by WEX Travel
Companies in the travel industry face unique accounts payable (AP) challenges due to the nature of their business. From traditional travel agents, to OTAs, to tour operators, making payments typically involves a large number of suppliers across the globe. Suppliers might include large multinational corporations or small, local vendors in more remote locales. For companies that are still using manual processes, rely on paper checks, and/or are paying suppliers through many different processes, AP can be a big headache.
Fortunately, there is a payment solution that is flexible, secure, and efficient: virtual payments.
Here are five ways virtual payments or virtual card numbers (VCNs) can help you avoid AP headaches.
1. Difficulty maintaining steady cash flow
One of the biggest challenges for any AP team is paying invoices on time while optimizing working capital. Manual processes and the use of paper checks can make it all the more challenging to do this efficiently. Virtual payments can make this process more streamlined and offer access to extended payment terms at no cost. This can also help you pay your suppliers faster, building stronger relationships, avoiding late fees, and improving your overall days payable outstanding.
Virtual payments can save you money in other ways as well. If you’re still cutting paper checks, you’re paying for the printing of those checks, the postage, as well as paper storage to store your files. These costs add up. In addition, you can actually create a new revenue stream when you use virtual payments my earning money on the payments you make.
2. Exposure to fraud and misuse
Payment fraud is unavoidable, but some payment methods are more susceptible than others. According to a survey from the Association for Finance Professionals, check fraud made up 77% of incidents of payment fraud in 2014, twice as much as fraud related to credit cards. Check fraud also represented the payment method with the greatest dollar amount loss. Traditional credit cards are also susceptible to fraud. Physical credit cards can easily be lost or stolen, and data breaches of credit card information within the travel industry have become increasingly common.
Virtual payments offer a number of controls that other payment methods often do not offer which can make them more secure. Unlike traditional credit cards that have an expiration date of years and can be used for any and multiple purchases, VCNs are single-use and can be restricted to a specific time period, a particular value and certain merchants. This reduces the risk of fraud and misuse, which saves you both money and time.
3. Costly international payments
As a travel company, it’s likely that a number of your suppliers and vendors are international – this can be a headache and costly to manage effectively. Virtual payments are globally accepted by suppliers using their existing terminals and can be used to make payments in over 150 currencies without unnecessary fees or exchange rate markups – typically saving you 3% per payment made.
Plus, the option to be billed in the same currency you are paying an international supplier in can help you avoid exchange rate fluctuation risk.
4. Difficulties in reconciling payments and lack of reporting
Another headache for AP staff is the reconciliation process, which can eat up time and resource. Certain payment methods such as check, ACH, bank/wire transfers and traditional credit/debit cards can lack detail when it comes to remittance information, which makes reconciliation more difficult.
With virtual payments, a single-use card number is generated for each payment and user-defined data fields can be set up to enhance data capture. This greatly simplifies payment reconciliation and reporting, which gives your staff time for more important tasks.
5. Time consuming processes
All of these AP headaches come back to one thing: wasting time. Your AP staff is not working as efficiently as they could if they are spending time processing paper checks, chasing down fraudulent transactions, changing processes for international payments, or spending time on manual reconciliation. Virtual payments solve these problems, create efficiencies and save money. Most importantly, though, by improving your payment process with virtual payments, you can eliminate unnecessary work, which will free up time to focus on proactive projects, such as auditing and further improving your processes.