Seamless payments: The holy grail (or maybe the crowning glory)

Accounts payable: savings, rebates, and security with digital payments

It doesn’t take much to imagine the advantages of truly seamless processes. In the company finance arena, the benefits of more efficient use of resources are probably the most obvious. When the accounts payable department isn’t spending the bulk of its time processing paper checks or even ACH payments, resources can be shifted to more strategic parts of the business. Even the savings on bank charges can become significant for you and your suppliers.

A seamless system becomes even more attractive when you consider the potential rebates available using virtual cards for accounts payable. Finally, the ever-increasing need to ensure secure transactions throughout the business process is where seamless payments really pay off, bringing the possibility of fraud to an infinitesimally small percentage. Since seamless payment systems use virtual credit cards – with a series of numbers that is only used once for a specific payment and supplier, and precise controls on how and where the individual card is used – it is nearly impossible to use that number for another payment.

Challenges to adopting virtual card payment systems

Integrating digital payments systems

Any organization considering a new process is often discouraged by the prospect of making its enterprise management (ERP) systems work in harmony. However, there are cases – especially in companies with a history of mergers and acquisitions – where one or more ERP systems exist in different parts of the business. In such cases, adding a seamless accounts payable (AP) system is daunting and can be a factor in avoiding change. But this avoidance has unfavorable consequences regarding the use of resources and bank charges, as well as affecting payment security. However, given that by 2025, up to 80 percent of buyer-to-supplier transactions will be electronic, now is the time to consider the switch.

It is crucial that any AP system can work with existing ERP systems and with procurement software. “When a client has one or more ERP systems, we can create an interface between those systems and their existing procurement systems via our bespoke integration tool,” says Sue Holbrook, WEX vice president of corporate payments at WEX. “Working with the AP team and sincerely hearing their needs is vital to the success of implementation.”

Engaging suppliers to adopt virtual card payments

Suppliers are essential to any business process, and prioritizing your key suppliers and engaging them in the benefits of a seamless AP system is vital for a successful implementation. That means adopting a top-down approach within your executive team and identifying key suppliers to begin onboarding into an entirely seamless payment process. At WEX, we manage this onboarding process with sensitivity toward suppliers while demonstrating key benefits to them.

The biggest payoff for suppliers is the savings not only in terms of their resources, but also in the speed of payment and cash flow in their businesses.

The payments technology process

Accounts payable and procurement’s use of digital payments

Working with your AP department to plan the switch to digital payments, you’ll want to observe the processes and determine how best to make any changes in their approach to supplier spending. You’ll want to aim for everyone to appreciate that virtual cards minimize manual processing. At the same time, you’ll need to articulate your priorities in terms of your accounts payable clearly. This is part of an internal campaign aimed to engage everyone involved in the process. As Molly Steele, corporate payments manager at WEX, described, “The success of a supplier onboarding project is first to engage the AP team.”

Prioritizing suppliers as you adopt virtual card

You’ll want to partner with a payments provider who will help you map out your suppliers in an effective way. As an example, partnering with WEX, you’d be provided a benchmarking system to identify the suppliers most likely to convert to a virtual card system. For example, ad hoc or one-off suppliers would be low priorities. However, no matter how little they might be used, new suppliers might be automatically set up with a virtual card system. Then, WEX looks at organizations that would be unlikely to accept virtual cards initially, e.g. municipalities, tax agencies, and employees. Once these categories have been identified, it’s easy to determine what is called the “targeted spend;” this includes suppliers with recurring check and automatic clearing house (ACH) payments who could see the benefits of taking virtual credit card payments. Your payments partner can also investigate existing Mastercard and Visa databases to see which suppliers are already taking virtual cards. At the same time, you’d want to consider the suppliers of strategic importance to your organization’s business, therefore working closely with your procurement team.

Supplier onboarding for accepting digital payments

Once your payments provider develops a list of suppliers, they can create a supplier engagement team for you tasked with managing the onboarding process. If WEX is your partner, this includes training your procurement and supplier teams on WEX technology and on how to convert suppliers to virtual cards, culminating with establishing an enablement team which is made up of people from your procurement team and the suppliers’ teams. WEX’s engagement team monitors every virtual transaction, and meets weekly with you to share detailed reports of how onboarding is progressing. “We look at every single payment in detail. Our supplier enablement team takes on every task they can to support AP and procurement, including getting the vendors set up in WEX’s payments platform. We enroll each vendor in our platform and keep the engagement high between all the project teams. With engagement comes success for both our client and their suppliers,” Steele explains. Creating and maintaining this engagement is pivotal to the long-term success of implementing a virtual card AP system.

With every new supplier that commits to a virtual card system, WEX will implement a new engagement campaign as thorough as the first campaign. This is ongoing, and WEX supports its clients no matter how many suppliers need onboarding.

Payments technology integration for your AP department

While capturing the requirements of the buyer and their suppliers, your payments partner team should work within your systems team to ensure that ERP(s) are in sync with the new processes. If you’re partnering with WEX, creating and adapting any application programming interfaces (APIs) needed for all the systems to communicate clearly and effectively will also be part of the process.

The experience of supplier onboarding to digital payments across industries

Different industries have different priorities, and WEX has demonstrable experience across most industries and with businesses both large and small. WEX’s solutions are scalable, and its teams are versed in business across market sectors. Any partner in this arena must have this broad view to truly integrate buyers with their suppliers. Knowing the priorities of both sides of the AP process and being sensitive to different priorities helps to build the full engagement needed to implement a successful, seamless payments system.

The winners when you adopt virtual card

When everybody wins, you genuinely have something of which to be proud. Effectively implementing a seamless AP system does just that. Bank of America recently estimated that businesses spend almost $160 billion USD per year sending and receiving paper invoices and payments in the US. Processing a check can cost both the buyer and supplier between $4 and $20 USD, including the cost of the checks, stamps, envelopes, and labor. Processing an invoice costs between $4 and $8 USD. There are savings to be had for everyone in the process.

Buyers and their role in adopting digital payments

Creating an AP department that can actually generate revenue is a crowning glory in itself. Your AP department does just that through rebates from a virtual card system. Writing checks or actioning ACH payments incurs fees; a virtual card is much more cost-effective. Not only is it less expensive, but WEX also shares the revenue generated from using virtual cards with its customers in the form of rebates.

When you adopt virtual payments, all the paperwork associated with manual payments is drastically reduced, as is the time spent administering payments. You are not waiting days or even weeks to reconcile your accounts payable as it is all part of a contemporary, digital system.

Suppliers and their role in adopting digital payments

As with buyers, suppliers realize considerable savings in time and banking costs by adopting digital payments. Further, this improves their cash flow as there is no time between receiving the manual payment and having it as available funds in their bank account. Suppliers are paid directly into their bank accounts and simultaneously receive the reconciliation data.

Adopting digital payments means better security for all

Virtual cards are the gold standard for payment security. Unfortunately, fraud rears its ugly head in so many ways across manual payment systems – whether using checks or ACH. Emails, snail mail, and faxes are all subject to security breaches. However, with a seamless system, the possibility of cracking a virtual card number is minuscule. Further, the virtual numbers are time-limited and can only be used once for a specific payment and payee.

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.

Resources:
Bank of America