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How to Automate Payments to Suppliers & Vendors

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Last editedApr 20232 min read

Manually processing and paying vendor or supplier invoices is far more time-consuming than vendor payment automation, while also incurring a much higher risk of human error. Automated vendor payments help you stay on top of payment deadlines and maintain a strong and healthy relationship with your suppliers.

In this guide to supplier payment automation, we explain what the terminology means as well as the best practices to automate supplier invoice processing at your business.

Vendor or supplier payments explained

A vendor payment is the amount your business pays to another business in exchange for goods or services. Usually the payments will be made to suppliers of the goods or materials required for your operations. Every business will have a variety of vendor payments they must make each month or at other intervals. This might include payments to the manufacturers of materials to stationary suppliers, transport services and perhaps outsourced IT support and even food and beverage providers.

The accounts payable department is usually responsible for handling vendor payments, though small businesses and start-ups might have a single individual responsible for all vendor payment management and vendor payment processes.

A typical vendor payment process begins with the sending of a supplier invoice to the buyer detailing the goods or services that have been rendered. Such invoices can be sent via post or by email, or via a supplier payments automation system.

The buyer will then verify the details on the invoice, including the items being charged for, the subtotals and overall total. Once it is approved, payment will be made according to the agreed due date on the invoice. Payments are made in a variety of ways agreed upon with the supplier, such as by credit or debit card, cheque, online banking or via an e-wallet.

As you can see, the manual process described above features multiple time-consuming steps which must be carried out by the accounts payable department every month. That is where vendor payment automation can make things a lot easier for both the buyer and the supplier.

Vendor payment automation explained

Using an accounts payable tool with a supplier payment automation function enables businesses to automate the process of paying suppliers. Vendor payment automation reduces the amount of manual tasks within the payment process, such as capturing and approving the invoice, as well as the execution of the payment.

This accounts payable workflow automation can then significantly improve the buyer’s relationship with their suppliers thanks to the reliability of timely payments and the visibility into the payment timeline.

For example, a business using GoCardless can encourage their suppliers and vendors to use GoCardless as well, which lets them set-up easy-to-manage recurring payments, as well as instant payments for ad hoc extras. It streamlines the process so there are no late payments or disputes over inaccurate payments.

How to automate supplier invoice processing

The first step is signing-up with a payments solution provider such as GoCardless. It’s easy to set-up and you can start getting paid almost immediately. You can then communicate with your vendors and introduce them to the solution, and help streamline their onboarding during the adoption of the supplier payments automation solution.

It will help if you have already established a strong relationship with the vendor or at least have a good history of doing business with each other. Brand new vendors can also be introduced to automated vendor payments as part of the introduction, with the timely and streamlined payment automation an attractive aspect of the pitch or approach.

The time saved during vendor payment automation can also benefit both your company and your suppliers through early payment discounts.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.

Over 70,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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