If you’re a business owner then vendor payout is a term that you’re most familiar with. It is one of the most important aspects of a business in terms of cash flow among business operations. Each business utilises the goods and services from other businesses or companies be it in the form of raw materials, consultancy service, hiring, food service, IT infrastructure purchase and what not. In most cases, businesses have a separate system that takes care of the vendor invoices and pays them before the due dates. However, there are certain problems with the traditional vendor payout systems.
This article will help you get familiarized with the challenges with older vendor payouts systems and how modern-day solutions can simplify the whole process. So, without wasting much time, let’s begin!
About Vendor Payouts
So, what exactly are the vendor payouts? As the name suggests, vendor payouts is a method of paying other businesses including your partners, suppliers and other stakeholders for the services or products provided by them. To manage the vendor payouts effectively, every business needs to have a clean and well-organized way. This not only helps in strengthening the business relationships but also makes sure that you manage your money movement in a timely manner.
The Challenges With Traditional Vendor Payouts
On a general basis, businesses need to make numerous vendor payouts every month. Traditionally, it is done manually.
From collecting and checking the invoices to clearing them, everything is done by the employees. Because a lot of manual work is involved, the process of making vendor payouts becomes very tedious and time-consuming. Not just that, manual vendor payouts offer many other challenges as well :
1. Manual Data Entry
Manual data entry is sufficient when the number of invoices you receive can be counted on your fingertips. But this isn’t the case with many businesses. Each business tends to deal with hundreds of bills every month and manual data entry in such cases becomes the most complicated task. It is not only tedious and time-consuming but is prone to errors because of the involvement of manual effort. Even a single mistake in the calculations and accounting can cost you dollars of loss. Besides, you need to hire a special accounting team to handle the vendor payouts, which is another burden on the company.
2. Lengthy and Time-consuming Process
Processing vendor payouts by traditional means is a slow and lengthy process. You need to take care of everything from scratch, from adding new vendors to your list, collecting their information, verifying their accounts and then initiating the payment. This results in delayed and sometimes even failed payments. This not only impacts the reputation of your business but also makes you lose your valuable business partners.
3. Error-prone Manual Reconciliation
At the end of the week or month, businesses need to reconcile their cash flow. In the case of vendor payouts, they need to keep a check on due dates and payment processing of the beneficiaries. This not only eats up a lot of time but is also prone to errors and scams because of lack of visibility and a lot of guesswork that is involved in their payment processing.
4. Complicated Management
Usually, businesses manage their invoices by using excel sheets. As discussed above, it is fine for managing 10-15 invoices, but when the number gets bigger, things get complicated. Even if you just set up your business and don’t have to handle too many payouts, your needs will grow over time. And at that time, making manual payouts will not do any good to your business.
Modern Age Payment Solutions & Simplification of Vendor Payouts
Every business needs automated vendor payouts for better operations.
With the arrival of technology and digitization of the payment systems, vendor payouts has become a breeze. The biggest benefit offered by modern age payment solutions like online payment gateways is the automation of transaction management. These solutions suffice the increasing demands of modern businesses. Making vendor payouts today is quick, easy and smooth. No time-consuming data entry, no faulty calculations, no complicated payment management and no failed payments. Basically, all the issues imposed by manual transaction management are successfully removed by digital payment solutions. Using them, companies can strengthen their vendor relationships significantly.
So, if you’re still sticking to the conventional methods, you are only hampering your growth and killing your progress.
Still not convinced? here is how today’s payment solutions have simplified the payouts :
1. Faster Payments That Saves Time and Effort
Time is undoubtedly the most precious thing for businesses. An automated payment solution helps you speed up your payment cycle, make scheduled payments to the vendors without wasting a lot of time and manual efforts. Consequently, you can offer less time for invoice management and give that extra time to other important business segments.
2. Reduced Errors And Higher Accuracy
Today’s payment solutions eliminate the chances of errors and provide higher accuracy because of automation. There is no need to excel sheet management, manual data entry and transaction management. Reduced accounting mistakes offer an accurate and enhanced financial management that benefits your business as well as your vendors.
3. Saves Cost And Optimizes Cash Flow
Digital payment solutions are more cost-effective than one actually thinks. They save a lot of money for the companies. It helps you to free up the extra staff involved in the management of vendor payouts and assign them to other important projects. Moreover, automated payouts help in streamlining the process and optimizing the cash flow.
4. Offers Greater Security & Vendor Satisfaction
Automated payment gateways offer excellent safety features that keep your financial data safe and protected. They reduce the risk of data from hackers and fraudsters. Further, scheduled and timely payouts keep your vendors and supplier happy and satisfied. This helps in establishing stronger relationships with your partners.
As you can see, today’s advanced payment solutions have simplified the process of making vendor payouts to a significant level. Automation and advanced capabilities of modern payment solutions help businesses to maintain their cash movement, save time & effort and establish healthy relationships with their partners.