What Vendors Expect From Accounts Payable

Like many business-based departments, accounts payable (AP) has undergone a remarkable transformation over the past decade or so. Once paper-driven and fraught with inefficiencies, delays, and human errors, AP departments worldwide have embraced technology to enhance speed and accuracy as well as reduce labor and management costs.

Historically reliant on manual invoice processes resulting in checks being delivered through the postal service, AP departments have consistently had to manage uncertainty regarding payment timelines and face increased risk of disputes over unpaid invoices. Fortunately, today’s advancements in digital technology have redefined the AP landscape, providing opportunities for faster transactions, better communication, and improved security.

Despite these advancements, however, many vendors still find themselves frustrated with their AP processes. Understanding what vendors expect from accounts payable is crucial for businesses aiming to foster better relationships and ensure smooth transactions. Let’s explore the key expectations vendors have regarding accounts payable and examine why these expectations are not always met.

Vendors Want to Get Paid On Time

One of the primary expectations vendors have from every business they work with is the assurance of timely payments. And just like any business, vendors rely on consistent cash flow to operate effectively. Any delays in payments have the capacity to create significant challenges which lead to cash flow disruptions, late fees, and strained relationships with stakeholders.

When vendors don’t receive payments as expected, it can affect their ability to meet their own financial obligations such as paying their employees or sourcing materials for their services. In essence, the fact that 55% of B2B invoices in the United States were paid late means paying them on time should be a top priority for every AP department.

Vendors Want Visibility into Invoice Status

To manage cash flow effectively and plan their operations around expected payments, most vendors prefer to know the status of their invoices immediately. In traditional AP systems, however, submitted invoices aren’t instantly traceable, so vendors wait in uncertainty and have to follow up multiple times to receive updates.

This lack of communication between AP departments and vendors can, over time, lead to frustration and mistrust. Vendors would rather work with systems that provide real-time updates on their invoice statuses–reducing the need for constant inquiries.

Vendors Want to Know Their Information is Secure 

A 2024 report by the Association for Financial Professionals found that 80% of organizations were victims of payment fraud attacks or attempts. With this notably rapid rise in cyber threats and data breaches, vendors are going to prioritize the security of their information, just like any business. They want assurance that their sensitive data, including financial details and payment information, is protected from unauthorized access.

As you’re likely already aware, security breaches can have severe consequences, including financial loss and damage to reputation. This will cause vendors to be increasingly concerned about how businesses handle their data, making it essential for AP departments to invest in robust security measures. 

Vendors Want Streamlined Onboarding to Automation Platforms

As more businesses adopt AP automation solutions, vendors expect a seamless onboarding process to these platforms. After all, with some vendors sending thousands of invoices out each month, they don’t have time to walk through complicated digitization initiatives from those they do business with. The overall goal is to ensure they can easily integrate into the new system without experiencing disruptions, and a reputable automation provider will ensure that.

What Is AP Automation?

Accounts payable automation refers to the use of technology to streamline and improve the efficiency of the accounts payable process. A business can choose to automate invoices through approval only or acquire an end-to-end solution that processes invoices from receipt all the way through to payment. 

The primary goal of AP automation is to reduce the reliance on manual processes, increase speed and accuracy, and enhance visibility throughout the invoice lifecycle.

Onboarding Vendors to an AP Automation Platform: 6 Steps

Onboarding vendors to an accounts payable (AP) automation platform is a crucial step in streamlining financial processes and enhancing vendor relationships. A smooth onboarding experience can help vendors adapt to new systems quickly and ensure they benefit from the efficiencies that AP automation offers. 

Here are the key steps to effectively onboarding vendors to an AP automation platform:

1. Preparation and Planning

Before beginning the onboarding process, it’s essential to prepare thoroughly and this means selecting an AP automation platform that meets the needs of both your organization and your vendors. Engage key stakeholders (including finance teams and vendor managers) to outline the goals and expectations of the onboarding process. Develop a clear timeline and assign responsibilities to ensure accountability throughout the process. Additionally, make sure the automation platform offers reliable and ongoing customer support, not just during implementation.

2. Communication with Vendors

Effective communication is critical to successful onboarding so reach out to vendors early in the process to inform them about the transition to the AP automation platform. Provide them with detailed information about the benefits of the new system and share the benefits, including faster payment processing, real-time invoice tracking, and enhanced security. Address any concerns they may have and outline the steps they will need to take to complete the onboarding process.

3. Gathering Vendor Information

As you prepare to digitize your invoicing, collect essential information from vendors to facilitate their onboarding. This typically includes gathering tax identification numbers, contact details, banking information for electronic payments, and any necessary compliance documents. Make the data collection process as straightforward as possible by providing templates or forms that vendors can fill out easily.

4. Training and Support

Once you’ve gathered all the information you need, provide vendors with training on how to use the AP automation platform; you can conduct online training sessions, create video tutorials, or write user manuals. Ensure that vendors understand how to submit invoices, track their payment status, and access support resources. Altogether, offering dedicated support during this phase can help resolve any issues that arise and reinforce the vendors' confidence in using the new system.

5. Testing the System

Before fully launching your AP automation platform, conduct a testing phase with a small group of vendors so both your team and the vendors can identify any potential issues or areas for improvement. Testing also ensures that the system works as intended and that vendors are comfortable navigating the platform.

6. Go Live and Continuous Improvement

Once you’re done testing and you’ve completed any necessary adjustments, it’s time to officially launch the AP automation platform for all vendors. During the first few weeks of onboarding, encourage feedback from vendors about their experience and the usability of the platform. Continuous improvement is key here; regularly review processes, address any challenges that arise, and keep vendors informed about updates or new features.

By following these steps, your business will be able to successfully onboard vendors to the platform while also improving efficiency, enhancing vendor satisfaction, and building stronger business relationships.

Frequently Asked Questions

What types of payments do automated systems support?

Automated accounts payable systems support a wide range of payment types, so your business can work with a variety of payment types to suit vendors’ needs. Besides credit cards and virtual credit cards, these systems can process electronic funds transfers (EFT), automated clearing house (ACH) payments, and wire transfers; some systems also support payment options like PayPal or other digital wallets. 

While the goal of AP automation is to move away from manual, paper-based payments, many platforms are flexible enough to also accommodate traditional payment methods like paper checks, making it easier for businesses to streamline their payment processes while keeping vendors satisfied.

What if vendors don’t want any banking information loaded to a digital platform?

Some vendors may be hesitant to provide banking information for digital payments, and this is often due to security concerns. Your automated AP system will address this by offering secure, encrypted platforms that protect sensitive information. Before onboarding, assure vendors that their data will be stored and transmitted securely, and that your business complies with industry standards for data protection. 

Your AP department can also offer alternative payment methods such as virtual credit cards or third-party payment platforms to accommodate vendors who are not comfortable sharing their banking details.

What’s the benefit of using an automated payment system with vendors who still prefer paper checks? 

The benefit of using an automated payment system with vendors who still prefer paper checks lies in the efficiency and control it provides. While vendors receive payments via their preferred method, businesses still have the ability to streamline internal processes by automating payment approvals, tracking, and recordkeeping.

Automated systems also reduce errors and delays often associated with manual handling and ensure payments are issued on time. Not only that, but AP automation offers better visibility into cash flow, improves payment security, and reduces administrative costs–even when your business issues paper checks. 

Transition Your Payments with Reliable AP Automation

AP automation has revolutionized the way businesses handle vendor transactions and offer increased efficiency, security, and visibility today. By addressing key vendor expectations—such as timely payments, invoice transparency, and secure data handling—you can continue building stronger relationships with your vendors and streamline your business’s financial processes. 

To learn more about improving your vendor transactions with AP automation, please contact us at CloudX today for a no-obligation demo. You can reach us by filling out this online form or call us at 860-787-5323.