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For companies today managing cash flow and working capital is often a challenge with the need to manage the monetary requirements of your own business against the need to pay suppliers according to agreed timelines.
The method you choose to pay suppliers can be crucial in helping you successfully manage these competing needs and can even help your business have better control over cash flow and working capital.
Many industries are being forced to evolve rapidly with economic, political and technological factors all putting increased pressure on businesses. In order to survive you need to constantly look at the way you operate to ensure that you are equipped to adapt to changes effectively and efficiently. As you respond to these challenges, choosing the right supplier payment solution is a key enabler of success and access to credit is central to this.
While credit can be obtained from suppliers, negotiating extended payment terms may not be feasible with many businesses now always requiring payment in advance or within a short time after goods or services are delivered. The time and effort of negotiating on payment terms may not be productive and could even have a negative impact on supplier relationships. Such terms would also mean that you do not qualify for early payment discounts.
Virtual payments give you access to interest free, unsecured credit via trusted payment providers and allow you to pay suppliers straight away, taking advantage of early payment discounts where available while improving cash flow.
Traditional supplier payment methods, such as corporate credit cards or lodge cards, bank/wire transfer or check payments, may give you access to credit from your bank but these methods simply do not give you the agility that your business needs to succeed. Traditional methods rarely allow you to earn on payments made, can prove costly if you are paying international suppliers and reconciliation can be time consuming and reporting abilities are limited.
Any supplier who is able to accept credit or debit card payments will be able to accept virtual payments. Virtual payments are single-use MasterCard or Visa cards so can be accepted via existing services.
While there is a cost for suppliers to accept credit card payments, your supplier will take advantage of the following benefits which may outweigh the cost:
If the benefit of early payment does not negate the charge that will be incurred for accepting the payment there may be opportunity to come to an arrangement to facilitate the reduction of the fee, for example passing on the money you earn from using virtual payments.
Subscribe to our Inside WEX blog and follow us on social media for the insider view on everything WEX, from payments innovation to what it means to be a WEXer.
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