***
title: Understanding payables
icon: envelope-open-dollar
subtitle: Learn about managing your payables and payouts with Payabli
description: Modernize accounts payable with flexible vendor payment options including checks, ACH, and virtual cards. Streamline bill processing and vendor management now
og:description: Modernize accounts payable with flexible vendor payment options including checks, ACH, and virtual cards. Streamline bill processing and vendor management now
keywords: embedded payments, vendor payments, payables automation, accounts payable, vendor management, bill processing, payment methods, payout processing
slug: guides/pay-out-payables-overview
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Accounts payable (AP) is how businesses manage payments to vendors, suppliers, and other external parties. It includes recording, verifying, and paying invoices for goods and services a business receives. A well-managed AP process helps maintain your business's financial health by making sure that you pay your obligations on time and stay on budget.
For the best payables experience, there are some best practices to optimize bill processing, payment management, and vendor relationships. Here are key features and functions to look out for from your payables partner:
* Bill processing tools that can scan and digitize paper invoices, automatically extracting key information.
* An approvals system that can route payout requests to the right people for approval and track approvals.
* Vendor relationship management tools that can track vendor interactions and performance.
Payabli's Pay Out APIs and UI offer easy-to-use tools for managing your payables program and sending payouts (payments) to your vendors and suppliers.
## Payout payment methods
Payabli enables three different payout payment methods, each of which presents different opportunities for monetization:
* Mailed checks
* ACH payments
* Virtual cards
Each payout type has distinct characteristics, costs, and revenue opportunities for partners.
### Mailed checks
There have always been costs associated with making payments by mailing checks: labor, paper, envelopes, postage, and so on. Because those costs aren't assessed in the form of a separate fee, they're easy to forget about.
When Payabli handles payments by mailed check, the partner pays a fee for the service which is similar to what you'd pay to process check mailings in-house. This fee is to cover the costs involved with the digitization of this service. Partners can then monetize this by charging either the merchant or the customer a premium for the privilege of using checks. For example, if Payabli charges a partner \$2 for mailing a check, the partner can monetize this service by charging \$4 to the merchant or customer. Partners can also choose to absorb the fees themselves.
### ACH payments
When a vendor wants to be paid by ACH, Payabli charges the partner a fee for the ACH. Partners can pass this fee through at cost or monetize these payments by adding a markup, or they can opt to charge nothing and absorb the cost themselves. This is common in emerging markets, where partners are trying to remove incremental costs. Another partner option is to charge a monthly, all-inclusive subscription fee for ACH payments.
### Virtual cards
Virtual card payments are similar to accepting a credit card for an invoice. The vendor's Merchant Services Provider (MSP) takes a percentage of the transaction. For example, on a \$100 payment with a 1% fee, the vendor ultimately receives \$99, while the MSP receives \$1.
Payabli doesn't charge partners for virtual cards. For transactions like the one described in the example above, part of the percentage comes back to Payabli, who is acting as the program manager with the issuing bank. Payabli shares that revenue with the partner. At scale, the amount a partner receives from this revenue stream can become significant. Partners often use it as a way to offset absorbing the cost of ACH and mailed check payments.
## Running your payables
Payabli has two different payables programs: managed payables, and on-demand payouts. Which solution is right for you depends on your business and your goals.
| Program Type | Key Feature | Best For | Funding Model |
| ----------------- | --------------------------------------------------------- | ------------------------------------------------------------------ | ---------------------------- |
| Managed payables | White glove service with dedicated team managing payments | Mid market/enterprise, property management, healthcare, government | Good funds model only |
| On-demand payouts | Instant payment processing with later fund collection | Businesses with stable financials seeking flexibility | Good funds and credit models |
### Managed payables
Managed payables are a white glove service and solution that offers businesses the convenience of outsourcing their bill payment processes. With this model, a dedicated team takes charge of determining the method and timing of payments to vendors on behalf of the business.
**Pros:**
* Hands-off approach for businesses after the bill is approved
* Expert oversight and management that drives digital payment adoption
* Full reconciliation of all payments
* Comprehensive exceptions management
* Reduced operational burden for vendor management
**Cons:**
* Less control over payment timing and methods because vendor enablement is managed
* This program operates in a good funds model which requires having funds available up front (between 2 and 4 days in advance)
**Considerations:**
* Minimizes rejected payments risk
* Reduces credit exposure through a good funds model
### On-demand payouts
With on-demand payouts, payments to vendors are made immediately, and funds collected from the merchant afterward.
**Pros:**
* Instant payment processing means partners and merchants are in control of payment timing
* Better cash flow optimization through the credit model with Payabli's partner banks
* Customizable check features for enterprise clients
* Direct check printing from sender's bank account so merchants can leverage positive pay with their banks
**Cons:**
* Partners and merchants must own the vendor enablement through Payabli APIs or tools
* Partners may have additional PCI scope if they want to view virtual cards details in their platform
* Partners might see lower adoption of digital payments when compared to a white glove vendor enablement service
**Considerations:**
* Partners need to consider the payment types available and how to manage their nuances within the program
* Merchants and partners must qualify for the credit model
## Funding your payables
Before a business can pay their bills through an automated flow, the payables program needs access to funds to cover the cost of the bills. Those funds are collected before the bill is initiated (good funds model) or in parallel to the initiation (credit model). The next sections explain these models.
### Good funds model
In the good funds model, payments to vendors are initiated only after the funds are verified and settled, eliminating the risk of payment failures or insufficient funds. Some key features of the good funds model are:
* Pre-verification of funds: Before any payment is initiated, the system verifies the availability of funds in the designated account to ensure that the payment can be successfully processed without any delays or complications.
* Settlement before payment: Funds are settled and confirmed in the account before the payout transaction is executed, providing assurance that the necessary funds are securely in place.
For paypoints, the good funds model could mean payments are pulled from their account 2 to 3 days in advance of the due date.
### Credit model
The AP credit model helps businesses to optimize cash flow, manage working capital, and maintain strong vendor relationships while mitigating credit risk. In this model, the paypoint or organization are underwritten to determine their creditworthiness. After they're underwritten and approved, they're able to initiate payouts to suppliers and vendors on credit.
Some key benefits of the credit model are:
* Improved cash flow management: Businesses can preserve working capital for core operational expenses or strategic investments, optimizing working capital efficiency and financial performance.
* Relationship building with suppliers: Offering quick payments may also enable businesses to negotiate favorable terms, discounts, or incentives with suppliers, reducing procurement costs.
It's good to know that access to the credit line is contingent upon the business's creditworthiness and ability to meet repayment obligations. Businesses with poor credit history or limited financial resources may have challenges in getting approved for this model or may be subject to higher interest rates and more stringent terms.
The credit model is only used for issuing virtual cards (vCards).
## Payables at Payabli
Payabli makes it easy to manage your accounts payable process through two key components: a one-time paypoint boarding process, followed by ongoing payout management.
### Boarding paypoints
When paypoints apply for merchant services with Payabli, they go through a comprehensive underwriting process to ensure that their business meets Payabli's standards and requirements. Here's what you can expect:
The partner collaborates with Payabli, providing the application and information required to underwrite and board the merchant's account. Merchants must submit an application with comprehensive documentation so Payabli can underwrite them and perform thorough Know Your Customer (KYC) checks. Documentation may include identity verification documents for authorized signatories, proof of address, business licenses, and any other relevant documentation to validate the client's identity and business legitimacy.
The Payabli team evaluates the application and documentation, adhering to KYC protocols to mitigate risks associated with financial crimes, fraud, and money laundering.
If the merchant is approved, Payabli boards the account with a trusted bank partner. This collaborative effort makes sure that the account is seamlessly integrated into the payables program.
After the merchant has been successfully boarded, Payabli confirms to the merchant that they're enrolled in the payables program and are ready to initiate bill payments. The timing of this process can vary by program and configuration.
With all necessary compliance checks completed and the account fully onboarded, the merchant is able to begin initiating payouts through Payabli.
#### Diagram: Payout onboarding sequence
This sequence diagram shows how a merchant gets onboarded for payables through the partner and Payabli:
1. **Merchant to Partner**: The merchant signs up for the partner's software tools.
2. **Partner to Payabli**: The partner sends all the necessary information to onboard the merchant via boarding tools or the API.
3. **Payabli**: Payabli underwrites the merchant.
4. **Payabli to Bank Partner**: Payabli onboards the account with a bank partner.
5. **Payabli to Partner**: Payabli confirms that the account has been boarded and is ready to pay bills through Payabli.
### Vendor management
Before you start issuing pay outs, you must create your vendors. You can manage vendors via the [API](/developers/api-reference/vendor/create-vendor) and the [UI](/guides/pay-out-portal-vendors-manage). You can also enable vendors via Vendor Links.
### Processing payouts
After a paypoint's boarding is complete, they can issue payments (pay outs) to vendors. The payout process works like this:
The payment process begins when a paypoint creates a payout request. This could also involve creating a bill in Payabli to retain record information about the vendor's invoice and the payment.
Before funds are collected for payment, the payment request typically undergoes a series of approvals within the paypoint. These approvals make sure that the payment request is legitimate, accurate, and authorized by the appropriate individuals or departments within the paypoint.
When the payment is initiated funds are collected from the paypoint. This could occur through various methods, such as direct debit from the paypoint's bank account, credit card payment, or transfer from a designated account.
**For managed and good funds payables:**
After funds are collected from the paypoint, the payment request continues processing. This step ensures that the payment request meets the necessary criteria and is approved for processing. Authorization may involve validation of payment details, verification of available funds, and adherence to internal or regulatory policies.
**For on-demand payouts:**
The payment is initiated immediately and provided to the paypoint or vendor to begin processing. The funds collection process is initiated in parallel.
After the payment is processed, confirmation of the transaction is provided to both the paypoint and the vendor. Settlement occurs when funds are transferred from the paypoint's account to the recipient's account, completing the payment transaction.
After payments are processed and reconciled, the payables product may offer additional features for post-payment management. This includes options for initiating disputes, and vendor payment reporting analytics.
## Payout Calculator
Use the interactive calculator below to estimate the time between initiating a payout and when funds are available to your vendors.
This calculator doesn't apply to managed payouts.
### Payout timeline reference
The payout timeline calculator estimates the calendar days from when you initiate a payout to when funds are available to vendors. You can select the payment method, capture date and time, and a hold period from 0–7 days. The batch cutoff is 9:00 PM ET. Payments captured afterward are included in the next business day's batch. The calculator accounts for weekends and federal holidays.
Here's a summary of the timeline for each payment method:
* **ACH** — Funds are pulled from the payer's account, held for the configured hold period, then an ACH credit is sent to the vendor's bank. Funds typically arrive 1–4 banking days after the ACH is sent. With a 3-day hold, expect around 6–9 calendar days from capture to funds available.
* **Virtual Card (Credit)** — The virtual card is available to the vendor immediately upon capture. Funds are pulled from the payer's account in the background. This is the fastest option but not all vendors are eligible.
* **Virtual Card (Good Funds)** — Funds are pulled and held first. The virtual card becomes available after funds clear, typically 3–5 banking days from capture depending on hold period.
* **Paper Check** — The check is printed and mailed via USPS the business day after batch close. No hold period is applied because checks are drawn from the merchant's bank account. Delivery takes 3–13 calendar days depending on USPS.
## Related resources
See these related resources to help you get the most out of Payabli.
* **[Payment glossary](/guides/platform-payment-glossary)** - Understand common terms used in Payabli and across the payments industry
* **[Understand positive pay](/guides/pay-out-checks-positive-pay)** - Learn how Positive Pay works to prevent check fraud
* **[Understanding managed payables](/guides/pay-out-managed-payables-overview)** - Learn about managed payables and the vendor enablement process