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Why Consolidated Payables Are Important

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedMar 20222 min read

Whether you’re transitioning to a paperless office or simply searching for ways to make your business processes more efficient, consolidated payables can help. In accounting, consolidation refers to the process of combining different financial statements into one. This same concept can be applied to consolidation in accounts payable, specifically its payment methods. Here’s a closer look at why consolidated payables are increasingly important in today’s digital business landscape.

What are consolidated payables?

Also called integrated payables, consolidated payables describe a service streamlining a company’s accounts payable process. Instead of manually processing each payment and sending it to your vendor, you can combine multiple payment methods into a single file for processing. This file is sent electronically to a bank or other integrated payables provider, who works to distribute the various payments accordingly. This type of consolidated clearing process works not only with electronic payments like ACH and wire transfers, but also with more traditional payment methods like checks.

By streamlining the payments process, a good consolidation accounts payable service frees your accounting team to work on higher value tasks.

Benefits of consolidated payables

There’s a multitude of advantages associated with using consolidation in accounts payable. You take what would normally be multiple payment methods, and combine them into a single file for faster, smoother processing. Although your business retains full control over your funds, the bank takes the reins to release the transactions according to your instructions.

In addition to the convenience of processing ACH, wire transfer, check, and card payments through a single file, here are some additional reasons why consolidated payables are important.

It makes digital migration easier: More businesses are now trying to reduce their reliance on paperwork and manual tasks. Using consolidated payables lets you start the process of migrating to a digital infrastructure without uprooting your entire IT and accounting system.
It gives you greater insight into business processes: Most of the best services out there offer an interactive central portal where you can log in to view real-time data regarding payments. This cuts down on vendor confusion regarding payments, and helps you control timing and cash flow.
It integrates easily with existing software: The best platforms will integrate with your existing accounting systems, assisting with report generation and invoicing.
It prevents human error: Manually processing thousands of invoices each week understandably leads to the potential for mistakes. These must be corrected, causing costly delays in payment processing. Consolidation in accounts payable uses automation to arrange payments on time and error-free.

How to choose a consolidated accounts payable solution

Is consolidation in accounts payable right for your business? This type of payments solution works best if you handle a high volume of different payment methods and juggle numerous vendors. If you already only pay a few vendors via bank transfer, you probably don’t need to use a full-service provider.

However, if you think your business could benefit from consolidated clearing, your bank should be the first port of call. Start the discussion and make sure that you’re on the same page about what you want to achieve with a consolidated payables solution. Your own bank may not be able to best meet your needs, so it’s a good idea to also shop around to compare providers. Find out how the services work, what the timelines look like, and which pricing models are available. Security is also vital for handling payments, so you’ll need to verify that the provider offers standard features like tokenization and other controls.

A good provider will also help you analyze the data associated with payments. Are there any patterns or trends you should be aware of? Consolidated payables can help you find ways to make the payments process more efficient, from start to finish.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.