Taking the Pain Out of Payouts

From advancements in fraud technology to shifting consumer behaviour, many factors are reshaping the way that businesses manage their payables. We have seen several interesting trends developing, particularly in the payouts space. Providing a swift and simple one-off payment experience is helping businesses build customer trust and satisfaction, while also improving operational efficiencies and reducing fraud.

Automating payouts for one-off payments to customers, vendors or suppliers is one example of how accounts payable (AP) and finance teams can leverage digital solutions that provide greater control, efficiency, and security. Digitising the payouts process reduces manual workload and frees up time for more strategic business activities.

These one-off payments can often be unexpected and irregular, with unplanned service outage compensation, payment discrepancy remediation, customer complaints or goodwill gestures. Businesses across industries have historically struggled with issuing them for several reasons.

These payments typically fall outside of the standard AP process, as the business often doesn’t store payee payment details. Obtaining these details are time-consuming and can introduce errors which leave businesses vulnerable to fraud.

Many businesses still rely on legacy cheque solutions for these types of payouts. The rising costs of stationery, printing, and ever-increasing postage, alongside the impracticalities of on-site printers during the Covid-19 pandemic, highlights the inefficiencies and security loopholes of such manual payment processes.

Consequently, organisations are turning to digital solutions. They recognise that manually processing payouts in today’s fast-paced business environment is unsustainable and unscalable, particularly when meeting the high expectations of today’s customers. Bottomline has invested in a Payouts Automation solution to support such organisations on their digital transformation journeys.

Financial professionals have cited ‘efficiency gains and security improvements’ as the most important factors influencing their decision to adopt new payment technologies, according to a straw poll during our recent webinar entitled, ‘Embracing Change and Technology in Payables to Drive Business Value’.

But the push for more efficient processes goes beyond AP and finance teams. Customer service managers and digital transformation teams are also prioritising making payouts a self-service journey. Therefore, providing payees with greater transparency and control in the process and ultimately a better experience.

In addition to improving the customer – and staff – experience, an efficient payout process can also help protect a business’s reputation. With social media and online review platforms, customers can now voice their opinions and experiences very publicly – bad reviews or complaints can quickly impact an organisation’s standing in the market and draw the attention of regulators.

From what we see, the speed at which payouts get processed can significantly impact a business’s credibility. Recipients expect a quick resolution and become frustrated when they encounter issues or delays. Therefore, we recommend that businesses prioritise an efficient pre-payment process followed by a quick payout which could land in their chosen bank account within days. This helps maintain customer loyalty and mitigate reputational damage.

Using a trusted payout solution, a business can initiate a payment through a link embedded in an email, integrated in an app or website, or even on a physical letter through a QR code if email addresses are unknown.

Bottomline’s Payouts Automation solution, for example, sends a secure payment request form to the recipient with prepopulated data, such as the payment amount, reference and customer name. The recipient simply opens the link in the email, website or app, then enters their account details which are securely verified and validated.

Once they submit the form, the data is stored securely in the payment solution, so there is no need for businesses to worry about storing sensitive data on their own servers. The payment is then sent via Bacs or Faster Payments, so the recipient could receive the funds within 2 hours.

Security is another sensitive area that businesses need to get right. In a second straw poll of our webinar audience, 6 out of 10 had experienced unauthorised transactions or suspicious activity in their organisation’s payment processes.

New technologies and frameworks have emerged in recent years to help businesses securely collect and validate payment details. For example, Confirmation of Payee (CoP), matches the name to the bank account to ensure the right person or business gets paid.To minimise the risk of fraud, finance teams are requesting solutions where CoP has already been integrated. Payouts Automation includes this functionality alongside additional anti-fraud measures, which use proactive detection and prevention methods by analysing payments for potential fraud or errors before sending the payment instruction via Bacs or Faster Payments. This helps businesses to validate first-time payments, detect duplicates and screen against deny lists to ensure payments are genuine.

Many AP and finance teams are reflecting on their current payout processes and exploring the opportunities that digital solutions can provide, including efficiency and security improvements. Such solutions have real potential to drive business value and better position a business in an increasingly competitive environment. ​​​​​​