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Posted July 13, 2015

virtual payments

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There are several of clear-cut advantages to automating your organization’s payment processes. Your accounts payable department enjoys a more streamlined workflow and payments tend to get out the door more quickly, to name just two.

When A/P automation is taken a step further into the realm of fully electronic payments—through virtual credit cards—there’s even more to appreciate: increased control over purchases on the front end to enhanced visibility into spending on the back end, not to mention the potential to earn perks through your suppliers’ early-payment incentives.

But have you considered the impact virtual payments can make on your suppliers? There are so many benefits to their business, and making their accounts receivables team happy is just the beginning. Introducing a virtual payment method into your relationship can be a big win-win resulting in financial and administrative satisfaction for both parties. Here’s why:

1. Easy-to-use

Virtual payment processing is similar to that of traditional credit cards. With a virtual card, there’s just no piece of plastic involved. If your partners already accept credit card payments from customers, it’s likely they’ll accept them from you. They won’t have any hardware to buy or software to install—making implementation simple and intuitive.

2. Less paper waste

With no physical invoices, statements, checks, and receipts to print, shuffle, and file, there’s a lot less paper to buy and manage. And there’s a lot less work for their A/R team, enabling them to focus on more value-added activities. In fact, with virtual payments, there’s essentially no need to invoice. You can set up push notifications based on your contracted rates and payments can simply be processed at the point of transaction or upon approval—at the push of a button.

3. Faster processing

When you compare the speed of payment through a virtual card to that of ACH transfers and paper checks, there’s really no comparison. Electronic payments are sent directly to suppliers’ bank account, which is great for their cash flow. And, if your contracts allow for supplier-initiated payments, payments can be sped up even more. Don’t forget that with faster receipt of payments, there can also be faster dispute resolution—and less time spent managing conflicts that can hurt your business relationship.

4. Enhanced security

Again, it’s challenging to compare the security of virtual payments to those handled through more manual and paper-based channels. Automatic processes are inherently safer, as they’re held up to higher standards and less vulnerable to human error. Virtual card payments are sent through the trusty major credit card networks. Plus, suppliers don’t need to provide their bank information and expose it to potential fraud or leakage.

5. Better data

The virtual payment process allows for the receipt of enhanced remittance data for smoother reconciliation and reporting. It’s more detailed than what’s provided through legacy methods like ACH and wire transfer. Virtual payments can provide suppliers with access to transaction product codes, quantities, description, and tax information—data they can use to analyze their business, optimize processes, and aid in decision-making.

Innovative payment technologies are helping companies find better ways to manage their financial processes. It’s easy to focus on the advantages they have for your internal A/P administration, but don’t forget that using virtual payments helps your business partners, too. They can promote mutual operational efficiencies and improve your working relationships at the same time.

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