What are batch payments? Benefits and how they work

Manual payments are no problem when you’re a one-person business and have half a dozen invoices to pay. When your accounts payable function grows to the point of needing dedicated staff, the thought of manually processing bills and invoices gives you a headache.

The reality is: Some finance processes simply can’t scale smoothly. If your business is succeeding, at some point, you’re going to need to turn to batch payments.

If you’re reading this, you either know that moment is coming or it’s already arrived. Don’t worry, batch payments are going to save you a huge amount of time and stress. Once you understand the essentials (as we outline in this article), you’ll be ready to start processing batch payments with confidence.

What are batch payments?

Batch payments is a feature that lets you initiate multiple transactions at once.

You use a template to fill out details about your recipients, payment destinations, currencies, and preferred payment method. Once you’ve completed the template, you upload it to your payments system and it processes the transfers at scale.

If the payment processor specialises in multicurrency transfers (as Airwallex does), their batch payment template can also include automatic FX conversions.

For further reading, check out the more detailed explanation we published when batch payments launched.

Why businesses use batch payments

Consolidation is one of the first steps to making any part of your business more efficient. Batch payments are the perfect example of this. Rather than making 100 payments one-by-one – entering account details, amounts, and currencies, clicking through different fields, pages, and approvals – you can add all the information in one go, in one place.

The time saved per transaction might not be huge, but, at scale, the benefits compound – saving time, reducing low-value administrative work, and reducing the chance of errors.

Key benefits of batch payments for businesses

We can’t talk about the specifics of your business, but there are core advantages of using batch payments that every business enjoys. Managing your high-volume transfers this way will see you:

• Reduce manual errors and admin burden

• Unlock better, more flexible cashflow planning

• Work with suppliers across currencies and borders

• Scale teams, marketplaces, and platforms with ease

• Save time, by processing multiple payments at once

How do batch payments work?

To explain the batch payments process, we’ll use our own product as an example.

1. Generate the template

The first thing you need to do is tell us what data needs to be in your template, including:

• Country

• Currency

• Transfer method

• Recipient type (business or individual)

• Transfer amount (guaranteeing your cost or the payees’ receipt)

2. Completing the template

Once you’ve generated your template, you’ll download the file. At Airwallex, our batch transfer template is an Excel file using .XSLX format.

You’ll enter the amount you want to pay each recipient, as well as other identifying and transfer-related information. Using functions like VLOOKUP to pull in payee data will make the process even quicker.

Note: This is not the full cell range of the template.

It’s vital that you leave the formatting across cells and headers unedited, as these contain specific enriched data that our system needs to successfully parse your data. If you change a column heading or copy and paste a value from one cell to another, it may stop your batch payment from working.

3. Uploading your completed template or sending via API

Once you’ve completed all the required fields, it’s time to submit the finished template file to Airwallex. You do this in the Transfers tab of your Airwallex account. Batch payments can be submitted via an API call.

4. Payment validation and approval workflows

The file will be processed and validated. After validation, it will return an error if any of the data is incorrect or incomplete. You can choose to submit the file and replace the erroneous data later – especially useful for time sensitive payments – or cancel and reupload an updated version.

With Airwallex, you can customise your permissions and approvals based on the user initiating a payment, the recipient, the value of a payment, the location of a payment, or many other rules.

Any payments requiring approval will be held until a relevant user has approved them.

5. Execution and settlement

If a payment requires no approvals, it will be processed on the date you’ve chosen. If it requires approval, it will be executed only once the approvals have been granted.

Of course, you will need to have the funds in your account(s) to fund these transfers. If you don’t, we won’t be able to complete all of the transfers in the batch.

You can find a status update for each payment in the batch transfers’ summary page.

6. Notification and reconciliation

Once your transfers have been processed, executed, and settled, it’s time for bookkeeping.

If your payment provider has an integration with your accounting system, much of this work will be automated and require a simple approval.

Read our user guide to batch transfers, if you’d like more detail.

Common challenges with batch payments

Batch transfers might be quicker than manual ones, but that doesn’t mean they’re perfect. Thankfully, a little awareness of the common mistakes and easy pitfalls and it’s likely you’ll have batch payments working properly and consistently.

File formatting errors or invalid data

We can confidently say that formatting and data errors are the number one reason for failed transfers in batch payments.

The formatting issue is a frustrating one, but it’s due to the nature of processing and parsing data at scale. Payment systems are set up to recognise specific values, formats, and strings of characters. That’s why we use templated files – so we can guarantee the way your data is formatted.

If any of these elements are out of place, you may as well be asking your payments system to send money to the moon. It just won’t work.

Payment failures due to incorrect account details

An IBAN is up to 34 characters long. A SWIFT code can reach 11 characters. If you’ve ever misplaced or confused a digit: You’re a human like the rest of us.

Simple human error can lead to failed payments. Ideally, you’ll be pulling all account and payee details from another spreadsheet using VLOOKUP or other functions. That’s not always possible, though.

It’s worth saying, this is just as problematic for manual payments as it is for batch.

Unexpected FX costs and fees

Let’s say you have an invoice to pay of $10,000 USD. On Monday, the exchange rate is 1.30 so you upload a batch payment including a £7,692.31 payment to that supplier.

The payment is processed and settled on Tuesday, when the exchange rate is 1.28.

Your supplier gets $9,846.16 in their account, not the $10,000 they’re owed. Now you have that problem to solve.

Without the option to fix the sent or settled amount, you’re exposed to movements in the currency market and any volatility between uploading your batch payment file and the transfers settling.

Lack of visibility into batch processing status

Depending on the payment processor you use, you’ll have varying levels of insight into where your transfers are.

When you’ve got millions of pounds in batch payment limbo, clarity is the least you can ask for. With Airwallex, you get a live, line-by-line status for every batch payment you send.

Limited approval controls

Any automation within your business needs to be carefully considered. IBM’s oft-quoted 1979 training manual says: “A computer can never be held accountable, therefore a computer must never make a management decision.”

Approval rules protect your business from expensive mistakes in batch payments, so if your provider can only offer limited functionality in this area, you’re being put at risk.

Fully customisable, logic-based rules are an essential element of good batch payments.

Reconciliation and auditing

Batch payments may bundle hundreds or thousands of payments into one action, but they need to be individually identifiable at month- and year-end.

Any payment processor worth its keep will integrate with your accounting software and send the payments in a bulk transfer as individual line items. If not, you face a bookkeeping nightmare. Airwallex’s spend management features can do all of this and a lot more.

When to use batch payments in your business (and how to solve common challenges)

Some of the most popular ways we see businesses using batch payments with Airwallex include:

• Running payroll

• Processing customer refunds

• Distributing affiliate commissions

• Settling invoices from contractors

• Paying suppliers (especially on month-end payment terms)

In almost all of these use cases, batch payments help businesses by consolidating, simplifying, and systematising a group of payments. As businesses grow and their suppliers and vendors scale with them, doing everything as-and-when becomes impossible.

With batch payments, you get to create a repeatable process for managing your accounts payable – preventing invoice overwhelm.

Tips for managing batch payments effectively

Any new process takes a bit of adjustment and management. While we’re confident you can get up to speed with batch payments quickly, there are a few tips we can share to make the process as smooth as possible.

1. Plan and set approval roles early: It’s better to be too cautious than too relaxed when it comes to batch payments. You only need to experience one error or fraudulent payment to realise that. Setting clear, logical rules for approving payments – before you make your first payments – will save you time, stress, and money.

2. Validating recipient details: Data validation isn’t the most exciting part of anyone’s day, but it’s vitally important for batch payments. Without validation, your money could go to the wrong place or invoices end up overdue. It’s good practice to check in with regular suppliers as to whether their account details have changed, in any case.

3. Automating via API and spreadsheet functions: Batch payments provide a huge boost to your efficiency, but you can take it even further. Automating submissions via API calls will speed up the process further. The real win, we think, is in using connected sheets within a spreadsheet and functions like VLOOKUP to input account details. This is the key to making payments both faster and more accurate.

Airwallex and batch payments: A smart automation solution

We’ve already explained how we handle the process of batch payments at Airwallex, but we haven’t told you about our product.

We’re really proud of what we’ve built. We offer all the features you’ll find in a great batch payments product – up to 1,000 payment per batch, customisable multi-layer approvals, and line-by-line status updates – along with some Airwallex extras.

International? Pick from over 200 countries. Multi-currency? More than you can name. FX? The feature automatically does the maths for you, so the recipient always gets the total amount.

There’s no better way to make payments at scale, across the world.

This step is inevitable – the platform you choose is not

If your business is growing, one of the first things you’ll need to automate is your accounts payable. A manual process simply won’t scale past a certain point, unless you want your role to become 24/7 payment processing.

Batch payments are a standard feature across banks, eMoney institutions, and payment providers. The only problem is that quality is not standardised across these providers.

Choosing a payments platform that lets you feel in control of the money you send isn’t just a nice-to-have, it’s non-negotiable. You’ll know you’ve found the right provider if you can fully customise your approval rules and logic, lock-in exchange rates, and do business like a local all across the world.