the desire to get paid faster and take advantage of electronic payment channels.

In response to such challenges, companies of all sizes are fulfilling the need to automate AP processes. But once they do, it gets tricky: How do they transition from traditional paper-based AP processing to automated AP without facing a lengthy and complex process?

A Solution for Transforming AP

One popular solution is to revamp and automate AP operations using a bank service commonly referred to as Integrated Payables.

Integrated Payables transforms once manual AP tasks into efficient work flows. The good news is that this tool no longer requires sophisticated file-formatting capabilities. Almost any business can use it.

The bank receives your Integrated Payables file, will print your disbursement checks, insert them into envelopes and mail them, while funneling your other transactions into the electronic payment channel you designate, such as the Automated Clearing House (ACH) network, Wire Network or even a virtual card solution.  

Integrated Payables Benefits

Efficiency and cost savings

Eliminating manual AP processing tasks such as printing, stuffing and mailing checks, and inputting instructions into multiple systems, can result in enormous time savings, freeing up AP staff to perform higher-value tasks and reducing errors and delays.

For businesses outsourcing their check payments, Integrated Payables provides postal cleansing and sorting, producing the lowest possible postage costs. It also eliminates the need to purchase and maintain check-printing equipment.

Moreover, our Integrated Payables tool adds efficiency by facilitating migration from check disbursements to less costly electronic payment alternatives such as ACH. 

Fraud risk mitigation

For businesses that use Integrated Payables to outsource their check payments, the service reduces check fraud risk and expense because they no longer must store and secure blank check stock on premises.

Integrated Payables also aids fraud prevention efforts by automatically delivering a Positive Pay file daily to the user’s online portal to enable the timely review of any suspicious items presented for payment.

Finally, by helping migrate payments from checks to electronic transactions, Integrated Payables shrinks check fraud exposure simply by reducing the number of checks a business is issuing.

Streamlined approvals, faster payments and improved vendor relations

If your company has multiple locations, the executives or managers who must sign off on disbursements may not always be in the office where you are printing checks, or they may be working remotely. That can make it difficult to secure timely approvals. Integrated Payables can streamline the process by allowing authorized signers to visit a portal and give their approval online.

Streamlining payment approvals can be beneficial to organizations of all sizes. Cadence Bank has a healthcare client, a physician’s practice issuing only about 50 checks a month, that adopted Integrated Payables primarily to enable the managing physician to conveniently approve payments when they’re on the go, which helps reduce payment delays.

The combination of speeding payment approvals and using vendors’ preferred electronic payment channels can lead to vendors receiving their payments faster. This can go a long way toward improving vendor relations.

Greater transparency

Integrated Payables supports a more transparent payables process that offers users greater control. Similar to how courier companies enable customers to track their packages from the moment they are sent to arrival at their delivery point, our Integrated Payables solution allows treasury managers to track the journey of their payments, from initiation to settlement. A more transparent payables process helps companies optimize liquidity while supporting their cash forecasting efforts.

A Smooth Transition to Automated AP 

Integrated Payables has been around for decades. However, adoption initially was restrained because many businesses were limited in their ability to create payment files in standard formats. These days more companies are equipped with enterprise resource planning (ERP) or accounting systems with sophisticated file export capabilities. And even at businesses that aren’t, if their system can generate payment instructions in an Excel or CSV flat file, their banks can generally format those payments for the desired channel. Cadence Bank has a large healthcare system client that opted to use Integrated Payables primarily to take advantage of the bank’s ability to take their payment data and produce a file of ACH transactions in an industry standard format.

Additionally, with Integrated Payables, banks can help businesses collaborate with their vendors to migrate check payments to electronic transactions more easily.

Implementing our Integrated Payables solution can be much smoother than you might imagine.

To learn more about Cadence Bank integrated payables, visit our website or contact your treasury management sales representative.  

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.