7 Payment Automation Myths

November 10, 2021 by Dani McArthur

7 Payment Automation Myths

Payment automation is on the rise as many local government and school organizations have discovered its ability to boost efficiency and cost savings. But, as its popularity has increased, so have the myths surrounding it. Here’s a look at seven of the most common payment automation misconceptions and why these shouldn’t be holding your accounts payable department back.

1. We will have less control if we’re not signing checks.

Truth: AP Automation operates within your existing payments process, so you will enjoy the same level of control you experience today. Payments are only issued with your explicit delivery of the payment data. Your standard approval processes will also seamlessly adapt to this program.

2. We can do electronic payments through our bank.

Truth: Your bank can deliver electronic payments to your vendors, but it’s not that simple. First, you need to provide your bank with specific details: who to pay, how to pay them, and where the money should be sent. However, your bank will not help you streamline your payment process, optimize the payment method to minimize costs, follow up on each payment to reduce labor, and assume liability for the payment to reduce risk.

3. We use positive pay, so we don’t need to worry about fraud.

Truth: The positive pay service used by your bank only matches the account number, check number, and dollar amount of the check but still allows bad actors to compromise the check. There has also been a significant increase in ACH fraud, with fraudsters calling an AP department pretending to be a vendor updating their banking information. Payment automation mitigates these risks because liability is transferred away from you and onto the automation vendor.

4. We don’t have time to implement payment automation. We have too many other initiatives.

Truth: Implementation takes approximately 30-45 days for most new setups, but your automation vendor will do all the heavy lifting during this process. The time required by you is minimal, creating a high ROI per hour of staff time.

5. We will lose money because we earn less float.

Truth: The upside of reducing costs far outweighs any lost float — typically by quite a large margin. A trusted automation provider can run a payment analysis to walk you through the numbers.

6. Our vendors will not take a credit card payment.

Truth: Many vendors accept credit cards because they ensure payments are delivered quickly and securely, and the funds are guaranteed. Still concerned? Your automation provider will work with your vendors to determine their willingness to receive card payments and send a check or ACH on your behalf if that is your vendor’s preference.

7. Our vendors will charge me more to take a card payment.

Truth: Most vendors accepting credit cards as a form of payment have already accepted credit card fees as a cost of doing business. There are a few vendors who will only take a card payment if they charge a premium. In this case, you can work with your automation provider to pay those vendors by card or another payment such as ACH.

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