Today, Accounts Payable Automation and more specifically improving B2B vendor payments is an issue on everyone’s mind. Both buyers and vendors are looking for ways to make the payment process less expensive, more efficient, and more secure. Virtual credit cards are becoming a more popular form of payment due to the significant benefits for both parties involved.

Buyer Benefits

Financial executives want to streamline their accounts payable operations and turn their attention to other activities that will make a more significant contribution to their companies such as managing vendor relationships. AP automation provides that opportunity, and virtual credit cards provide the needed tools.

Reducing Paperwork

Producing, approving, and mailing checks account for a good portion of the paperwork that every Accounts Payable Department must handle. Paying vendors with virtual credit cards eliminates that paperwork.

Reducing Costs

Virtual credit cards can eliminate the costs associated with paying by paper checks:

  • Paper checks are expensive to print and keep in inventory.
  • Office supply costs are increased to purchase envelopes and postage.
  • Significant man-hours are required to match invoices to paper checks.
  • Management’s time is required to approve certain checks.
  • Mailing the checks requires man-hours to stuff envelopes and affix postage.
  • Exception processing is reduced because the virtual card reflects the invoice amount down to the penny and the reconciliation is automatic.

 

Improving Security

Paper checks pose security problems in a number of ways. For example, paper checks are the payment method most susceptible to fraud. In addition, paper checks can be lost, stolen, or delivered to the wrong address. On the other hand, virtual card payments are instantaneous, significantly reducing the risk of exposure. If a thief somehow obtained a virtual card number, they would be unable to make use of it.

Vendor Benefits

When credit cards first started to be used for B2B payments, it was difficult for small businesses to take advantage of them. Only the largest companies could afford to open merchant accounts, leaving small business owners at a competitive disadvantage. Today, accepting credit cards is almost a necessity and any size business can use virtual credit cards to their advantage.

Expanding Markets

Any size business can expand their reach when they process virtual credit cards. New market segments are open to them, and they can compete on a much more level playing field with their larger competitors.

Reducing Costs

Virtual credit cards can eliminate the costs associated with processing paper checks:

  • Significant man-hours are required to receive paper checks and match them to invoices.
  • Exception processing is reduced because the virtual card reflects the invoice amount down to the penny and the reconciliation is automatic.

 

Improving Security

Single use virtual credit cards limit the exposure to risk from fraud and lost or stolen payments.  Unique 16-digit card numbers are issued for single transactions with specific spend limits making them more secure for both the buyer and the vendor.

Increasing the Speed of Payment

Waiting for payment is a problem for any vendor. If the wait gets too long, it can impact the vendor’s ability to meet their obligations, and it can prevent them from taking advantage of new opportunities.

By definition, if a vendor is paid with a paper check, the buyer is limited in their ability to process payments quickly. The buyer’s accounts payable department must go through all the steps required to produce and mail a paper check. On the other hand, the instantaneous nature of virtual credit cards improve the payment speed significantly.

Virtual credit cards can offer peace of mind to both buyers and vendors. The cards are affordable, reduce paperwork and costs, improve security, and increased the speed of payments. It’s not difficult to see why virtual credit cards are increasingly seen as the best choice for B2B payments.

If you want more information about how virtual credit cards can help your business, ask the experts at ACOM. Call us at 800-347-3638 or contact us online.

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