Supplier Payments Automation Explained: Benefits and How It Works

Walk into most AP departments and you'll still see check stock, envelopes, and stamps. About 42% of supplier payments still go out as paper checks, according to industry surveys. It's expensive, time-consuming, and risky — but it's what people know how to do.

Payment automation replaces that manual work with software that handles electronic transfers, virtual card payments, and yes, still some checks for holdouts — all in one go. Your team schedules what needs paid, the platform gets vendors set up with banking details, sends them payment information, handles the money movement, and updates your books with one entry instead of hundreds. You save money, pay faster, keep suppliers happy, and can even earn cash back that covers the system cost.

The high cost of "business as usual" in AP

Most finance teams know their payment process wastes time. They just haven't measured exactly how much until they start tracking it.

The obvious costs are easy to spot — check stock, postage, the hours spent printing and stuffing envelopes. The hidden costs are bigger: late payment penalties because checks sat on someone's desk waiting for signatures, missed discounts for paying early, fraud losses from stolen checks, and skilled finance people spending their day on repetitive work instead of analyzing spending patterns or negotiating better terms with vendors.

Research from IOFM shows that AP staff spend 40–60% of their time on manual payment work — entering data, printing checks, chasing down signatures, answering vendor calls about whether payments went out. Meanwhile, controllers can't see what's actually paid versus what's scheduled, and CFOs are guessing about cash needs based on week-old bank statements because there's no real-time view of what's clearing when.

Automation fixes these problems through software that connects to your existing books, handles the actual payment work, and shows you what's happening with your cash right now.

What is supplier payment automation?

Think of payment automation as software that sits between your accounting system and your vendors. You approve bills in your accounting software the same way you always have. Then instead of someone manually processing each payment, you export a file and the platform takes over.

The software looks at each payment and routes it through the right channel based on how that vendor wants to get paid and what makes sense for your business. Some vendors get electronic transfers to their bank accounts. Others get virtual card payments (unique card numbers generated just for that transaction). The holdouts who insist on checks still get checks, but the software handles the printing and mailing.

Here's what makes it different from just using your bank's online bill pay: the platform also gets vendors set up with their banking information and payment preferences, sends detailed payment explanations so vendors know exactly what bills you're paying, manages the actual money movement, and feeds everything back to your books as clean data that's already matched up.

Your team stays in control — they're still approving what gets paid and when. They're just not doing the manual work of cutting checks or starting dozens of individual bank transfers.

The 8 core benefits of automating supplier payments

These eight improvements show up consistently when companies move from manual payment work to automated platforms. Each one addresses a specific problem that finance teams deal with every day — from the direct costs of check processing to turning your AP operation into something that actually makes money.

How much does manual payment processing actually cost?

The Association for Financial Professionals publishes annual research on payment costs, and their 2023 study found that manual check processing costs $4–$20 per payment while automated payments cost $0.50–$3. For companies cutting 2,000 checks monthly, that's $100,000 to $400,000 in annual savings just from switching payment methods.

Here's where those costs come from, using data from AFP's 2023 study and IOFM's AP benchmarking research:

There's another savings opportunity that surprises most finance teams: virtual card cash back. When you pay vendors with virtual cards, you earn 1.5–2.5% back from the card network according to standard commercial card program structures.

Here's how the math works: Based on payment network data showing millions of card-accepting businesses, companies can expect 25–40% of suppliers to accept cards after systematic outreach over 12–18 months. If your monthly spend runs $5 million and 35% of vendors accept cards, that's $1.75 million in card spend generating $26,250 to $43,750 monthly in cash back at those rates — or $315,000 to $525,000 annually.

The returns scale with spend:

Note: Card acceptance rates reflect typical adoption after 12–18 months based on payment network data. Cash back rates vary by card program and spending volume.

Why does processing all payments together improve efficiency?

Right now, your AP team probably runs separate processes for different payment types. Monday is bank transfer day, Wednesday is check run day, urgent payments get wired whenever they come up. Each payment method needs its own approval cycle, file preparation, and follow-up work.

Automation collapses all of that into one process. You approve bills in your accounting system. You export one file. The platform routes each payment through the right channel automatically — bank transfers for most vendors, virtual cards for vendors who accept them, checks for the rest. The whole thing runs in a few hours instead of spreading across three days.

Implementation case studies from major platforms show companies cut their AP processing time by 40–60% after automation. Time previously spent on payment logistics gets redirected to analyzing vendor terms and negotiating better payment conditions.

The matching improvement is equally dramatic. Instead of matching hundreds of individual payments against bills line by line, you match one consolidated entry that the platform feeds back to your accounting system. This can reduce monthly matching time from 18 hours to 90 minutes.

How do automated controls reduce fraud and compliance risk?

Check fraud went up 385% between 2021 and 2023, according to FinCEN's analysis of suspicious activity reports. When you mail paper checks, you're putting your account number, routing number, and authorized signatures in the postal system. Thieves intercept checks, wash them (remove the original ink), and rewrite them for larger amounts to different payees.

Automated payments eliminate most of that exposure because sensitive banking information stays inside secure systems protected by multi-factor authentication and role-based access. Your staff logs in with username, password, and phone verification. Vendors access a portal to see payment details but never see your banking information.

Virtual cards are particularly effective against fraud. The platform generates a unique card number for each payment. If a vendor's systems get breached after they receive payment, the stolen card number is already expired — it only worked for that one transaction. Bank transfers go to validated vendor banking details that get verified during setup, so you're not accidentally paying into fraudulent accounts.

You also get complete records showing who approved what, when, and why. That's essential for SOX compliance and internal audits. You can set up approval rules (payments over $50,000 require two people to approve), require extra verification for new vendors or banking detail changes, and flag unusual patterns automatically (same bill number paid twice, vendor receiving payment before bill was approved, payment amount doesn't match bill).

Fraud detection improves significantly when the system can spot patterns that humans miss. Paying the same bill twice in one week gets flagged immediately instead of discovered months later during quarterly audits.

Why do suppliers prefer automated payments with detailed information?

Late payments damage vendor relationships and cost you discounts for paying early. Manual processes create unpredictable timing because payment work depends on staff availability, signature schedules, and how many other things are competing for attention that week.

Automation makes payment timing reliable. Vendors know that payments approved by Friday will clear their account by Tuesday. No surprises, no calling your AP team to check on payment status.

The bigger improvement is payment information — the details explaining what each payment covers. With paper checks, vendors get a check and maybe a stub with a bill number. With generic bank transfers, they get a deposit and have to guess which bills it covers. With automated payments, vendors receive detailed breakdowns showing bill numbers, amounts, PO references, and payment dates.

That solves vendors' biggest accounts receivable headache: matching incoming payments to open bills. According to Ardent Partners' research on electronic payments adoption, companies see 50–70% reduction in vendor payment inquiries after automation. Vendors also tend to offer better terms to reliable payers — some extending payment terms (net 45 instead of net 30) because they trust the payment will clear on schedule.

The outreach piece matters here. Getting hundreds of vendors to switch from checks to electronic payments is a major project if your AP team has to call each vendor and explain the benefits. Automation platforms typically include a service team that handles vendor outreach, walks vendors through portal setup, answers questions, and manages the transition.

What cash visibility do centralized dashboards provide?

When payments scatter across check runs, bank transfer batches, wire transfers, and card transactions, you can't see your actual cash position. Your CFO is looking at last week's bank statement trying to guess when $2.3 million in scheduled payments will actually clear.

Automation centralizes everything into one dashboard showing scheduled payments, what's processing right now, when things will hit your bank account, and what's already cleared. You see three weeks forward, not three days backward.

That visibility changes how CFOs and controllers manage working capital. You can time payment runs to preserve cash balances while still paying vendors on schedule. You can identify which early-payment discounts are worth taking (2% discount on net 30 might be worth it; 1% discount probably isn't when you could earn 2% cash back by paying with a card on net 45). You can coordinate payment timing across multiple locations instead of each one running their own schedule with no visibility into the others.

The dashboard also helps with stakeholder communication. When your bank asks for payment volume data to support a credit line increase, you pull accurate reports in minutes instead of spending weeks compiling data from multiple systems. When your board asks about AP efficiency improvements, you show concrete numbers on processing time and cost reduction.

How does payment data transform into better decisions?

Manual payment processes lose valuable information. You might know you paid Vendor X last month, but you probably don't know whether you paid them by check or bank transfer — or what each method cost — or how long it took from bill approval to payment clearing — or whether you captured available discounts.

Automated platforms capture all of that:

• Payment method by supplier tells you which vendors accept cards versus bank transfers. That identifies targets for card enrollment campaigns.

• Cost per payment by channel shows the actual expense of checks versus transfers versus cards. That builds the business case for converting check holdouts.

• Payment timing by category shows opportunities to optimize — either capturing early-payment discounts or extending payment terms to preserve working capital.

• Discount capture rate reveals what percentage of available discounts you're taking and whether accelerating payments makes financial sense.

• Cash back by spending category shows which types of spending generate the most returns and guides where to focus card acceptance efforts.

The reporting extends beyond internal analysis into stakeholder communication. When auditors ask about payment controls, you demonstrate complete records with approval hierarchies and separation of duties. When your bank requests payment volume data, you pull accurate reports showing transaction counts, dollar volumes, and payment timing patterns.

How do automated systems scale without adding people?

Growing companies often double supplier counts and payment volumes in 18–24 months through acquisitions, new product lines, or geographic expansion. Manual AP processes break under that load. You either hire more staff or fall behind on payments.

Automation scales without adding people because the platform handles work regardless of volume. Adding 500 new suppliers means updating a database, not hiring two new AP clerks. Processing 5,000 monthly payments instead of 2,000 takes the same staff time because work is automated. Enterprise implementation case studies show companies routinely handle 3–5x payment volume growth with unchanged headcount.

Growth through acquisition creates particular challenges because you're integrating multiple vendor databases, payment schedules, and approval workflows. Automation platforms absorb that complexity without requiring your team to manually merge everything.

Scalability extends beyond volume into complexity. When companies expand geographically, they add cross-border payments with different currencies, banking systems, and compliance requirements. Automation platforms handle those variations without requiring specialized expertise. Geographic expansion that would previously require hiring people with international payment knowledge can now happen without adding headcount.

How do virtual card payments turn AP into something that makes money?

This is where payment automation shifts from cost savings to revenue generation. When you strategically enroll suppliers in card acceptance programs, you convert regular spending into the cash-generating transactions described earlier.

The service component drives adoption. Corpay's team explains benefits to vendors — faster payment, automated matching, detailed payment information — and manages the transition from checks or bank transfers to card acceptance. You're not asking your AP team to call hundreds of vendors about changing payment methods. The service team handles that work, tracks progress, and optimizes for cash-generating transactions.

There's also a working capital benefit. Virtual cards clear to suppliers quickly but your company retains funds until the card payment settles — typically 30–45 days based on standard commercial card terms. That extends how long you're holding onto cash while suppliers receive immediate payment. You're improving vendor relationships and preserving working capital simultaneously.

The strategic value: from back-office work to strategic finance

Payment automation elevates your AP function from back-office transaction processing to strategic cash management. You shift from "did we get the checks out?" to "how do we optimize payment timing, capture all available discounts, and maximize cash back while maintaining strong vendor relationships?"

Controllers and CFOs gain tools to manage how long they're holding onto cash strategically rather than just monitoring it. You can model the cash impact of extending payment terms with key vendors versus the relationship cost. You can calculate whether taking a discount beats earning cash back. You can forecast cash needs three weeks forward with confidence rather than hoping your estimates are close.

The shift also supports broader corporate initiatives around paperless operations and digital transformation. Eliminating paper checks reduces waste, cuts storage requirements, and improves disaster recovery capabilities. The data capture and reporting capabilities support ESG reporting requirements that increasingly include operational efficiency metrics.

Finance teams that embrace automation report higher job satisfaction because staff spend time on analytical work rather than repetitive tasks. AP clerks become cash management analysts. Payment processors become vendor relationship managers. The function elevates from necessary back-office work to strategic contributor.

How to implement payment automation effectively

Start by evaluating your current payment mix and identifying bottlenecks. What percentage of payments go through checks, bank transfers, wires, and cards? How many suppliers accept each method? Where do delays occur — bill approval, payment work, or matching payments to bills? Understanding your baseline helps you measure improvement and prioritize which problems to solve first.

Next, assess your accounting system integration options. Modern automation platforms connect directly to NetSuite, Microsoft Dynamics 365 Business Central, Sage Intacct, Acumatica, and 180+ other systems through APIs, file transfers, or direct integrations. The goal is seamless data flow where approved bills export automatically, payments process without manual steps, and settlement details feed back to your accounting system as one entry per payment run instead of hundreds of individual transactions.

Getting vendors set up matters more than most companies expect. You need vendors to provide validated banking details, accept electronic payment terms, and opt into card acceptance where appropriate. Managed enrollment services handle this systematically — explaining benefits, walking vendors through portal setup, addressing concerns, and tracking adoption rates. That removes the burden from your AP team while accelerating the transition.

Change management within your organization requires attention to approval workflows, controls, and reporting. Who approves payments above certain thresholds? How do you maintain separation of duties between payment approval and execution? What reports do controllers and CFOs need for cash management? The implementation should preserve your control environment while simplifying execution.

Plan for phased rollout rather than switching everything overnight. Many companies start with a subset of suppliers — perhaps vendors already receiving bank transfers who are easiest to convert — then expand to card-accepting suppliers, and finally tackle the holdouts who insist on checks. That approach lets you validate the process, train staff gradually, and build confidence before moving high-volume or high-risk payments to the new platform.

How Corpay automates and scales AP operations

Corpay unifies AP automation, supplier payments (virtual card, ACH, check), corporate cards, and cross-border payments in one platform. We back it with a fully managed service that handles vendor enrollment, payment delivery, follow-up, and simplified matching. You maintain control and visibility through your accounting system while we manage the execution details.

The integration works through your existing system — NetSuite, Microsoft Dynamics 365 Business Central, Sage Intacct, Acumatica, and 180+ others through APIs, file transfers, or direct connections. Approved bills export automatically. Payments process without manual steps. Settlement details feed back to your accounting system as one transaction per payment run.

We complement your accounting system — closing the gaps around bill capture, approvals, vendor enrollment, payment delivery, settlement, and matching that accounting systems weren't built to handle. Companies choose us because we understand the complicated parts of supplier payments — the exceptions, the vendor outreach, the follow-up questions — and we manage that complexity through a service model rather than expecting your team to figure it out.

Learn more about Corpay's AP automation solutions or talk with our team about your payment challenges and how automation fits your accounting system.