You may have noticed several new methods for vendor payments in your role as a business owner. Your customers might be hiring automated accounts payable (AP) software providers, for example, to handle your invoices and payments for them.
Like anything new, it may take a while to get used to this. We thought it might help if we explained more about how this system works. And we figured it would be especially instructive if we focused on the five biggest myths about these new payment methods – and debunk every one of them.
Why are we doing this? To make you feel more confident your vendor payments will be on time and secure, reduce your workload and help you grow your business faster.
Now let’s take on the myths.
5 Myths About Vendor Payments & AP Automation
1. It will take longer to get paid
If there’s one thing that’s been on your mind the past two years – given constrained business conditions – it’s probably been getting paid on time. As you’re no doubt aware, this has been a real problem for many companies.
During 2020, the peak of the pandemic, companies took more than 62 days (about two months) to pay suppliers – an all-time high, according to The Hackett Group.
Payment delays not a problem for small business owner
However, thanks to AP automation, payment delays haven’t been a problem for Jeff Gross, co-founder of a small business called Organically Maid. After his customer approves one of his payments, Jeff receives his funds in just three business days via AvidPay Direct, an AvidXchange enhanced direct deposit service. The three-day turnaround is twice as fast as a year ago when his customer paid him by paper check.
“I have a pretty small business and cash flow is very important,” he said. “Getting paid in an exceptionally timely fashion truly helps out.”
As this example shows, you don’t have to worry that it takes longer to get paid using a third-party provider such as AvidXchange. In fact, using a virtual credit card you can get paid as fast as one day after your buyer approves a payment.
Faster payments mean you’ll spend less time concerned about cash flow and have more time for high-value work such as recruiting talent and growth projects.
2. You won’t be able to track payment status
If a client of yours uses AvidXchange, you won’t be in the dark about what’s going on with your invoices and payments. You can easily access a single consolidated dashboard to see when your invoice is approved. You’ll receive an email notification when payment is sent.
That means you’ll have a better handle on your cash flow, making it easier and faster to make payments to workers, pay rent or invest in new services or products.
3. You’ll be forced to accept electronic vendor payments
You will not have to use electronic vendor payments if you work with AvidXchange. We’ll pay you by check if that’s what you prefer.
And of course, if you see advantages in automating payments via credit card or direct deposit, we can do that, too. It’s totally up to you. You can run your business in a more flexible way that suits your needs and those of your customers best.
However, according to a survey conducted by the Association for Finance Professionals (AFP), there’s a pervasive move to electronic payments for B2B transactions, with only 10 percent of respondents unsure or not at all likely to convert the majority of its B2B payments to suppliers from checks to electronic payments.
Meanwhile, 32% of organizations are already making the majority of their payments electronically and the remaining 58% are either very likely to or making it a priority to shift to electronic payments.
Likelihood of Organizations Converting Majority of B2B Payments Made to Suppliers from Checks to Electronic/ Digital Payments
4. You’ll lose control of your payment process
You won’t lose control. You’ll still have ultimate oversight of your invoice and payment process. Any valuable data about your payments — status, amounts, dates and so on — will be readily available to you.
Tracy Call, an executive assistant for a training software provider called Smart Training, likes receiving payments via AvidXchange because it’s clear how the process runs.
“I like knowing that my request for money has been sent and received and there’s no mystery,” she said. “I don’t have to wonder why I haven’t been paid yet. I like the communication of sending our invoices via email because it’s so simple. Having an electronic process is far more scalable for our business than a paper process.”
Without the mystery, you’ll feel confident in how you spend your money because you’ll know when to expect payments that boost your cash flow.
5. You’ll create tension with your customers
You may be concerned that when your third-party provider handles payments and fear you’ll somehow strain your relationship with customers. In fact, the opposite is true.
You won’t have to contact them, for instance, asking when they’re going to pay you. When necessary, AvidXchange smoothly handles those issues, taking those time-consuming and often strained interactions off your to-do list.
Instead, you and your customers can focus on other important and potentially lucrative aspects of your business relationship.
The Truth About Vendor Payments & AP Automation
These five myths are just that – myths. What is true is AP automation providers help vendors get paid faster with fewer mistakes while offering greater visibility into cash flow.
And above all else, it’s important to remember the process should be easy for you. You should be able to see the status of your invoices and payments at any time. You deserve to be in control and know when you’ll get paid. You shouldn’t have to chase payments and risk straining relationships with your customers.
To learn more about the supplier experience with AvidXchange, click here.