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Virtual Card Payments: 4 Reasons You Need Them

by | Jul 15, 2019

What is a Virtual Card?

Commonly called a single-use account or SUA , a 16 digit virtual card number generates randomly via AP automation programs. The program sends the SUA with an access link directly to your supplier with detailed payment instructions.

This remarkable AP automation tool assigns exact bill amounts and invoice details to the virtual card.  Further, the tool regulates supplier access times.  These unique features contribute directly to the tool’s fraud prevention renown.

Any supplier who can currently process a credit card, can process virtual cards.

Growth Projections

As a matter of fact, virtual card usage is the fasting growing commercial card category when compared to purchasing and corporate cards in 2018.  According to Accenture, use is up a staggering 24% from 2017 to 2018 totaling a whopping $169 billion in AP Spend.  By 2021 virtual card spend is expected to surpass both corporate and purchase card spend categories.

4 Reasons Businesses Need to Jump on the Virtual Card Bandwagon

Electronic payment or epayables by virtual cards offer outstanding benefits for AP departments.  Regardless of company size, this payment form shows signs of stickiness and here’s why.

 1 – Revenue Generation through cash rebates

Top AP automation vendors provide cash rebates for virtual card use.  The rebate amount correlates directly to the overall transaction volume.

Even better, businesses who do their homework find the best AP automation programs analyze, devise and implement initial and ongoing supplier enablement campaigns.  A supplier onboarding campaign ensures higher card acceptance with your suppliers.  This part of the AP automation program is crucial for increasing virtual card transaction volume.  Cash rebates grow with volume.

Revenue generation is a measurable benefit that transforms your AP department from cost center to revenue generator.  This is a powerful change in the way the department functions with huge cross company impact.

2 – Security

Second to cash rebates is the security aspects of SUA. Unlike plastic purchasing or corporate cards which are vulnerable to theft, the virtual card is extraordinarily fraud resistant. The ability to set expiration dates and exact dollar amounts dramatically limits the chance for fraud.  AP staff easily assign SUA’s to specific invoices.  Further, the defining characteristic of the SUA, both random number generation and single use decreases fraud probability.

Moreover, SUA’s have no link or identifiers to or with your company’s bank, credit or account information.  This payment process uniquely safeguards your resources and provides peace of mind every time you make payments.

Purchasing and corporate card use create broad opportunity for waste, misuse, and non contract purchases.  These older commercial card programs require intense, after the fact scrutiny.  Now businesses implement virtual card programs via employee pre spend request decreasing vague, unapproved or costly expenditures.

In other words, virtual card use stops “out of policy” and non company expense abuses.

3 – Cash-Flow and Management

Virtual card use extends days payables outstanding (DPO) and improves working capital.  The statement cycle of credit card payments allows your company to take advantage of early pay discounts and still pay the actual bill 30 days after your supplier is paid.

Visibility and transparency provided with AP automation and SUA generation facilitates enhanced control over AP spend and cash management.  The virtual card is handy and faster to use without the need for actual paperwork during the payment process. At the same time, tracking and reporting is easier with real time digital monitoring of transactions.  No more expense reports to pour over post spend.

4- Savings

Virtual card use increases payment processing efficiency and cuts costs.

Paper check purchases from banks or affiliated suppliers become unnecessary outlays.  Additional tangible costs for paper check processing must also be shouldered such as postage, envelopes, paper, toners, ink, staplers, paper clips, machines and other office paraphernalia. These outdated processes entail substantial gruntwork, labor and manpower costs.

With automated payment tools such as the SUA these administrative expenses are completely eliminated or significantly reduced.

But monetary values are not the only savings.  Virtual credit card payments saves your business time.  Valuable and new financial task allocations for AP staff will contribute to the company’s general productivity and  profitability.

Partner with a Professional AP and Merchant Solutions Provider

Business today demands progressive digitally enhanced AP solutions.  Knowledgeable AP automation partnership is the foundation for a successful epayables program.

Maximize benefits, cut costs and efficiently structure your payment processes for the long haul.  Pioneer a long term plan by investing in a payments partnership.  An expert AP and merchant solutions provider will safeguard your venture and guarantee profitability, growth, and resiliency through industry changes.  A virtual card program is just a single tool in the automation basket.

Year over year growth statistics in AP automation demands a company intiative.

XBS Global ensures fast, secure and convenient electronic payments to handle all the day-to-day operations for B2B and retail clients.

We employ only experienced professionals and experts on payments processing to support and collaborate with manufacturers, professional service companies, distributors and other businesses including government contractors in implementing and managing merchant and AP solutions in their individual systems.