According to PwC and Strategy & Analysis, global cashless payment volumes are on track to increase 80% to nearly $1.9 trillion by 2025. What's fueling this growth? Well, there are a few factors at play, but the real game-changers shaping the future of modern economies include the rise of real-time payments, digital and mobile wallets, and digital currencies.

Now, this news might not be jaw-dropping. After all, many of us have probably recently used our mobile wallets to pay for a quick coffee. But in this blog, we want to focus on the underlying technology that's propelling this trend forward and a crucial factor in making payment processes a success in businesses — payment automation.

What Is Payment Automation?

Payment automation is simply the use of automated solutions to move money without time-consuming, manual processes. These solutions work digitally and can process transactions in real-time or near real-time. Regular individuals and businesses alike can use payment automation to pay bills, salaries, supplier invoices and product purchases.

By automating payments, businesses can expedite accounts payable processes, streamline operations and mitigate risks of human error — a common pitfall of manual payment processes. Ultimately, payment automation helps businesses optimize their financial workflows and frees employees to take on more strategic tasks.

It’s also worth mentioning payment automation is a small drop in the larger finance and accounting automation pool. In fact, automation brings the best gains for your organization when integrated with other processes for full, end-to-end efficiency. For example, with AP automation, invoice automation, KYC automation and AML automation.

How Does Payment Automation Work?

Intelligent automation (IA) solutions that include robotic process automation (RPA), artificial intelligence (AI), machine learning (ML) and other cognitive technologies are implemented to automate payment-related tasks. These payment-related tasks include:

• Invoice processing — IA solutions can capture and consolidate invoices from various sources with technologies like optical character recognition (OCR).
• Invoice validation — With rules-based algorithms, RPA digital workers can validate and verify the accuracy and completeness of invoice data.
• Payment approvals — Digital workers can route requests to the appropriate business stakeholders for review and authorization of payment.
• Complete invoice payments — IA can integrate with banking systems and payment gateways to schedule payments to go out.
• Fraud detection — AI and ML tools can help detect patterns and anomalies, flagging any anomalies to a human worker to review. For example, integrating AI and ML tools into the ACH verification process to validate bank account details.

Types of payment automation systems

Nearly every type of transaction has its own automated payment system. Here are some common examples:

• ACH payments
• Credit card payments
• Direct debit
• Recurring payments
• Online payments
• Invoicing

Benefits of Payment Automation

Adding payment automation to your workflow has many benefits; let’s go through them below.

Operational efficiency

Automation streamlines the entire payment process. It takes the manual and redundant workflows traditionally done by humans and gives them to digital workers, who can execute them faster and with a higher level of accuracy. These tasks include data entry and reconciliation. This also has a knock-on effect of other benefits like a faster payment cycle and improved cash flow management.

Cost management

Organizations can reduce costs with automation as digital workers are more efficient and productive. Automation’s accuracy also helps minimize errors and late payment costs and penalties. Over time, these savings can be substantial. Organizations can also save on transaction costs with digital payments, which are competitively priced compared to costs associated with processing paper checks or handling cash.

Fraud protection

Automation helps reduce the risk of payment fraud and enhances security measures as digital workers, with added AI, can be trained to spot irregularities and discrepancies. Additionally, rules and conditions can be set so organizations can ensure that only preapproved transactions are approved and paid. Automation also enables real-time transaction monitoring so businesses can respond quickly and proactively to potentially fraudulent activities.

Accuracy

Since digital workers can perform tasks at the same level of precision and consistency every time, they don’t fatigue like a human worker would. So, compared to manual processes, automated payment systems are less prone to human error and mistakes. This includes reducing the risk of duplicate payments, wrong data or inaccurate information from slipping past.

Oversight

Automation ensures that all payments are tracked, and not only does this help with compliance but it also helps with strategic planning. Businesses can capture accurate and real-time financial data for analysis such as cashflow forecasts for better decision-making.

Vendor satisfaction

As vendor payments are streamlined and made on time without error, vendor relationships are improved. Over time, automation helps establish consistent and reliable payments to vendors, laying the foundation for long-term loyalty and potentially capitalize on additional benefits like early payment discounts.

Compliance

Digital workers also help ensure better compliance. They enforce policies and requirements by standardizing processes and control, reducing the risk of non-compliance.

How To Set Up an Automated Payment System

Payment automation is relatively easy to set up; you just need to find the right solution for your organization. There are a few in the market that are available, some more advanced than others and some that are tailored to specific industries. Find out what you need in an automation solution and research exactly what’s out there. Some factors you might want to consider include:

1. Ease of use: Look for a solution with an intuitive user interface and options for no-/low-code customization to simplify creating automations.
2. Customization options: Determine the level of customization required for your unique needs. For example, whether you need extreme customization or prefer templated designs.
3. Features and functionality: Assess the features and functionality offered by the payment automation solution, including invoice processing, payment scheduling, approval workflows and reporting capabilities. Select a solution that aligns with your specific requirements and workflow processes.
4. Integration with other systems: Ensure your chosen solution seamlessly integrates with your existing systems, such as accounting software or other automation tools.
5. Security: Prioritize security features when selecting a payment automation solution. Look for solutions that adhere to industry-standard security practices and compliance regulations to protect sensitive financial data and ensure data privacy.
6. Cost: Consider the cost of implementing and maintaining the payment automation solution, including upfront costs and subscription fees.

Get Started With Payment Automation

With payment advancements and innovations in electronic payments becoming more prevalent, it's essential to ensure you have the right setup in place to leverage these advancements effectively. By implementing payment automation solutions and optimizing your payment processes, you can capitalize on the benefits of automation and use your resources more effectively.

Learn more about how you can start automating financial processes like payments today.

Download our e-book for a comprehensive starter guide on finance and accounting automation.