Payment management software is any software designed to support a business in the process of payment management. Payment management software is offered by a range of providers and developers, and may range in benefits from automation, streamlining, and optimizing the payment management process to reducing waste, increasing payment security, and improvising visibility and oversight for payments within a business.
Payment management software is also known as payables automation software, due to the fact that automation is one of the primary draws of software in this category. Automation refers to the transfer of tasks that once would have to be completed manually by an employee to tasks that can be automatically completed by software with little or no manual involvement. This reduces work hours, cost, inconvenience, and the potential for human error.
The most in-depth payment management software solutions assist with the entire process of payment processing and accounts payable.
What’s included in payment management software?
Included features in a payment management software platform will depend on the specific platform. Nearly all of them will allow for the generation and sending of invoices to customers and clients. The majority will handle payments to independent contractors while also offering the ability to generate reports for taxes and internal review. They should also be able to effectively manage recurring payments without manual activity, while managing specific vendors and payments seamlessly within the platform’s dashboard.
Some payment management software will also automatically reconcile payments and disbursements in a ledger, reducing manual work required when it comes to year-end accounting and bookkeeping processes.
How does payment management software work?
Once an individual or business signs up for a payment management software, the first step is providing relevant information that the software will use to process future transactions. This usually includes contact info, W-9 or other tax forms, payment methods, and preferred currency.
From there, businesses can upload invoices, generate their own invoices, and conduct other payment-related processes either manually or automatically from within the payment management software. Most modern payment management software uses artificial intelligence (AI) to automate as many aspects of the payment management process as possible, reducing manual input and time spent by employees or business owners managing payments themselves.
What is AP automation?
A common term in the payment management conversation is ‘AP automation.’ AP in this case stands for ‘accounts payable,’ the segment of a company responsible for payments to vendors, suppliers, or other payment recipients. AP automation is any software or process that transfers manual accounts payable processes to an automated system, reducing human input and time drain along the way.
Which businesses need AP automation?
Whereas AP automation may have once been considered a luxury reserved only for the largest and most successful organizations, it’s now more accessible than ever and can be implemented by everyone from the smallest business to the largest enterprise.
In fact, one of the most important benefits of AP automation is that it allows companies to scale up without experiencing problems with their accounts payable process. AP automation tools can automatically grow with a company’s accounts payable needs and total outgoing cash flow, avoiding logistical problems that can otherwise come with large or rapid growth of a business.
Features and benefits of payment management software
While no two payment management software platforms are exactly alike, there is a core list of features that any respectable and effective payment management software platform should include— invoicing, payment processing, receipt generation, discounts and refunds, recording and tracking, and reporting functionality.
Invoicing
Invoicing functionality allows payment management software users to generate, manage, and track invoices for customers. Invoices can either be generated by manually inputting all relevant data (payment amount, terms, payee and payer information, etc.) or by automatically generating invoices after a customer is billed or checks out using a point of sale system or other automated purchasing system. Invoicing is considered the de facto first step in the payment management process. Once an invoice is generated, it can then be sent to the customer— usually from directly within the payment management software.
Payment processing
Once invoices have been generated and sent to customers, the payment processing stage begins. Some payment management software solutions allow payment options to be embedded directly on websites, while also allowing for manually processed payments via card or digital transfer.
Generally, the preferred form of payment will be communicated from the business to the customer in the invoicing stage.
Receipt generation
An effective payment management software solution should have the capability to automatically generate and store receipts for transactions processed within the software. These receipts can then be generated as printed copies for in-person exchanges or sent via email, text, or other means for the customer’s own records.
Discounts and refunds
Payment management software should also offer the capability of providing discounts, vouchers, coupon codes, and other forms of promotion— as well as refunds— to customers during or after the purchase process. The software should also accurately and automatically reflect the balance of payments after these discounts or refunds have been executed within the transaction.
Record and track invoices and transactions
One of the most important features of effective payment management software is the ability to easily and simply manage outgoing and incoming invoices, record payments made and received, and provide visibility into pending payments or payments that are due in order to avoid missed payments or unexpected withdrawals from business accounts.
Reporting
Reporting is another essential tool for payment management software. Reporting should not only be robust in the amount of data tracked, analyzed, and stored, but it should also provide a clean and easy-to-understand interface. This is vital for effective payment management, because data is only worthwhile to relevant parties in a business if they can interpret it. The best payment management software empowers businesses with reporting and data analysis tools that make outgoing payments and their effects as clear as possible. This will allow businesses to make informed decisions moving forward and have a complete picture of the outgoing cash flow occurring within their business during a given period.
