A business payments can be defined as a transactional event that involves money with a third party which is recorded in an organization’s accounting system. In today’s business, many transactions take place and especially when everything is maintained manually, finance teams tend to lose track of payment transactions.
In this blog, we are going to discuss the three types of business transactions that occur in an organization.
Procurement of Goods or Services – Any goods or service that has to be procured by an organization goes through a series of process.
This will usually be initiated by an employee in the organization who is in need of something. Often this person raises a purchase requisition which then goes to the procurement department.
- The procurement team will validate the requirement and ensure that the purchase request is under the organizational compliance.
- The procurement team then gets a quote from different vendors based upon the quality of service, delivery timelines, pricing, credit period, etc.,
- After all these criteria are satisfied, the procurement department selects the best vendor and then release a purchase order to procure goods.
- Once the goods are received, it is then checked for its correctness by the requester against the purchase order that’s issued.
- Upon the confirmation from the requester, the finance team will ask the vendors to raise an invoice.
- The invoices from the vendors will be received and recorded by the finance department. A physical copy is maintained for auditing purposes.
- Once the invoices amounts are processed, the finance team will send a notification to vendors regarding the settlement.
- Non-Purchase Orders is a subset of procurement which is used when something is required immediately, and the person, who wants to make a purchase, cannot afford to waste any time in seeking approvals from multiple stakeholders before placing the order.
Employee Payroll – Every organization will have a human resource department which is responsible for calculating amounts owing, and dealing with employees who joins or leaves the organization. Employees will receive a wage or salary slip showing their pay and any deductions for tax etc.
Employee Travel & Reimbursements – Employees who are required to travel outside of your organization for business purposes end up spending a part of their own money either for travel & stay or for a lunch meeting with customers. All of them record their spending details and submit it to the finance team to get the total amount spent reimbursed. This usually happens via sending receipts through emails addressing to the finance managers for the approval. In case any of the expense is not approved by the finance manager, it won’t get processed. Employees get this amount along with their end of the monthly salary or on a particular date in a month.
The aforementioned business payments when being done manually consumes a lot of time and is error-prone. Finance teams take days to reconcile these business payments with bank accounts and to keep the accounting systems up-to-date. These manual methods are proven to be risky and it is very difficult to track fraudulent transactions.
Business payments does not make corporate earnings or balance sheets more volatile. It just increases the transparency of volatility in earnings
How to track & monitor the business spends?
A typical finance management software can help you to automate, gain visibility & control business spending. The platform would be capable of automating all the repetitive tasks like manual data-entry, bank reconciliation, and will have a powerful policy engine governs all business transactions & an integrated payment technology system allowing automated reconciliations.
Employee Expense Management Through Prepaid Cards – A business prepaid cards, is one such prepaid debit card that can be configured according to the types of expenses that occurs in your organization. You can pre-set spending limits so that the organization never end up spending more. The powerful policy engine allows you to set up custom approval workflows. You have the ability to set managers as admins on accounts to control expenses and purchases, and built-in security features to freeze and unfreeze cards as necessary, make prepaid business cards a good choice for businesses of all sizes.
Digitized Payment Processing – Finance automation software has a very simple interface and offers a unique and hassle-free payment processing experience. With just a click of a button, make bulk business payments through our payment file. Settle multiple employee claims either through employee’s bank account or through prepaid cards. You can even automate your utility bill payments, vendor payments through our banking integration via NEFT, RTGS, and IMPS. Validate each and every payment against the purchase order through an audit trail.
Automated Accounting – Eliminate the error-prone manual process of entering data into your accounting software and ensure that the data is entered accurately into the ledgers. Improve your accounting accuracy through automated accounting.
Finly is one such finance automation software that empowers finance team to make data-driven decisions by eliminating the manual and error-prone tasks and increasing their productivity. The platform is powered by machine learning & AI that automatically verifies the payments that are being processed and reconciles with your accounting software in real-time. Besides that, the platform also provides powerful analytics by which finance team can gain total visibility on their business spends.