Integrated payables is an automated electronic solution to help businesses get payments out to vendors via those vendors’ preferred payment methods, offering cost savings and greater efficiencies compared with traditional methods.
“One of the primary goals of integrated payables is efficiency through automation,” says Jim Altman, Middle Market Pennsylvania Regional Executive at Huntington Bank. “It means no more manually signing checks, managing check stock or licking envelopes. It reduces costs while providing greater protection against fraud.”
Smart Business spoke with Altman about integrated payables and how it streamlines the payments process.
How does integrated payables work?
Integrated payables is a portal through which businesses can issue and reconcile payments. The interface allows users to automatically load payment files from their accounting software along with payment instructions from the portal’s vendor records so that payments are made through the vendor’s preferred method — ACH, virtual card, etc. It streamlines a process that, in the past, required different payment files or potentially different systems.
Those new to integrated payables receive training as well as help with the supplier enablement campaign through which the bank will reach out to a business’s vendors to determine their preferred method of payment and attempt to convert them to an electronic payment format.
What are the benefits of using integrated payables?
Moving to electronic payments though integrated payables can offer benefits to both payers and those receiving payments. From the perspective of the payer, the capabilities provided by integrated payables enable those who would otherwise spend their time writing and mailing checks to focus on more strategic company objectives.
Check fraud is the most common payments fraud, ranking above all other B2B payment methods. Switching from manual check payments to electronic payment methods such as single-use virtual credit cards, as well as implementing dual approval processes, all help businesses mitigate fraud. Additionally, some banks will automatically enroll integrated payable customers into positive pay to reduce check fraud risk.
Often not considered when thinking about payment methods is the total costs of checks. Those who are processing payments internally can face a total cost per check of between $3 and $20 each, which includes creating, signing, mailing and reconciliation. Automating payments reduces the total cost of payments because the integrated payables solution does the work. All payments are managed through one portal, and the payments are created and reconciled within the same portal.
Further, companies that use virtual cards can also take advantage of a rebate benefit where some of the interchange revenue is shared back with the payment originator. That can help offset banking fees or any other fees they might receive through processing.
In what ways might suppliers benefit from integrated payables?
Checks are still the primary payment method received by suppliers. When it comes to suppliers, there are benefits when they convert to more modern payment forms. For instance, taking a virtual card payment often means they can get paid faster versus other payment methods.
In addition to getting payment faster, suppliers typically receive detailed invoice data with electronic payments, making reconciliation much faster. Some systems even allow the reconciliation data to be integrated directly with a supplier’s receivables system.
Explore the options in the market to automate the payables processes because bringing a solution such as integrated payables onboard creates efficiencies that allow companies to focus more resources on their business and less on banking and payments. ●
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