Paying bills is required for any business. Whether it’s a bill for a utility provider, a vendor, a contractor, or another partner, each payment has its own due date, terms, and instructions. Mistakes can be costly: miss a deadline, and your relationships suffer. Overpay by mistake, and budgets get skewed.

Bill payment systems that handle this process in a way that’s easier to track and regulate are becoming more popular: the global accounts payable automation market was valued at $3.08 billion in 2023.

Below, we’ll explain how automated bill payment works, how to choose a platform, and how to connect it to accounting software – and why this matters for businesses.

What’s in this article?

• What is bill paying software?
  
• Why do businesses need bill paying software?
  
• How does bill paying software work?
  
• What features should you look for in bill paying software?
  
• How does bill paying software integrate with accounting systems?
  

What is bill paying software?

Businesses use bill paying software to track and process bill payments to vendors and other service providers. A bill payment platform logs every step of the bill payment process automatically, from the original invoice to payment confirmation. It integrates with the business’s processes, so a range of tasks – including invoice approval and disbursement – are handled in one place.

Bill payment software imports or scans each invoice and routes it to the appropriate person or department for review. Once approval is received, the platform schedules the payment according to the due date. Each invoice is then marked as closed, and the cycle repeats for every bill payment.

Why do businesses need bill paying software?

Manual bill paying processes are slow, prone to data entry errors, and offer less visibility into payment status compared with automated processes. Though small startups might be able to handle bill paying manually, businesses operating at a larger scale often use bill paying software.

Bill payment platforms automate many of the manual steps involved in bill paying. They create faster payment cycles and faster approval processes and show the status of each incoming bill clearly. Bill payment platforms make it easier for businesses to handle multiple billing cycles and varied payment types – and to empower a range of employees to approve disbursements – with minimal administrative work.

How does bill paying software work?

Each invoice follows the same pipeline in bill paying software: capture, review, schedule, pay. Here’s a step-by-step look:

• The invoice is entered into the platform via file import, automatic email forwarding, or scanning paper copies.

• The system routes each invoice to whoever is responsible for approving that category or department.

• Once approved, the invoice is paid automatically on a chosen date via the preferred payment method.

Every change, approval, or payment is logged. If someone needs to see who approved a particular invoice or when it was cleared, the record is there. In addition to processing bill payments, platforms often include additional features, such as:

• Email reminders

• Automated matching of invoice data to purchase orders

• Data analysis

• Multitier approval options

• Vendor profiles storing payment terms, contact information, and associated documentation

What features should you look for in bill paying software?

Every bill paying program is different. Some are lean, while others have advanced options and extras. Your choice of software can affect how well you manage bills, how often you encounter late fees, and whether you end up double-paying a vendor by mistake. The software should simplify day-to-day tasks while offering tracking for deeper insights.

The right choice for your business depends on your budget, the size of your operation, and the types of payments you handle. Here are a few questions to consider:

How user-friendly is the interface?

People are more likely to adopt a platform if it’s simple to learn and use. Look for easy navigation, logical menus, and a straightforward setup process.

Does it support multi-user access?

Growing organisations often need multiple team members to manage payables. Some employees handle data entry, some sign off on approvals, and others might need read-only access to run monthly reports. If this applies to your business, look for a system that accommodates different levels of access.

Can it process automated approvals?

Having an automated approval chain means you can define who reviews which invoice and at which spending threshold. This can help keep the flow from getting stuck because each invoice automatically moves on once the right person signs off.

Are there electronic payment options?

If you want to stop using paper cheques, choose a platform that supports digital disbursements, such as bank transfers, or debit and credit cards.

What are the document storage options?

It’s often helpful to store relevant paperwork alongside each invoice. That includes receipts, statements, and any communications with the vendor. An organised, in-platform archive can cut down on lost files.

What kind of security controls are in place?

Look for systems that allow multifactor authentication and other ways to shield sensitive data. Because you’ll be trusting the platform with bank information, make sure it follows recognised guidelines for data protection.

Does it integrate with my accounting software?

Consider choosing a product that connects to your accounting system. If the bill paying software does not integrate, you’ll need to copy data over to your main ledger.

Are there vendor portals?

Some software lets vendors log in and see the status of their payments. That can reduce back-and-forth emails about when their money will arrive.

What kinds of alerts and reminders can I get?

Receiving automated notices when payment deadlines approach or when an invoice is flagged for review helps keep the process running without guesswork.

Can it scale with my business?

A software product that grows with your business can help you avoid switching platforms later. Even if you start small, it helps to know your system won’t become obsolete once you add more invoices.

How does bill paying software integrate with accounting systems?

Bill paying software can integrate with accounting systems through direct connections (in which you log in to the same platform for your accounting and bill paying software) or with application programming interface (API)-based setups. The approach depends on the platforms involved.

When these systems are linked, every new invoice and completed payment transaction is sent automatically to the accounting system, which helps with financial decision-making, accounting processes, and overall record-keeping accuracy. Bill paying software that doesn’t integrate with accounting systems can lead to redundant data entry and increase the chance of mistakes.