What is Payment Automation Software
Intro
If you are reading this article, chances are you're either a business owner or an intermediate investor seeking software to automate payments, but maybe you aren't exactly sure how it works or if there are any risks.
In this article, we will go over exactly what is payment automation software, and mention some of the benefits and features they offer. This may help you decide if this type of software would be useful to you and your business. We will go over some payment software examples for small businesses and include different types of payment automation software.
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What is Payment Automation Software?
To put it in simple terms, payment automation software helps a business with payment processing such as paying invoices and creating workflows to help with the approval process.
As a real estate investor and small business owner, I can say that it has been truly beneficial to not only me but my processes. With hundreds of invoices to pay weekly, having this automated helps me save time from either writing checks, E transferring vendors one by one, or picking up some cash (check out my article "Unlocking Higher E transfer Limits" for more information on how this works with software). All I need to do is enter the invoices in the system and approve them for payment. Once this is done I pay all invoices with a click of a mouse.
Payment automation software offers features such as approval workflows, integrations with accounting software, Payment execution, vendor management, payment scheduling and so much more. We will go over more features and benefits further in this article. You can see more about workflow management on Wikipedia.
Overall, payment automation software empowers real estate investors and business owners to streamline their operations, reduce costs, minimize risks, and focus more on growing their businesses.
Accounts Receivable Vs Accounts Payable Software
Accounts Receivable (AR) and Accounts Payable are two crucial components of financial management for business. Software designed to manage these functions plays an important role in streamlining operations, enhancing your efficiency, and ensuring accuracy with your financial transactions.
What is Accounts Receivable Software?
Accounts Receivable software automates the processes related to tracking and managing payments owed to you and your company by your customers/clients. It allows your business to create invoices, send them to your customers, and track your payments received.
AR Software Typically offers features such as invoice generation, payment reminders, customer account management, and reporting tools to monitor receivable aging and track outstanding balances. By automating these tasks, AR software helps your business accelerate cash flow, reduce manual errors, and improve collection efforts.
What is Accounts Payable Software?
Accounts Payable (AP) software automates the processes of managing your company's payments to its vendors, suppliers, and creditors. AP software facilitates invoice processing, approval workflows, payment scheduling, and reconciliation of accounts. It enables your business to streamline the entire accounts payable process, from invoice receipt to payment, while ensuring compliance with your payment terms and optimizing cash flow.
AP software will often integrate with other accounting systems, enabling seamless data exchange and providing insights into your company's cash flow projections, vendor relationships, and expense management.
In short, AR software focuses on managing incoming payments, AP software handles the outgoing payments. Both software are an essential part of any company to manage finances, help businesses optimize cash flow, reduce manual tasks, and improve your overall efficiency in managing your finances.
Check out my Resource Page for some of the top software to help you on your Real Estate Journey
AR and AP Software Typical Features
Invoice Generation and Management: Creating and managing invoices for sales (AR) or purchases (AP), including customization options and tracking capabilities.
Payment Processing: Facilitating various payment methods such as credit cards, checks, ACH transfers, and electronic funds transfers (EFT) for both AR and AP transactions.
Automated Billing: Automatically generate recurring invoices for regular customers or expenses, reducing manual effort and ensuring timely billing.
Payment Tracking and Reconciliation: Tracking payments received (AR) or made (AP) and reconciling them with corresponding invoices or bills to maintain accurate financial records.
Aging Reports: Generating reports that show the aging of outstanding receivables (AR) or payables (AP), helps your business to monitor overdue payments and manage cash flow effectively.
Customer and Vendor Management: Maintaining databases of customer (AR) or vendor (AP) information, including contact details, payment terms, and transaction history, to streamline communication and transactions.
Approval Workflows: Implementing customizable approval processes for invoices (AP) or credit requests (AR), ensuring proper authorization before payments are made or credits are issued.
Integration with Accounting Systems: Seamlessly integrating with accounting software such as QuickBooks, Xero, or SAP to synchronize AR and AP data, streamline financial reporting, and ensure consistency across all financial records.
Expense Management: Allowing businesses to track and manage expenses related to purchases (AP) or sales (AR), including reimbursement requests, expense approvals, and integration with expense management systems.
Credit Management: Providing tools to manage customer credit limits, perform credit checks, and track credit terms and balances for AR transactions, helping to mitigate credit risks and ensure timely payments.
Accounts Payable Examples
QuickBooks Online
QuickBooks Online offers robust AP functionality, including invoice management, payment processing, and expense tracking. It integrates seamlessly with other QuickBooks products for comprehensive accounting solutions.
Xero
Xero is a cloud-based accounting software that provides AP features such as invoice creation, bill payments, and bank reconciliation. It offers customizable approval workflows and integrates with over 800 third-party apps for extended functionality.
FreshBooks
FreshBooks is an all-in-one accounting solution that includes AP features like expense tracking, vendor management, and automatic payment reminders. It's user-friendly and suitable for small businesses and freelancers.
NetSuite
NetSuite is an enterprise resource planning (ERP) system that includes AP functionality along with other business management tools. It offers comprehensive AP automation, including invoice processing, vendor management, and financial reporting.
Plooto
Plooto is a versatile business management platform that includes AP features such as invoice management, expense tracking, and vendor management. It offers customizable workflows and integrates with popular payment gateways for seamless transactions. For more information on Plooto check out the article "Plooto Review and Pricing".
Accounts Receivable Software Examples
Zoho Books
Zoho Books is a cloud-based accounting software that offers robust AR features including invoicing, payment tracking, and customer management. It provides multi-currency support and integrates with other Zoho products for comprehensive business management.
Wave Accounting
Wave Accounting is a free accounting software that includes AR functionality such as invoicing, payment reminders, and customer statements. It's ideal for freelancers and small businesses looking for simple yet effective AR solutions.
Sage Intacct
Sage Intacct is an enterprise-grade cloud ERP system that offers advanced AR capabilities, including automated billing, revenue recognition, and subscription management. It's suitable for mid-sized to large businesses with complex AR needs.
Invoicera
Invoicera is an online invoicing and billing software that specializes in AR management. It offers features such as recurring billing, late fee calculations, and client portals for improved communication and payment processing.
Workday Financial Management
Workday Financial Management is a comprehensive financial management system that includes AR functionality alongside other modules. It offers features like revenue management, credit risk assessment, and AR analytics for informed decision-making.
Best AP Automation Software for a small business
The best AP automation software for a small business or real estate investor in my opinion is either Plooto or Quickbooks Online. They are both user-friendly, have great customer service, all the features you need such as invoice management, bill approvals, and payments and expense tracking.
Personally, I use both but lean a bit more towards Plooto to be the best. Although QuickBooks starts at $24/month and is the cheaper option, at $32/month Plooto is my favorite as I can pay vendors with multiple different payment options and in one large payment.
Outro
In summary, payment automation software simplifies payment processing, such as paying invoices and creating workflows for approval for your company. As a real estate investor and small business owner, I've found it to be an invaluable part of my company for managing my numerous invoices.
Payment automation software, such as Plooto or Quickbooks Online, offers numerous features that will save you and your business lots of time and help you from having manual payment errors. Whether you may need software for AR or AP there are many options out there that will work for you.
Check out my Resource Page for some of the top software to help you on your Real Estate Journey
FAQ
Which software is commonly used for AP automation?
There are several great options such as SAP Ariba, Plooto, Coupa, Concur Invoice, Bill.com, Quickbooks Online, Xero. All software will vary in use and it is important to review them all to make sure you choose one that meets your needs.
How does AP automation software work?
Accounts Payable (AP) automation software helps you streamline the managing bill approvals, invoices, and payments within your organization. It can help you do this with several features such as invoice capture, data extraction and validation, invoice approval workflow, Integrations, Payment processing, and more.
How do I automate invoice processing?
To automate your invoicing process you will need to get a payment automation software that fits your needs. Your PAS will then need to be set up with automated workflows based on some predefined rules you will set.
What is an AP system?
An AP system (accounts payable system), is a software solution designed to manage and streamline the process of paying bills and invoices.
What is the difference between AP and AR Software?
AR software focuses on managing incoming payments, AP software handles the outgoing payments.
Accounts Receivable is what type of account?
Accounts receivable are categorized as an asset account in a company's financial records. This classification indicates that it represents money owed to the business by its customers or clients for goods or services provided on credit