Karbon Payout is the ultimate vendor payment system

Efficient Vendor Payment System for Businesses – 7 Highly Effective Practices

If you are a business owner in an SME or Startup, you probably have to manage its finance to some extent. You also most likely have a system in place for paying your vendors. If you don’t have a vendor payment system yet, you need to set one up as soon as you can. This is because – a) you need to optimize your cash flow and b) because you need to have a good reputation among top vendors to ensure product quality delivered is superior than your competitors. There are examples of several businesses that have gone under due to unoptimized cash flow and inferior product quality.

Vendor payment process is part of every business’s accounts payable process. The purchase-to-pay cycle also ends with this as one of its final steps. The process goes something like this: Accounts payable department within the company receives the vendor invoice, verifies it and then routes it for approval. After approval, the respective payment is sent to the vendor. While this process sounds simple on the outside, it may turn out to be lethal for a company if handled poorly.

We at Karbon Card consistently work towards increasing the efficiency of our clients’ vendor payment system through a high degree of AP (Accounts Payable) automation. So here are some of the tips that we recommend you adopt before you face the “lethal” situation as described above. 

vendor payment system 7 best practices

Schedule payments in advance using your vendor payment system

You’ll make your life easier along with everyone involved in the process by adopting an automated vendor payment system. Scheduling recurring payments for your constant vendors will ensure that your top vendors receive their payments on time.

As a business owner, you will not have to take out a sizeable chunk of your precious time in handling the payment process. Your software should allow vendors to add themselves as beneficiaries to the system.

Enhance your relationship with the best vendors

Since the Covid-19 pandemic has hit, it has become even harder for vendors to secure their payments on time. There is now a growing unrest within the vendor community regarding this very topic. If  you make a genuine effort to stand out from the rest of the crowd in paying your vendors on time, it will be noticed by your vendors. This will open doors to good communication and an enhanced trust between you and your vendors. Good quality products have gotten harder to procure as the global supply chain issue continues to trouble businesses.

Automate the AP Process and organize your things

Organizations that automate their accounts payable (AP) processes end up processing vendor invoices faster which in turn ensures that the vendors get paid on time. The traditional way of verifying manual invoices presents a challenge to the staff and results in delays. Company efficiency and exposure can be increased by implementing a strong automation process. This ultimately works in favour of the company in terms of saving costs and increasing pay cycle efficiency.

Daily reconciliation

This is an important practice to follow if you want to optimize your cash flow. Make a good habit of getting your accounts updated on a daily basis with an automated payment process.

E-payments with ACH

Nowadays there are e-payment solutions such as the Automated Clearing House (ACH) that end up reducing the company overhead costs. It also offers enhanced security features. It also improves the accuracy of your books by initiating auto debit and credit transactions with your vendors.

AP Processing and Reporting should be centralized

If you own a large organization, this point is more relevant for you. By centralizing your AP processes, you can streamline workflows and reinforce superior bookkeeping practices. Above everything, this also lets your team achieve more in a lesser amount of time with fewer resources. This ultimately promotes a lean implementation and keeps your vendor payment system streamlined.

Systemize your financial operations – Accounting and Reporting

Before you can think of managing your accounts payable, you need to ensure that your accounts and reports are up to date. You also need to ensure that your accounts payable balances reflect accurately in your financial statements. Without this, you will be blinded in terms of the amount and timelines within which your vendors need to be paid. 

What would be your choice, as a business owner, to establish an efficient vendor payment system?

The answer – Karbon Payout

how payout establishes a strong vendor payment system

Our clients make use of Karbon Payout to automate the AP processes, make their vendor payments and streamline beneficiary management. Here is how Karbon Payout can help your business implement all the best practices towards achieving efficiency in your vendor payment system:

  1. Schedule your payments, all in a single click! Karbon Payout enables you to upload all details in one place and schedule your payments according to your own convenience. You enjoy the benefit of cash flow optimization while your vendor enjoys the benefit of timely payments.
  2. Add beneficiaries automatically using Payout links. You can send payout links to your vendors and ask them to add themselves as beneficiaries in your vendor payment system. This sends a message to the vendor that you are serious about timely payments and are willing to adopt smart tech to solve the pain point of payment delays.
  3. High degree of AP automation promotes vendor satisfaction. By automating your AP processes, Karbon Payout ensures that your vendors stay satisfied with you. You will no longer have to risk losing your top vendor (and ultimately quality of your top product) as long as your vendor stays satisfied with your payment timelines.
  4. Frequent reconciliation is possible due to automation in the accounts payable process. This makes it extremely easy for conducting daily, weekly and monthly audits with regards to your payments. This is the most important activity to do if you want to optimize your cash flow and keep your finances in order.
  5. Send payments 24×7. Karbon Payout is NACH-enabled. This means that you get to send payments and carry out all financial operations 24×7 without having to worry about it being a bank holiday. This also improves the accuracy of your records.
  6. Our intelligent system selects the best payment channel for you. Be it RTGS,NEFT,IMPS, our smart vendor payment system selects the best payment channel for you, thanks to advanced analytics and intelligent automation.
  7. User friendly interface lets you spend less time worrying about all the glitches while making the payment and focus on the one thing that truly matters in these recent and very uncertain times – growth and survival.


Written By

Nikitha Reddy
Growth VP @ Karbon


How does payout work and what does it stand for?
Payout links – how they work and where can I use them?
What are the access controls in Payout?
How Karbon card acts a vendor payment system?

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