How to Manage and Streamline Vendor Bill Payments

Are you struggling to manage all the processes and tech for bill payment? Do you find it challenging to keep track of due dates, payment amounts, and other details? If so, you're not alone. We have looked at the average number of payment methods used by our users and found, that more than half of businesses use more than 5 different ways to pay their suppliers, vendors, employees, authorities, etc. per entity.

Imagine having to juggle the processes and governance for managing all these bill payment applications. This can be a complex and time-consuming task. However, with the right strategies and tools, businesses can start effectively organizing and managing these applications to save time and reduce the risk of errors. 

In this article, we'll define what bill payments are, discuss the benefits of consolidating multiple bill payment methods, provide tips for effective organization and management of the various use cases, and explore the role of technology in simplifying the process.

What Are the Different Bill Payment Methods?

First, let us pin down what bill payments are. In its simplest form, bill payments are cash outflows to suppliers, that billed (or invoiced) a company for goods or services. This processes is usually tightly associated with Accounts Payables management, or Source-to-Pay process frameworks. The workflow's steps usually involve receiving a goods or services from suppliers, receiving a bill or invoice, and then pay this bill or invoice with one of the chose payment methods by the business.

The complexity of this process rises, when the number of bills hits a certain threshold for a company size, or when the company needs to juggle different payment methods for different vendors. A good rule of thumb: As soon as the company hits more than €1 million in annual turnover, or more than 100 bills to pay per month, they better start looking out for proper technology to support their workflows for vendor payments. Here's why: Just the data entry and 3-way matching takes manually at least 20-30 minutes (if you are fast... and accurate!). This sums up in 40-50 hours, or a full working week, per month alone to manage bills. At this point, technology can make a significant impact, in bringing down this time to less than 4-5 hours to manage the payments to your vendors. Vendors" can be understood quite broadly, as businesses have to pay all sorts of liabilities, such as goods, services, softwares, employees, insurance, tax authorities, banks, and so on.

Depending on the supplier, business sometimes are forced to pay their bill using multiple different methods. However, in most cases it is possible to centralise these methods into one. Examples of bill payment methods that businesses might consolidate include:

• Bank account-based payments: Many businesses have multiple accounts, such as a primary operating account and separate accounts for different departments or locations. Bank account payments can range across SEPA credit transfers and Direct Debits.
• Credit card-based payments: Businesses may also have multiple credit cards, such as cards with different spending limits or rewards programs. 
• Online payment services: In addition to bank accounts and credit cards, businesses may also use online payment services, such as PayPal, Payoneer, Wise, or Stripe, to make and receive payments.

Benefits from Consolidating Bill Payments

Imagine paying your Vimeo-subscription with PayPal, your Google or Microsoft workspace with your company's credit card, your office rent via a direct debit order, and your tax authorities per direct SEPA transfer. It's likely that you might already know this as reality in many businesses.

This is where platforms focusing on coordinating bill payments come in. When centralizing the management and organization of these payment methods into one place, companies gain access to significant cost reductions from time improvements:

• Improved control and visibility. When centralising all payments to one business account in a single platform, businesses get a comprehensive view of their obligations, manage their cash flow better, and ensure that bills are paid on time. 
• Reduced risk of errors. Consolidated payment methods reduces the risk of mistakes, making it easier to manage and update payment information by finance admins. As all these information remains in a single workspace, businesses can more easily update and collect payment information, and avoid costly mistakes.
• Easier reconciliation of payments. With a single business account to conduct bill payments, businesses also make it easier for themselves to reconcile their payments, as they have a single source of information for all payments made. This reduces the need for manual reconciliation and makes detecting and resolving discrepancies easier.

Tips for Managing Bill Payments

In principle, managing your bill payments is straight-forward: To effectively organize and manage your payment methods you need a clear overview of upcoming payments. To achieve this, businesses usually use software applications to automate the process, and review and update payment information regularly. Best-in-class CFOs and CEOs select their banking products based on which business account serves the best (bill payment) finance software to them:

1. Create a centralized payment schedule: It is essential to have a clear overview of upcoming payments and due dates. One way to do this is to create a centralized payment schedule that lists all bills that need to be paid, along with their due dates, payment amounts, and ideally using the central business account. This schedule is usually an out-of-the-box feature of bill payment software providers and can be used to track the progress of payments and to ensure that bills are paid on time.
2. Use software to automate the process: Software that automates the process of bill payment saves time and effort. These platforms combine next-generation business accounts with payment apps to schedule and manage payments, configure automatic payments for regular bills and schedule bulk payments in advance. Such tools help businesses reduce the need for manual data entry and free up resources that can be better spent on other tasks.
3. Regularly review and update payment information: To avoid errors and ensure that bills are paid on time, it's crucial to periodically review and update the payment information in all bill payment applications. This includes checking for changes in payment methods, verifying the accuracy of payment amounts, and ensuring that all payment information is up to date.
4. Consider the intersection of bill payments with accounting: Another tip for organizing and managing bill payments is to consider the intersection of your banking and payments wwith accounting software. Many accounting software programs, such as DATEV, QuickBooks and Xero, are helpful with importing payment information and transactions from bank accounts and credit cards. It is a key improvement to integrate your bill payments with accounting software to simplify the process of managing and reconciling payments.

The Role of Technology in Simplifying the Process

The benefits of technology in simplifying and streamlining multiple bill payment methods cannot be overstated. We are quite opinionated that the best CFOs and CEOs choose their payment and banking providers based on the software they receive to manage their workflow. When selecting online banking platforms, payment apps, or other digital tools, there is opportunity to automate and streamline payment processes, saving time and effort and can help to reduce the risk of errors:

• Online banking platforms advance to support CFO workflows better: Many banks and financial institutions started providing online platforms that allow businesses to manage their payments and other financial transactions. These platforms typically provide tools for scheduling and managing payments, such as automatic payments for regular bills and the ability to bulk schedule payments in advance.
• Payment apps that integrate deeply with accounting processes: In addition to online banking platforms, in recent years many apps came on the market that help businesses manage their payments. These apps often provide additional features, such as tracking spending or sending and receiving payments directly from mobile devices. A key feature to look out for is that these apps allow you to export your data seamlessly into your accounting systems, either via direct API integration, MT940, or SEPA CAMT.053 export.
• Other digital tools: Some accounting software programs offer tools for importing and managing payment information, which can help businesses to integrate their bill payments with their financial records. Other tools, such as payment gateways and payment processors offer to process online payments from customers and clients.

A thing to remember is that using online payment services, such as PayPal, Wise, or Stripe, can be efficient, but they are often associated with the highest fees in Europe. If cost is a concern, business owners should consider using holistic solutions that combine payment accounts with financial workflow management as they are more cost-effective and charge lower fees than online payment services. 

Automating Bill Payments with Friday Finance

Friday Finance takes the effort and manual tasks away from managing finances. Friday Finance offers business accounts designed to save time in managing bill payment workflows, which makes it possible to pay all bills in one place.

By automating bill payments, Friday Finance makes it easier for businesses to keep track of their accounts payable and avoid missing important payments. With the platform's fully integrated bill-pay solution, modern enterprises in Europe pay their bills instantly or schedule them for a later date, giving them greater control over their finances.

In addition, the finance operations platform allows businesses to see exactly who they need to pay and when they can pay them, making it easier to plan and manage their cash flow. By automating bill payments, Friday Finance helps businesses save time and reduce the risk of late payment fees and other financial penalties.