SME must-read | 10 tips on paying vendors' bills

What is a vendor invoice?

When a company purchases goods or services from a supplier, it must pay the supplier for them. The document that the supplier sends to the company to record the details of the transaction of the goods or services purchased by the company is called a “vendor invoice”. A vendor invoice is a document sent by a supplier to a company to record the details of a transaction for goods or services purchased by the company. A vendor invoice contains detailed information to ensure the accuracy of the transaction between the company and the supplier, including the date of the invoice, the invoice number, contact information, description of the goods/services, terms of payment, and the total amount payable.
 

Process of handling vendor invoice

Tracking payment progress
There are also many payment management systems that provide automatic payment on a specified date and bill payment reminder function to help merchants minimise the chance of missing bills. For example, merchants can preset a payment date for bill payment in KPay App. The system will automatically make payment according to your preset date. The system also provides bill reminders to ensure that all bills are paid on time and accurately.

In addition, SMEs need to have good and systematic tracking methods, such as an Accounts Payable Aging Report, which is an accounting report that records the status of the company's outstanding payments to suppliers and the extent to which they are overdue. The aging report categorises accounts payable into different aging ranges based on how long they have been overdue.

Timely update of general ledger records
When you process each supplier invoice, you will need to record the transaction in the relevant account in your general ledger, including: supplier name, payment date, amount, payment method, etc. This is convenient for future review and auditing.

Paying local vendors

Paying Mainland vendors

Enterprises are required to obtain approval from the authorities before making commercial remittances. If the amount of remittance exceeds USD 50,000, it must be handled in accordance with the relevant provisions of the “Guidelines on Foreign Exchange Control for Trade in Services” and its implementation regulations, with the provision of contracts, receipts or other transaction documents by the Mainland company.

1. Bank remittance
Handling fee: HKD 50-165
Advantage: The remittance process is protected, ensuring the safety of remittance information.
Disadvantages: Handling fee is more expensive

2. E-wallet remittance
Handling fee: HKD 25-30
Advantage: The whole process can be done online, simple operation.
Disadvantage: Setting a limit for remittance methods

3. Exchange store remittance
Handling Fee: Need to check with individual stores.
Advantage: Lower handling fee or even no charge.
Disadvantage: exchange rate may have a certain difference compared with banks, and enterprises need to bear the relevant risks.

4. Cross-border remittance platform
Handling fee: generally charge a certain percentage of the remittance amount.
Advantage: Reasonable cost, can track the progress of remittance.
Weaknesses: Remittance limit is set

Paying foreign vendors

Professional overseas remittance company

• Handling fee: approximately HKD 150

• Advantages: Faster response time to customer service, can provide personalised service to customers.

• Disadvantages: Some small companies may have the risk of handling remittance manually.
   

Third party payment collection platform

• Handling fee: generally charge a certain percentage of the remittance amount

• Advantage: Fully automated operation, simple operation. Lower remittance and handling fee, and the whole process can be done online.

• Disadvantages: There may be a minimum threshold for remittance, so you need to pay attention to the relevant requirements before remittance.
   

Bank telegraphic transfer

• Handling fee: HKD 65-250; branch service will be more expensive.

• Advantage: The remittance process is monitored by the bank to ensure the security of the remittance information.

• Disadvantages: Expensive handling fee and long remittance time.
   

Cheque remittance 

• Handling fee: HKD 100-250

• Advantage: Handling fee is similar to that of telegraphic transfer, higher security.

• Disadvantages: Longer remittance time, payee needs to go to the bank in person to withdraw the money.
   

Exchange store

• Handling fee: need to ask individual stores for help.

• Advantage: simple and fast, simple procedures. Simple remittance procedures, the payee can collect the money in 2 working days at the earliest.

• Disadvantages: Less secure than bank wire transfer, exchange store or background may not meet the compliance requirements.

10 tips on paying vendor invoice

• The supplier payment process should be clear and transparent, ensuring that all team members are involved.

• Set up automatic or recurring payments

• Paying multiple suppliers at once simplifies the payment process and in some cases may save transaction costs.

• Ensure suppliers are paid on time to build trust and maintain corporate image.

• Negotiate longer payment terms with suppliers to gain greater flexibility and relieve financial pressure.

• Pay attention to fees and charges when transferring funds to avoid unnecessary expenses.

• Monitor exchange rate trends and make international payments in a timely manner to maximize profitability

• Choose a banking institution with a higher transfer limit to facilitate large-value transactions at any time

• Choose a banking institution that offers instant payments to ensure that your money gets to your account quickly.

• Compare different payment options and choose the one that best suits your business needs.

All of the above remittance methods have their own advantages and disadvantages. If you are looking for a safe, fast and low-cost remittance method, KPay can help you! KPay's Fast Payment Account offers both local and overseas remittance functions: you can use the Fast Payment Service (FPS) for fast local transfers, with the earliest possible same-day transfer; and for overseas remittances, the KPay Fast Payment Account lets you remit funds to 14 countries and regions in 15 currencies at lower prices than bank wire transfers, helping you to significantly reduce the cost of finding money. 

Want to know more about KPay's remittance function? You can read this article.