Smart Factories, Smarter Finances: Why Manufacturers Must Evolve in Industry 4.0

Manufacturers have poured resources into AI, IoT, and automation to improve production, and it’s paying off. Factory floors are more efficient than ever. But behind the scenes, finance teams are still managing invoices by hand, chasing down approvals, and mailing checks.

That disconnect is slowing everything down. Hidden bottlenecks, missed discounts, and delayed decisions are common side effects when AP processes don’t keep up.

Even as smart sensors monitor equipment in real time and robotic systems keep production moving, many manufacturers still rely on paper-based invoicing. In fact, 71% of manufacturers use manual methods to create, exchange, and receive invoices.

Unlike retail or service industries, manufacturing finance is far more complex. Multi-line purchase orders, intricate part numbers, and partial shipments require meticulous tracking. Factor in supplier payment terms tied to quality checks, and the potential for bottlenecks skyrockets. Without automation, these inefficiencies quietly drain cash flow, slow operations, and limit a company’s ability to pivot quickly.

It’s time for the finance side of the house to catch up. Automating AP and payments isn’t just about saving time, it’s about giving finance the tools to support smarter sourcing, better supplier relationships, and a more agile operation overall.

This gap between production and finance is one of the last holdouts in the digital transformation journey. To understand why closing it matters, let’s look at what’s driving Industry 4.0 and where finance fits in.

The Digital Transformation in Manufacturing: Beyond the Shop Floor

Industry 4.0 isn't just about machines; it’s about intelligence across the entire business.

Manufacturers have upgraded production with AI-driven robotics and IoT-connected systems, yet financial operations often remain stuck in the past. If AP teams are still managing invoices through emails and spreadsheets, they become the weakest link in an otherwise agile business. To stay competitive, finance must evolve alongside manufacturing technology.

What’s Driving Industry 4.0?

Industry 4.0 marks the fourth industrial revolution, where automation, data, and AI are at the core of business transformation. Key technologies leading the charge include:

• Artificial Intelligence (AI) and Machine Learning – Optimizing production lines, predicting maintenance needs, and analyzing spend data to uncover cost-saving opportunities.
• Internet of Things (IoT) – Connecting devices to track materials, monitor equipment health, and surface real-time data across the entire operation.
• Automation – From robotic assembly to intelligent invoice processing, automation removes friction, reduces errors, and boosts efficiency.
• Real-Time Data Analytics – Today’s finance leaders rely on live dashboards, not dated reports, for visibility into cash flow, outstanding invoices, and supplier payments.

Where Finance and AP Fit into Industry 4.0

As manufacturing technology continues to evolve, the pressure is on for financial operations to keep pace. The innovations driving Industry 4.0, like predictive analytics, real-time monitoring, and automation, shouldn’t stop at the factory floor. Finance plays a critical role in keeping operations running smoothly, and when it lags behind, the entire business feels it. While production embraces cutting-edge tech, finance can’t afford to fall behind. When AP processes remain manual, they create disconnects that ripple across the business. For example:

• A factory using predictive maintenance avoids equipment failure, but delayed supplier payments lead to late fees—or worse, missed deliveries.
• IoT-enabled inventory tracking optimizes supply chains, but without automated invoice processing, finance struggles to manage working capital.
• A CFO leveraging machine learning for demand forecasting still depends on spreadsheets to project AP obligations.

The Rise of Digital Payments in Manufacturing

Payments have often been an afterthought in manufacturing finance. But that’s changing fast. With the rise of real-time transactions and payment automation, manufacturers are starting to view payments as a strategic function that directly impacts agility and cash flow.

Why Payments Matter More Than Ever

Traditional payment processes in manufacturing tend to be manual, slow, and costly, dependent on paper checks, wires, or legacy ACH transfers. But as Industry 4.0 accelerates, more finance teams are realizing that modernizing payments is essential to controlling costs, improving liquidity, and strengthening supplier relationships.

The Shift Toward Automated Payments

Manufacturers are increasingly adopting digital payment tools that integrate with AP workflows to drive speed, security, and visibility. Examples include:

• Virtual Cards – Single-use digital cards that improve cash flow and reduce fraud by allowing payment delays while ensuring suppliers are paid instantly.
• Real-Time Payments (RTP) – Unlike traditional ACH, RTP transactions settle in seconds, building trust with suppliers.
• Automated ACH and Wire Transfers – Smart scheduling optimizes payment timing, reducing manual effort and improving cash flow management.
• Integrated Payment Platforms – Connecting digital payment tools with ERP and AP automation systems provides full visibility into cash outflows.
• Rebate Opportunities – Some platforms offer rebates on virtual card transactions, offsetting implementation costs and even generating revenue, essentially helping the system pay for itself.

Cash Flow Optimization Through Payment Strategies

Digital payments do more than streamline processes, they give finance teams powerful tools to control working capital. With automation, manufacturers can:

• Capture early-payment discounts – Automation ensures you never miss a supplier incentive. 

• Cut payment processing costs – Digital methods eliminate printing and mailing checks, saving thousands annually. 

• Strengthen supplier relationships – Faster, more reliable payments lead to better pricing and service. 

• Protect against fraud – Virtual cards and automated verification protocols flag unusual patterns and prevent unauthorized transactions. This is especially critical for high-value equipment purchases, where payments can reach seven figures. 

The Competitive Advantage of Digital Payments

Manufacturers who automate their payments not only improve cash flow and reduce costs, but they also gain a competitive advantage. As ongoing supply chain disruptions test operational resilience, having flexible, scalable payment solutions helps businesses respond quickly to changing conditions.

And because manufacturing often experiences seasonal swings in demand, payment optimization tools give finance teams the flexibility to extend terms during slower periods and capture early-payment discounts during peak seasons.

The Future of Finance in Manufacturing: Why onPhase is the Solution

Industry 4.0 is reshaping manufacturing, but outdated finance processes can hold you back. Manual AP and payment workflows slow growth, drive up costs, and introduce avoidable risks.

With onPhase, you can eliminate paper-based tasks, speed up approvals, and seamlessly integrate automation with your ERP. The result is a finance team that supports agility, not bottlenecks.

Don’t let legacy processes stall your Industry 4.0 transformation. Talk to an onPhase automation expert today to learn how you can cut costs, boost efficiency, and strengthen supplier relationships.

Ready to get started? Download our Supply Chain AP Checklist built specifically for manufacturers navigating digital transformation.