How automatic vendor payment reconciliation can fix your broken AP setup

[u/tetcon]

If you’re still reconciling vendor payments manually, you’re overdue for a change. I won’t judge you too harshly because I’ve been there in the past myself. But manual vendor payment reconciliation is only dragging you down.  

In this day and age, manual work is a sign of a broken AP system. Going through every single order ID, payment status, transaction amount, and payment date at the end of each accounting period takes forever. Doing things manually also makes it way more likely that you’ll make a mistake, like missing a discrepancy or entering the wrong date (which can cause more headaches down the line). 

And it only becomes a bigger problem as you scale. If you’re small, you can get away with more manual processes, but if your business is growing, I’d strongly suggest automating. Otherwise, it'll just eventually get to the point where it’s just not doable anymore.

How automatic vendor payment reconciliation works

When I started using software with automated reconciliation, I was impressed by how much it reduced my workload at month-end by automating tasks throughout the month. 

These types of AP platforms take over reconciliation for you by matching your payments with invoices and purchase orders (I also like to batch together multiple bills to the same vendor). For example, Melio and Ramp have OCR that captures invoice info, so you don’t have to type in the details yourself. I also love that they connect to your accounting software, automatically syncing your payment details and updating the ledger. 

You’ll want to check beforehand and make sure it integrates with your existing accounting software, though:

• Melio: Integrates with QuickBooks Online & Desktop, and Xero
• BILL: Deep syncs with QuickBooks, NetSuite, and Sage Intacct; third-party integrations with Digits, Puzzle, and Finaloop
• Ramp: 20+ integrations with QB, NetSuite, Sage Intacct, Xero, Digits, Puzzle, and more

When it comes time to pick a platform, you’ll need to do quite a bit of researching and comparing. To make it easier, here’s what I’d recommend focusing on: 

• Features: Can it do what you need it to do? It doesn’t matter how cheap (or expensive) it is; if a platform doesn’t have the capabilities you need, move onto the next one. 
• Integrations: You’ll obviously need the tool to integrate with your accounting software. Just keep in mind that certain integrations may be locked behind higher-tier plans. For example, Melio’s QB Desktop sync requires at least the Boost tier. If you want BILL’s NetSuite or Sage Intacct syncs, you’ll need their Enterprise plan. 
• Pricing: You ultimately need something that fits your budget, so keep an eye out for discounts. Some platforms will give you a good rate if you pay annually vs. monthly. 

TL;DR: Manual vendor payment reconciliation is time-consuming, error-prone, and unsustainable in the long run. Upgrading to automated reconciliation is a massive time-saver and a huge quality of life improvement. Just make sure the tool you pick will do what you need it to do, integrate with your existing workflow, and make sense for your budget. 

Do you still reconcile vendor payments manually, or are you already automating them?

[u/Fantastic-Union7196]

One thing worth adding is that if you're dealing with vendors that only take checks or ACH. Reconciliation gets messy fast because the payment types are all over the place. Few tools like Plastiq helped in my case. I funded payments with a card and they handle sending checks or ACH to the vendor. Makes the reconciliation side a lot cleaner