In our personal lives, as seasoned, sensible shoppers, we might consider joining a warehouse club like a BJs or Sam’s Club. Buying in bulk with competitive pricing, we become the smart shoppers we always wanted to be at these big box stores. With every purchase there’s a feeling of satisfaction and savvy: “I got this. I know what I’m doing and I’m saving my family money.”
In fact, as CNN’s Nathaniel Meyersohn recently reported, Costco, Sam’s Club and BJs “won the pandemic.” COVID shoppers pushed membership to an all-time high, as consumers enjoyed a one-stop shopping experience that let them shop less frequently when minimal exposure to public spaces was encouraged. Wouldn’t it be nice to have that same opportunity as a business – to cut costs and consistently make efficient purchases? What if there was a tool available that would allow us to do just that?
Virtual payment technology: an edge when it comes to savings
Investing in a payment processing tool is an important step for your business to take in today’s digital landscape. You will save on paperwork, staffing, and redundancies by reducing time-consuming tasks like data entry and processing. By streamlining workflow and improving accuracy, your employees can shift their focus to minimizing risk and saving your company money. With virtual payments technology you will have access to data that will provide visibility into cost-saving vendor management information. This is where the Accounts Payable (AP) savings, and the walk down a proverbial Costco aisle can be realized.
How does payments technology data provide valuable AP information to your business?
Virtual payment technology allows your Accounts Payable (AP) department to digitally tie key information to each transaction. Digitizing this information then allows access to all the associated data going forward. According to RJ Pettis, Senior Category Procurement Manager at WEX, the process to digitize vendor information is straightforward, and it also makes things easier for your vendors in the long run. “Once you have filled the invoice, you can load it into the vendor payments software and it runs. It’s that simple. The vendor is then responsible for collecting their payment from the filled invoice in that same, shared platform.” Digitizing vendor management saves time for vendors and streamlines the business model as compared to a manual process, which can be laborious and time-consuming.
Spend analysis is a key tool for procurement
If your payments are made through an AP software, you can access some enlightening cost-saving information from the data provided by that AP tool. “By exploring the data that comes from using a fintech payments solution, you can collaborate with colleagues across all lines of business within your company and streamline who the company is using for vendors,” says Pettis. For example, you may be purchasing office supplies and office furniture from different vendors, but by combining these product expenses into one vendor, you can strengthen your buying power and potentially negotiate a better deal for your company. You can become that smart and savvy big box shopper just by using the data provided by your payments technology tool.
Using an intuitive and easy-to-learn AP tool can aggregate, in real-time, the amount you spend with each vendor and provide you with valuable negotiating information. Not only will you find ways to save money, but you can also better manage risk and increase the buying power of your business.
How payments technology helps your AP department save you money while best servicing your vendors
Accounts Payable transparency allows businesses like yours to easily self-audit, keep clean books by tracking any discrepancies, and stay proactive. During the pandemic, many businesses have suffered and continue to suffer from staffing shortages due to COVID-related causes. Automating payment systems, including automating data entry and reconciliation, can improve efficiencies during this difficult staffing time.
AP automation helps you best manage vendor relationships as well. “One of the features with this kind of technology that provides a huge advantage is the ability to see which vendors have collected payments and which ones have not,” says Pettis. Within his payments technology tool, Pettis is able to see which of his vendors have used the tool to gather what WEX owes them and which have not. “Seeing into this kind of data allows me to proactively partner with my vendors and provide them with a better partnership than I was able to in the past. When I can have visibility into their payments activity I can investigate if there is something amiss and follow up with them to be sure they are properly receiving their payments.” User-friendly interfaces like payment system dashboards show charges generated during the previous month or year and the status of the invoices.
With the tool’s ability to sort by date and vendor, AP departments can catch any discrepancies, like the unusual instance of accidentally paying a vendor twice. The software dashboard provides easy access to run custom reports that might include transaction times, dates, and other pertinent details – whatever data you’re interested in digging into. Your AP tracking becomes seamless and transparent. This frees up time for you to more comfortably manage your day-to-day business with the knowledge that you have real-time data to back you up no matter what issues may arise in the payments process.
The virtual card is the go-to way to make payments
If you haven’t already, now is the time for you to switch your corporate payments processes from outdated modes of payment to more secure and cost-effective virtual card technology. Used for any purchase, electronic payment cards will streamline your AP department transactions, making each automated transaction safe and accurate.
As Pettis describes it, he has complete control over who gets paid, when and for what amount. “I can set up a Mastercard specific to a vendor I’m trying to pay and only to that maximum amount that was generated, with an expiration date,” explains Pettis. “I set each payment up to be just for that specific amount at that time.” Pettis does this with both one-time and recurring payments and he does so through a secure web portal which is integrated into his AP system automatically.
With online analytics, you can track the details of all payments, and improve your daily processes. Most virtual card platforms will easily integrate into your general ledger software to manage your finances with minimal errors. With less time devoted to manual reconciliation, your business becomes more streamlined, and saves you money.
Digitize your AP experience with financial technology
Combining virtual card technology with a data-gathering system will provide you with the ability to get real-time reporting and analysis. This kind of information will give you the edge you need to compete in today’s digital world. The knowledge you gain from a proven digital payments technology allows you to make sound decisions on the fly. Ensuring you have your purchasing and payables in an intuitive system is critical to save your company time and resources, and improve the bottom line.
Virtual payments can be integrated into fintech software that will capture and electronically store your supplier invoices, and then route them for proper coding and approval. With a streamlined electronic system, audits and alerts keep the payable process on track and on time. This is a win-win for you and your vendors which will save you both time and money, ensure a steady cash flow, and provide better security for your finances.
“With the ability to set payment parameters, like date and amount, specific to each vendor,” explains Pettis, “I have greater control of the payables. This comes in handy with small shops or vendors using Square. Square typically will not advance small businesses credit lines above $25k per transaction. So if we owe them $100k on an invoice they have to hit the Virtual Mastercard (VMC) four times. With a good payments system software, you can do that – allow multiple hits on the same invoice so long as it does not exceed a maximum or require that it be collected in one fell swoop. For businesses that are limited, having the ability to hit several times allows our AP department to shift more volume onto VMC, and better service our vendors.” That kind of nimble and bespoke solution will make all the difference for your company to stay on the cutting edge of payments technology and keep vendors happy and engaged.
Use the data gathered to save your company money
You can use the data that a payment software gathers about your activity and invoice history to streamline your buying power. The money you spend can be categorized and sorted by the type of purchase made to help you see the total picture of how and where your dollars are being spent. For example, if you have several offices buying office supplies independently, you can now see how much you’re spending in total. Information is a powerful negotiating tool with retailers and other suppliers, especially in a time of global supply chain crisis.
“Firms can use the technology to analyze their payment spend and determine where they should be streamlining to save money,” says Pettis. “The software allows you to see what transactions have gone through, who the vendor was, and what was the frequency of use. There are many companies that lack good visibility into their AP spend, and with these payment tools, they can approach the process with better visibility and a lot more business smarts to make good spending decisions.”
Strong data entry into your payments technology tool will lead to future savings
One way to best manage your company’s spend and root out ways to save is by ensuring thorough and clean data entry at the outset. By entering spend into your fintech payments tool with as much information as you need to glean data at a later date, you’ll be able to get the most out of the tool.
A robust AP tool can categorize your purchasing into direct and indirect procurement or purchasing spends for better analytics. Direct spending is grouped by goods and services that are necessary for the manufacturing or delivery of your product or service (including materials and labor), whereas indirect spending is categorized as goods and services purchased for your business operations. Common indirect categories are human resources, information technology, legal, marketing, office, postage, print, photocopier, travel, telecommunication, and utilities.
When you group your spending into categories that make sense to you, you give yourself the opportunity to generate reports and graphs to help you analyze your overall spending power. The old rule of thumb always applies: the data gathered and analyzed is only as good as the accuracy of the data collected. When you take the time to categorize your procurement carefully, you will be amazed by the savings that can be realized. Learning to maximize value for every dollar that your business generates requires the ability to look at the overall picture and make predictions for strategic planning for the year to come.
Financial technology is the essential tool for today’s B2B payments
WEX worked with The Economist Group to gain a better understanding into the current state of B2B payments. Surveying hundreds of executives from financial services, technology, and fintech, they learned that companies that don’t adapt may not survive. The results of the survey, as detailed in Capitalizing on the virtual payments opportunity, highlight the reality that businesses are overwhelmingly moving from outdated manual payments to secure electronic payments, including ACH, virtual cards, wire transfers and real-time payments.
In an earlier article we explain, “Financial technology companies saw an increase in business, most notably in payments technology implementation, due to changes in how we work that came about during COVID. According to the Economist/WEX joint study, fintechs see payments as the gateway to a new era of business.” And now this era also includes the ability to create a more sophisticated analysis of your firm’s spending and build strategies for how to collaborate across the business and across your vendor partners to realize savings.
Capitalize on your purchasing budget with the best fintech payments tools
How do you make the most of your company’s growth and accomplishments? Find opportunities within the fintech payment tools you’ve invested in to better understand your business’s financial decisions. This will allow you to make more educated spending decisions in the future. Conduct a high-level analysis of cost efficiencies and spending patterns to see areas where you can save money or increase growth. This can help you gain an understanding of what is positively impacting your cash flow.
How do I get my vendors to accept virtual card payments?
Many payment systems companies, like WEX, provide the marketing tools to encourage their vendors to use the payments technology. As Pettis explains, “WEX provides a team to actively reach out and contact your vendors to enroll them in the program. Our effective outreach campaign includes telephone calls, emails, and direct mail letters, making for an efficient and painless transition to the new AP platform.”
Your payments technology provider can help your vendors easily accept virtual payments and help them see how it will benefit their businesses.
Sound technology adoption decisions translate to good business
By keeping an eye on your daily business transactions, through the use of a strong payments technology tool, you can keep a finger on the pulse of your financial health. Not only that, you can also develop strategies for negotiating better rates and discounts with suppliers and vendors by examining the company’s wider spending habits. By working to find less expensive alternatives on the budgeted items you spend the most on, you can save hundreds of thousands of dollars every year for your business.
Finding a company that excels in payment innovation technology with a long-running track record working with major financial institutions and other fintech partners will provide you with the tools and experience your business requires to succeed in the rapidly changing environment of the business world today. In essence, look for partners who will deliver value with every digital payment processing transaction.
Learn more about how WEX payment solutions can be tailored to your business, so you can operate more efficiently while creating lasting growth and success.
To learn more about WEX, a growing and global organization, please visit wexinc.com.