Accounts payable is a vital part of a firm's operation and is responsible for processing the payment to the vendors. In addition, it is responsible for making virtual payments that are not associated with payroll. Making the vendor payment is the last step in the procure-to-pay cycle and is fundamental to accounts payable management. Vendor payment helps to streamline the payment of external suppliers or vendors. The more efficient you are in dealing with vendor payments, the healthier your business relationship with vendors and suppliers will be. Wondering what the meaning of vendor payment is or how it works to ensure smooth functioning? Read on to learn more.

What is Vendor Payment?

The process of making payment to a vendor or a supplier with whom your company has a professional relationship is called vendor payment. It is also classified as an account payable or invoice to pay. Managing vendor payments in a timely and systematic manner help to build a positive connection with the supplier by ensuring continued services or supplies. Therefore, it helps in maintaining the smooth workflow of your company. Smooth operations, continued supply of goods or services, and reputation management are the main reasons behind making vendor payments on time. Therefore, the vendor payment portal administration is essential in case your company is involved in the below-listed transactions:

Why do you need vendor payments?

Timely vendor payment meaning and significance can be learnt better by scrolling through the imperatives below:

• Timely vendor payments cultivate a positive rapport between the company and vendors. Building healthy relationships is important in business, so vendor payments must be systematic and prompt. That is why the vendor payment portal plays a vital part

• Keep your company clear of overdue payment penalties and interests by having an effective vendor payment method. In the longer run, your business will operate smoothly by making timely vendor payments

• Vendor payment portals and management is a multidisciplinary business practice, as various departments function across the company. Keeping track of everything is not only stressful but also a very time-consuming task. If faced with any complication, it may create a hindrance to the overall growth of your company

Vendor bill tracking systems and management are the two paramount aspects of any business and company, regardless of the scale. In addition, the tracking and timely distribution of vendor payment invoices help you better serve your customers.

Process of vendor payments

The vendor payments can be processed by the account payable team of every business, be it small, medium, or large-scale business. However, to make smooth, timely, and hassle-free vendor payments, you must follow the numerous steps listed below:

Step 1: The first and foremost step is to collect the invoice from the vendor if they have yet to share that with you.

Step 2: After receiving the invoice, you need to verify the accuracy of the invoice. Make sure to check the approval of the vendor's authorized signatory.

Step 3: Make the journal entry by accounting for the invoice on the ERP or the accounting system. Also, understand the basic details required for making payment.

Step 4: Make sure to deposit TDS with the government within the due date specified by the Income Tax Rules. With the purchase register, conduct reconciliation of GSTR-2A and GSTR-2B at regular intervals. Also, follow up with vendors to know whether they have uploaded the invoices. 

Step 5: To make the invoice payment, take the approval of the authorized signatory of your business concern.

Step 6: Make the vendor payment and record it in the books of account using the payment voucher. Pay using the preferred mode. You can pay via any method, be it UPI, bank transfers, e-wallets, or any other mode. Also, collect the receipt and record the transaction in the books of account as successful.

Some steps can be automated using the cloud-based vendor payment system. In addition, an automated vendor bill tracking system helps to ensure a smooth and hassle-free experience for the users. 

Solutions to effectively manage vendor payments

Before Artificial Intelligence (AI) entered the realm, companies heavily used spreadsheets for all the vendor payment details and calculations. However, companies are embracing AI with open arms as technology has advanced. Not only does it make the job easy, but it also saves time and effort in providing accurate results. Considering the benefits artificial intelligence-based solutions and data analysis offer, they are used to optimize the commercial procedure of account transactions.

Benefits of tech-based solutions for making vendor payments

• It helps in automating the approvals within the timelines
• Digital vendor payments ensure audit-ready data by maintaining the digital trail
• It helps to simplify the bill payment process with less manual intervention
• The automated vendor payment option offers a smooth tracking of cash flow in the organization.

Due to the numerous benefits automated vendor payment-making solutions offer, it is essential to choose the best solutions that provide scalable features for the growth and profit of the organizations.

The vendor bill tracking system and automated payments are made easily via the vendor payment portal. At EnKash, we believe in enabling our customers to solve their problems to maximize efficiency and minimize errors. Our portal enables you to make bulk payout with a single click on your screen. So, what are you waiting for? Check out our offerings and make your company’s vendor management process efficient today!