Payment processing software: why do you need it?
Managing payments to staff and suppliers is a key priority for any business. But it’s often a manual, time-consuming process, fraught with the potential for errors.
Slow processing or payment errors can be costly, causing damage to both your business’s reputation and staff morale, as well as knock-on effects for your cashflow.
With the right software, you can reduce those risks and keep your payment systems running as smoothly as possible.
What is payment processing software?
Payment processing software allows businesses to manage various types of payments in bulk.
It sits in between accounting software such as Xero and your bank. Once money is deposited into the software you can use it to pay employee’s and suppliers in bulk from the payment processing platform.
The features available might vary depending on the tool you use, but the software often allows you to collect together paperwork from a single source (Xero) that might otherwise be managed by multiple people in multiple inboxes.
The platforms make smart use of technologies like artificial intelligence to speed up the process, such as extracting data from PDF or paper invoices which will mean bank details are automatically stored in the software..
Benefits of payment processing software
Businesses can benefit from payment processing software in several ways:
Being able to handle everything in bulk, and automate the extraction of details you need, is a huge time saver for anyone processing payments. The time you free up on manual processing can then be used to complete more, or higher-value tasks.
There’s a delicate balance to strike in the timing of your payments to suppliers. Pay as and when you receive an invoice, and you’ll end up with an unpredictable, fluctuating cashflow – but pay too late, and you could damage your relationships. Software gives you better control, allowing you to handle your payments in one go at a time that suits your business.
Clear audit trail
With everything recorded in one system, there’s no uncertainty about which invoices you’ve already paid. That saves time digging up information, but it also provides full transparency if you ever need an audit.
This oversight of the payment process means you’ll have visibility if any transactions don’t seem right, reducing the potential for fraud. You’ll also be able to assign users different levels of authority, controlling who is able to make payments, and making sure specific steps are followed.
Avoid human error
Whether it’s inputting bank details or payment amounts, even a single incorrect number can make all the difference. By automatically importing and transferring data, payment processing software can eliminate this risk.
Knowing your data is error-free should give you confidence to do more with it, using it to inform your understanding of your business performance. Many software tools come with dashboards to monitor your cashflow and make further improvements to your payment processes.
Many payment processing platforms include the option to integrate with other accounting software, making more of your financial processes quick and efficient – for example, by reconciling transactions with your bank feeds.
A company director can give an internal person or a trusted partner access to the software to make payments on their behalf without having access to the bank account, yet still having a clear sign off procedure.