With a move away from checks and other antiquated payment methods to modern methods, organizations are recognizing a treasure trove of control, visibility, security and reduction of costs. While this is great for the purchasing organizations, a handful of suppliers in some markets are yet to be completely convinced on the advantages of payment via Virtual Card Numbers or VCNs.
Successfully onboarding suppliers and getting existing partners up to speed with changes, comes down to recognizing both parties’ challenges and effectively managing the customer/vendor relationship. Today, we seek to share why some suppliers are slow to adopt VCNs and how to ease them into a faster, easier, and more cost-effective future.
Why Suppliers Are Hesitant to Accept VCNs
While there are many benefits for suppliers including faster payments, reduced risk and less paperwork, one of the most common concerns is that of cost. According to an Ardent Partners Report shared in a previous WEX Blog, 42% of suppliers feel that they do not have the technologies to accept new payment methods. Another 23% are hesitant to take on charges in the form of acceptance fees, opportunity costs and system implementation.
Combatting Costs with Data, Timeliness, Automation, and Security
For suppliers, the status quo in receiving payments is rife with pitfalls, pain points and problems. Checks get lost, purchasing organizations lose invoices, systems get hacked and paper costs money. These are some of the costs of doing business that exist without making a change.
However, just as a purchasing organization can recognize immense benefits by implementing ePayments into their own processes, suppliers can take advantage of many of the same. Here are four ways in which suppliers can save money by accepting virtual payments:
1) Data
Aside from providing enhanced remittance data resulting in smoother reconciliation, payment via Virtual Card Numbers (VCNs) delivers more detail (e.g. transaction product codes, quantities, description, and tax information) that can be used to inform business decisions.
It’s superior to what’s generated by paper-based or even the ACH and wire/bank transfer processes, so it can add immediate value to suppliers’ ability to build a more strategic A/R operation.
2) Timeliness
Imagine being able to get paid on time, every time. With VCNs, suppliers are paid immediately, reducing the hassle of late payment. Because they’re processed digitally, payments via VCNs are faster than the more traditional forms of payment and an improved cash flow at a lower cost than wire/bank transfer or ACH transactions. This is especially important in international transactions, in which wire and bank transfer funds are often delayed at national clearing institutions. VCNs are truly “faster payments,” with immediacy in transmission no matter the distance, bank, or currency.
3) Automation
Thanks to improved, more robust data transmission, suppliers will be able to deal less with exceptions, modifications or other time-consuming transaction processing tasks. As the number of transactions increases, the amount of work put into managing these transactions will not, thanks to the automation provided when a customer uses VCNs to pay a supplier.
4) Security
VCN payments are digital, paperless and automated, already giving them a leg up on manual (more traditional) forms of payment. Unlike check and wire/bank transfer payments, VCN payments don’t use sensitive bank account information that can be lost or stolen and they use the major credit card network suppliers are already familiar with. Better yet, VCNs are single-use and controls can be employed to ensure a particular VCN is specific to a payment. Get more details in Use Technology to Fight Fraud and V-Cards Fight Payments Fraud in Business Travel.
5) Guarantees
A promise isn’t a promise unless all sides can back it up. For travel brands, all sides are guaranteed delivery and payment: Providers are guaranteed payment from their customers through a standard credit agreement, and in turn, the supplier receives immediate, guaranteed payment via VCN. This improves cash flow for providers and facilitators like OTAs, guarantees funds for suppliers, and protects all parties involved in the arrangement from reneging or fraud.
Hope for a Virtual Future
Ardent Partners reports that more than half of suppliers are now open to ePayments. Buyers who approach their vendors and explain the benefits of ePayments for the supplier, who offer assistance signing up for the process, and who offer increased purchases and improved payment terms along with the ePayments will find their vendors eager to embrace the new relationship and new technology.
For more information on the positives for buyers and suppliers, read WEX’s blogs, How Virtual Card Numbers Reduce the Cost of Doing Business, Building a Business Case for Virtual Payments, and Four Barriers to ePayments Adoption (and How Virtual Cards Overcome).