Getting Started with Automated Payments? Top 10 Questions Answered
Blog / AP Payments
Jun 30, 2021
Getting Started with Automated Payments?
Top 10 Questions Answered
Making payments to hundreds of vendors can take up a lot of time – especially if you're not using automated payments processes. We've identified the most important answers you need to get started with automated B2B payments for your multifamily, CRE, or other real estate business.
1. What are the benefits of automated payments?
A). Decreasing the costs and time spent managing payments are the top benefits.
By automating payments, AP payment costs often drop by 40%. That’s because outsourced B2B payments providers, like Nexus, pay your vendors with electronic methods like virtual cards or ACH. There are no postage, toner or printers to buy.
Plus, there are big time savings too. Many Nexus customers report they’ve reduced their payments time by 50% over manual check cutting because everything is available online for approvals, reconciliation, and tracking.
Finally, payments through virtual card often qualify for rebates that defray licensing costs.
2. Will my suppliers accept automated electronic payments?
A) Yes. Suppliers are now accustomed to electronic payments, such as virtual cards and ACH, and many expect their buyers (payors) to use them. In a Nexus study of supplier behavior, 60% of suppliers said they will honor their buyers’ preferences**. They don’t want to lose a customer. Plus, many suppliers prefer payment via virtual card or ACH because they are faster and more secure than check.
3. How do virtual cards generate rebates?
A) Virtual cards work similarly to regular credit cards and are backed by the same institutions. These companies charge an interchange fee which the supplier absorbs when he/she swipes the card. Part of that fee is often rebated back to the B2B payments company and the buyer.
4. Will suppliers increase the rates they charge me if they accept virtual card as a payment method?
A) While we’ve heard of some rare instances of suppliers raising rates, we know it’s not a widespread practice. Most suppliers simply consider any virtual card fees they incur as a normal cost of doing business.
In fact, many suppliers don’t have a choice because their customers require payment through Nexus Virtual Card and ACH.
5. What visibility into digital B2B payments – and their details – will suppliers have?
Depending on the provider, you can increase the visibility suppliers have into the payments process.
Nexus has an industry-leading self-service portal, NexusConnect, where suppliers can easily check both invoice and payment details throughout the entire payment cycle - at no cost. Nexus customers report that calls and emails from suppliers decrease by about 75%, thanks to all the information available in the self-service portal.
6. How quickly will my vendors get paid?
A) Automating payments is a lot faster than mailing checks manually. But how fast depends on the provider. Nexus will pay suppliers on your behalf immediately and electronic payment receipt usually takes just a few days.
However, not all digital B2B payments companies pay vendors as soon as they get money from you. Some providers will actually hold the money first (so they can earn interest on it). So, make sure to find out if there’s a hold on funds and, if so, how long it lasts.
7. Are electronic payments, like virtual card and ACH, safe?
Yes, both are far more secure than checks. Of the 3, virtual cards are the most secure method.
Per the Association of Financial Professionals, virtual cards made up only 3% of targeted payment fraud, while checks clocked in at 74%. The AFP also says 33% of financial professionals reported that their organization’s ACH payments were subject to fraud/fraud attempts.***
8. I hear a lot of companies talking about supplier network. Why is that important?
A) Many B2B payments companies boast that they have thousands of suppliers in their network who are eager and ready to accept payments through virtual cards. While that’s an impressive marketing statistic, it won’t help you earn rebates or “go electronic” quickly.
That’s because the B2B provider must have the “right” type of suppliers in network who have said “yes” to accepting their virtual card. So for example, if you are in real estate, you need suppliers that are connected to real estate, like HVAC, plumbing, landscaping, etc. and have also agreed to accept virtual card or participate in electronic payments. If those suppliers aren’t in your provider’s network, the payments provider is essentially starting from zero because it has to cold call your suppliers and get them on board with them. That’s a big trust and time gap the provider has to cross.
9. How will the automated payments platform integrate with my system of record/GL?
A) When you pay through an outsourced provider like Nexus, your payments activity is automatically synced to your system of record. You won’t have to do any manual entry.
10. Can I automate just my vendor payments, without automating invoice processing too?
A) Yes. With many providers, including Nexus, you can opt to automate only your vendor payments at first. However, there’s a lot more functionality when you automate payments and invoices together, such as the ability to see the full invoice that you paid or are about to pay.
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