There are many advantages to automating your organization’s payment processes. Your accounts payable department will benefit from precise controls, direct cost savings, and reduced fraud, just to name a few.
When A/P automation is taken a step further and your business decides to adopt 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.
Explore further with our "Supplier enablement" Infographic.
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. Read on to hear the six top reasons why your suppliers will love virtual payments.
1. Cost savings can be realized with virtual card adoption
The average cost of processing a check today is between $8-$10. By transitioning to virtual card technology, your business can reduce that cost for both you and your suppliers - increasing everyone’s bottom line. Consider this: a five percent reduction in operating costs can have the same impact on your bottom line as a 30% increase in sales would. That’s no chump change.
2. Reduce fraud with enhanced security found with virtual card technology
When comparing 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 a higher standard and are 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 themselves to potential fraud or leakage. Legacy payment solutions are inefficient and fraud-prone compared to virtual payments: In 2021 checks and ACH debit payment methods were the most impacted by fraud activity - 66% and 37% respectively.
3. Virtual cards are 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.
4. You’ll experience faster processing when you transition to virtual card technology
When you compare the speed of payment through a virtual card to that of ACH transfers and paper checks, virtual cards win the race, hands down. Electronic payments are sent directly to your supplier’s bank account, which is great for cash flow purposes. 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.
5. Virtual cards provide access to better data
The virtual payment process allows you access to enhanced remittance data for smoother reconciliation and reporting. Virtual card data is 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.
6. 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 A/R teams, enabling them to focus on more value-added projects for the business. 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.
Quick view of the benefits for both buyers and suppliers:
- Direct cost savings
- Precise controls
- Reduced fraud
- Financial transparency
- Robust transaction data
- Automated reconciliation
- Faster payments
- Guaranteed funds
- Accurate amounts
- Free payment portal access
- Robust remittance information
Learn more about how WEX payment solutions can be tailored to your business, so you can accelerate and streamline operations while creating lasting growth and success for your organization.
Editorial note: This article was originally published on July 13, 2015, and has been updated for this publication.