In addition to automating the procurement process, a more advanced tool like Tipalti can offer features that far exceed simply paying bills. Here are a few examples of how accounts payable automation software can benefit a business in other ways:
Look for a tool with an integrated supplier hub that will help streamline manual data entry and empower vendors.
Shift the responsibility of providing, managing, and maintaining accurate supplier data back to the supplier. AP team data entry mistakes are not responsible for late payments.
A portal that encourages self-service is beneficial for onboarding. The platform should easily guide suppliers through the entire process in real-time, which includes:
- Collecting contact details
- Verifying bank account information
- Collecting and validating IRS and VAT tax IDs
Look for an accounting system that either hosts a supplier hub or provides a white-labeled iFrame that will securely embed in the HTML of the business website.
This type of self-service cuts out manual processes and allows vendors to onboard quickly. The system eliminates duplicate registrations for a cleaner master file and cuts out extra time the AP department spends onboarding companies.
A supplier portal allows a business to collect vendor data and reduce payment errors securely.
Tools like Tipalti provide a rules engine driven by 26,000 different rules. It helps to identify payment issues before they happen and reduces payment error rates.
To gain cost savings, rules are instated will:
- Vet and validate local bank routing details, such as SWIFT and IBAN codes
- Screen OFAC blacklists
- Notify of any indiscretions
- And more…
These rules depend on a payee’s country and payment method. The most effective payable solutions will have built-in global payment intelligence and fraud prevention.
One of the biggest disruptions in the AP workflow is when suppliers flood with requests for payment status. Suppliers can check on their invoices and payment history in email notifications.
If a business deals with international vendors, then it needs a process that offers a preferred payment method and currency.
The supplier hub should support multiple languages and give companies the option to choose specific payment thresholds. The business will be in full tax and regulatory compliance.
The AP automation solution chosen should automatically comply with IRS tax provisions.
Self-registration on a supplier portal will prompt all vendors to provide their VAT/local tax ID as part of the data capture process.
AP operations are always up-to-date.
Artificial intelligence helps payees select the correct form/s, while thousands of automated rules verify details.
1099 and 1042-S end-of-year reports provide a submission-ready file that simplifies reporting to federal and state authorities. The file includes withholdings. It also makes it easy to maintain W-9, W-8BEN, and VAT details.
Look for an AP automation tool with tax compliance capability that is KPMG reviewed and approved to meet IRS requirements. Platforms like Tipalti enable non-US payers to take advantage of local tax/VAT ID collection in 49 countries.
Digitize Collection and Validation
The right AP system helps taxpayers choose correct forms based on the country and business structure.
Once the correct document is selected, the AP platform will digitize the information and apply thousands of rules (including TIN matching) to ensure the data is correct.
At year-end, the software generates all necessary reports and calculates withholdings for the IRS.
Search for tax compliance that supports:
- W-9, W-8BEN (-E), W-8EXP, W-8IMY, W-8ECI, W-4, or Form 8233
- Tax IDs are collected and optimized for electronic signatures
- Verification of tax data to ensure it is complete
- Protect a business from IRS penalties
The AP solution should provide tools for non-US payers, like local and VAT tax ID collection.
Look for systems like Tipalti that have a built-in tax engine. This technology validates against 3,000+ rules to prevent any ID errors or issues.
Any AP automation platform an accounting team has should proactively prevent fraud.
Tools enable detailed payee monitoring and mitigate risk exposure, making tools an ideal solution for global partner business models.
An integrated fraud management solution will enable a business to maintain a deep audit trail and stay in compliance.
A program that manages the end-to-end supplier payment process tracks a wide array of relevant data points, including:
- Contact details
- Account numbers
- Payment history
The program helps a company uncover any patterns of fraud and identify potential risk factors in a network.
Fraud management features like Tipalti Detect have a blocked payee list of 7,400+ and offer $4 million in potential savings. All of this without any additional work required from CFOs or the AP team.
Another way to proactively mitigate fraud is through risk checks. AP software uses current and historical data on all payees to perform comprehensive risk management.
Risk checks determine if a payee is related to other blocked or suspended payees or if any accounts match information like:
- Payment method details
- SSN or EIN
- Email (for PayPal users)
- Company name
- Phone number
Review and Resolve Cases
If there is a risk match on a payment or payee, AP software automatically opens a case and notifies the finance team with the appropriate permissions.
They can then review the details case-by-case and decide the next course of action. Filters will identify risk triggers.
The case enables a business to investigate quicker and more efficiently.
The AP system should keep records of every activity related to fraud. Comprehensive case records must show who reviewed the case, when, what the outcome was, and why.
Generate detailed payee reports to get insights on why someone is blocked and what
Payee reports allow a business the visibility needed to stop fraudsters before making a payout.
Advanced Payment Processing
Any simple AP system can handle a few bills, but what happens when a business needs to process dozens or even hundreds of invoices at once? Businesses must pay supplier invoices on time. Easily group e-invoices for payment, regardless of who they’re from or what method.
Automatically separate invoice approvals from the actual movement of cash to enforce segregation of duties. Supplier payments are on hold if adequate funds aren’t available.
Eliminate data entry across multiple bank portals, extra fees, and costly overhead—schedule payments in different methods, countries, and currencies in a single dashboard.
Look for an AP solution that automatically remits to suppliers with no interaction from the payable department. Invoicing can trigger payments, file uploads, or an open API.
All payment status and data from each method are reconciled, normalized, and sent off to ERP.
Automated AP solutions like Tipalti make doing business on a global scale easy. They help an organization pay 196 countries in 120 currencies, with 26,000 rules to validate supplier data and reduce payment errors.
Enterprise-grade financial controls will allow a business to use a variety of global payment methods.
Payment types include:
Look for features that include flexible and secure payments backed by solid, money transmitter licenses.
Protect all funds leaving the business. Institute internal solid controls, enforce delegation of authority, and segregations of duties to better scale payment operations.
Look for an AP solution that offers unlimited payment approvers, role-based access, and configurable workflows.
Successful AP software will enable a business to incentivize suppliers to choose the most cost-effective payment methods.
Transaction fees can occur with incentive or sent to the payees depending on their chosen payment methods.
Preset payment thresholds can hold payments until they reach a specified limit, which improves cost margins on transactions and bolsters supplier relationships.
Reducing calls to AP staff with proactive payment status communications keeps suppliers informed as to how payments are processed, when, and why they fail.
Vendors can view complete payment history in the supplier portal, freeing up hours for the AP team to focus more on issue resolution.
If additional information is required to process payment, payees are alerted. All payment communications should be white-labeled, so the brand always stays front and center.
Chapter 8: Advanced Capabilities: How to Maximize the Value of AP Automation Software