You are hanging out with your friends when suddenly they decide to watch a movie at your place. You agree, but as soon as you sign in to your streaming website, you notice that your subscription has been canceled due to non-payment. Sure, it is embarrassing, but automated payments are a solution for that.
As the name suggests automated payments are those that are directly sent to your billers from your bank account. These can be payments made for personal purposes and for business-related billings. Let’s dive deeper into the terms related to payment automation.
What is an Automated Payment System?
Payment processing with automated onboarding means creating a merchant account in the simplest way possible. The automated payment system lets the businesses expedite their financial processes which almost directly translates to earning more money. But, do we really need it?
Corporate time is literally money. We have all been in situations where manual payment processes blocked our chance of winning early-payment discounts and whatnot. In a report from PayStream Advisors, 31% of respondents claimed that manual routing of receipts for payments and authorization prevented them from receiving an early-payment incentive.
A little delay usually costs us a lot of money, but that is not all. If you get fortunate enough to save some cash, the scammers who usually target manual payment processes will rob you. A report found out that around 81% of companies were targets of fraud back in 2019. All of this while you are paying for all transactions more than you would pay for them if they were conducted electronically.
How Does Payment Automation Work?
Now, payment automation could work in two ways. The first one is called transfer via ACH transactions. ACH is the acronym for Automated Clearing House, where you tell your bank how much to pay, when to pay, and from which account. Note that these payments are to and from the bank.
So, whether you have to pay for a subscription, or your credit card bill, consider the problem sorted. Your bank will automatically deduct the said amount and transfer it to the company you have to pay on the same date every month.
Another way is to pay from your credit card, and there are two ways you could employ your credit card to schedule automated payments for you. You can either pay through your bank’s online payment service, or directly to the biller. The first option is much like the previous ACH one, just that you will be required to use your bank’s online payment app for it.
The second option however is a bit different. You can establish an automated payment system directly with your biller by either sharing your bank account details or your credit card details. You would need to share your account number so the money could be drafted from your bank account on billing date. If you are paying from credit card, you will need to share the credit card details including your card’s expiration date, and CVV, so the biller could charge your card on every billing date.
Benefits Of Payment Processing With Automated Onboarding:
If you are wondering whether an automated payment system is really worth the hype. Here we are sharing a list of benefits that you could be interested in;
- Fast and fraud repellent:
The conventional human-controlled transaction scenario is very slow. Plus there is always a fear of getting scammed and looted. With automation, you feel safer and find yourself getting all the benefits of fast payment processing systems.
- Efficient method:
There are very few-to-none duplicate payments and almost no errors that could severely damage your relations as a business. Companies have reported a huge amount of reduction in overpayments and duplicate payments following the use of automated systems.
- Superior visibility:
Payments are becoming a key emphasis area for financial leaders who analyze, and forecast their cash flow. With automation onboard you will have strategic tools like supply chain financing and dynamic discount which greatly optimize cash flows.
- Satisfactory supplier relations:
Suppliers receive payments more quickly due to shorter pay cycles during automated payment processing and reduce the number of days sales overdue (DSO). This significantly strengthens ties with the supply base.