Automating Payouts & The Costs of Manual Payout Processes
7 Jun 2023
Harry Kearney, COO
In the fast-paced world of B2B business, efficiency and accuracy are crucial. However, many companies are still stuck on their manual and outdated processes for paying out vendors. These outdated methods can lead to various challenges, including increased costs, decreased productivity, and potential errors in reconciliation and reporting. In this blog post, we will explore the problems associated with manual payment processes, discuss the solution of automating payouts, and introduce a practical product that can revolutionise your payment workflows.
The costs and challenges of manual payout processes
Inefficient and error-prone manual payment processes can be a significant burden for businesses and can significantly hamper growth and scale. Let's take a closer look at the problems and costs associated with these outdated methods:
Manual payment processes require significant overhead. Time-consuming tasks such as collecting invoices, verifying them, getting payment approval, and executing payments can add up, impacting your bottom line. Additionally, manual processes are more prone to errors, resulting in potentially costly payment discrepancies and reconciliation issues. According to a study conducted by the Association for Financial Professionals (AFP), manual payment processes cost an average of $5 to $25 per transaction, significantly higher than automated methods.
Managing manual payment processes can be a time-consuming and repetitive task, diverting valuable employee hours from more strategic activities. The need for manual data entry, verification, and tracking not only slows down the process but also reduces productivity across multiple departments. According to a report by Goldman Sachs, the productivity loss from manual payment processes amounts to $1.5 trillion globally (2018).
Error prone and reconciliation risks
Manual payment processes are vulnerable to human errors, such as incorrect data entry, duplicate payments, or missed payments. These errors can damage relationships with vendors, leading to delays in future transactions and potentially impacting your business's reputation. Moreover, manual processes often lack the robust compliance and security measures necessary to protect sensitive financial information. The aforementioned AFP study also found that 66% of companies experience payment errors due to manual processes, leading to additional costs and time spent on reconciliation.
Lack of transparency towards vendors
Another critical problem with manual payment processes is the lack of transparency it offers to vendors. Manual methods often provide limited visibility into payment status and transaction details, causing frustration and uncertainty among vendors. The absence of real-time updates and notifications can lead to strained vendor relationships and delayed reconciliations. Furthermore, the lack of transparency makes it challenging to resolve payment disputes and address vendor inquiries promptly. This opacity hampers trust-building efforts with vendors and can negatively impact long-term partnerships.
Automating Payouts for Efficiency and Accuracy
To overcome the challenges of manual payment processes, businesses should consider automating their payouts to vendors. Automation offers several benefits, including improved efficiency, enhanced accuracy, and reduced costs. Here's what your company can do to streamline your payment workflows:
Implementing an integrated payment system
An integrated payment system is one that takes into consideration how the company actually does business, and is not dependent on manual overhead from the finance team. A company should be able to procure as they normally do in their ERP system, and have that procurement data trigger the relevant payments automatically - fully ready to be signed off on with 4-eyes approval flows.
Leveraging new payment rails
Companies can now embrace new payment rails such as with blockchain technology in full regulatory compliance, while using real money and not cryptocurrencies. Blockchain technology offers faster processing and settlement, greater programmability, and increased security and transparency leading to stronger vendor satisfaction and more efficient finance workflows.
Eliminate risk of errors
Automating payment processes helps mitigate the risk of fraud, enhances compliance, and provides a secure environment for financial transactions. Additionally, at ZTLment, we enable finance teams to put guardrails on their money, meaning they can only send money to pre-approved companies to reduce the risk of fraud and payment errors.
Shared ledger for end-to-end transparency
With ZTLment, you can create a shared ledger overview for your relevant stakeholders to track the status of payments in real-time. This helps you build trusted relations with your vendors and reduces the amount of disputes finance teams receive regarding payments.
Payment Workflows Without The Work
At ZTLment, our product philosophy is centred around one core concept: payment workflows without the work. By combining superior payment infrastructure on blockchain with a simple and intuitive user experience, we help finance teams reduce their manual overhead and reconciliation errors, and giving them the tools to build stronger and more transparent vendor relations.
How to get started:
Finance teams can get started with ZTLment without having to integrate to their cloud or ERP systems, with our simple drag-and-drop payment module. Simply export all outstanding payments from your ERP system and drop them into our Dashboard, and execute an unlimited amount of payments in under 30 seconds. See the video below for more context on how it works.
For end-to-end automation of vendor payouts, businesses can also integrate with our APIs to connect their data to automate payouts. For more information on this, visit our Developer page here or feel free to request access to our docs here!
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