INTELLIGENT ACCOUNTS PAYABLE AUTOMATION
The Value of Paying Invoices with Virtual Cards
The OneDataSource Editorial Team
February 18th, 2021
How often do you pull out your checkbook for a personal transaction? It likely depends on what generation you fall into. The youngest Gen Zers may even be asking, “what’s a checkbook?”
Paper checks aren’t typical in our personal lives, especially as the world’s gone digital. Yet, when it comes to B2B financial transactions, 81 percent of businesses still pay their vendors or suppliers via paper checks. At that level, it’s near impossible not to feel the friction that comes with it. It’s costly, manual, error prone, and much slower, to name a few.
What if there was a way to eliminate that friction? What if you could flip the script so instead of over 80 percent of transactions conducted via paper it was less than 20 percent?
The good news is you can with payments technology. The even better news is that some of the latest advances using virtual credit cards for paying invoices can turn the AP department into a revenue source.
The Value of Payments Technology
Payments technology fits within the umbrella of AP automation. It’s ideally part of an end-to-end solution covering everything from invoice processing to payments and reporting all in one. Ultimately, it allows accounting and accounts payable end users to seamlessly complete that last, critical mile of the AP process. Through automation of the payment workflow, the AP team is faster and more efficient, while also cost-effective. There’s no longer the time and expense of physical checks, which is estimated to cost $31 per transaction.
Payments technology enables you to:
- Gain visibility into expenses and greater control on payments in real time
- Deliver on vendor’s payment preferences, building stronger relationships
- Take advantage of several cost benefits
The truth is there are multiple electronic payment methods. You could use electronic check or ACH and be considered fully automated in your payments process. However, you’d be missing out on an innovation that promises the greatest financial benefit – virtual cards.
Previously, we explored what those first two methods looked like as part of an intelligent accounts payable automation software, specifically onePAY. Now, with the integration of Priority Commercial Payments Xchange (CPX) into onePAY, we’re able to deliver on modernization plus monetization.
How Payments Technology Works
onePAY now allows for the processing of each transaction using the optimal payment method.
Many are already familiar with more established electronic payment processes. We know that faster processing results in greater benefits. But what may not be as familiar are virtual cards. So, what are they exactly? A virtual card is a unique 16-digit virtual credit card number that’s created solely for one-time use in a specific amount between payer and payee.
With onePAY Payments, the payer, aka franchisee or organization, sends a payment file of approved invoices for suppliers that agree to accept a virtual card payment method. That single-use virtual credit card number is issued for the vendor to process. Then, the franchisee gets the benefit of cashback from the interchange and processing fees. And that’s in addition to any early pay discounts they receive from the vendor.
While not new, virtual cards are slower to take hold as a widely accepted part of the digital payments process. Some may question how many of their vendors or suppliers have adopted this method. The bonus of onePAY Payments is that franchisees don’t have to take on the burden of identifying those vendors. With a complete database, franchisees get clear insight into how many of their existing vendors already accept v-card payments.
With onePAY Payments, the payer, aka franchisee or organization, sends a payment file of approved invoices for suppliers that agree to accept a virtual card payment method.
Why Paying Invoices with Virtual Card Provides Franchisees with the Greatest Benefit
It’s clear digital payment processing replaces outdated, manual processing. So, what exactly makes virtual cards so special? Why do they provide franchisees with the greatest benefit? It comes down to two main reasons – money back in your pocket and security.
Earn Virtual Card Rebates on Monthly Spend
There is no getting around it. AP departments are typically viewed solely as cost centers. Virtual cards allow them to create a new revenue stream around something they must do anyway. Franchisees can earn cash rebates simply by paying your vendors or suppliers. Plus, the more virtual credit card transactions, the more you earn back.
If that wasn’t enough, the combination of revenue generation plus reporting tools means franchisees can forecast rebates and optimize cash flow management. That’s something every business strives for.
Virtual Cards Include Extra Protection
Virtual cards are designed to protect against fraud. Since they are virtual and can only be charged by the named payable entity, they cannot be lost or stolen. It cannot be reused as virtual cards are for one-time use, allowing you to pre-set the specific payment amount and tie that payment to the invoices you are paying. Plus, the 16-digit card number is unique for each payment.
As an added layer of protection, the card expires once the maximum dollar amount has been spent or in 30 days. This innovative payment method also simplifies the cancel and dispute process. A franchisee can cancel one payment without impacting any other payment.
Taken together, franchisees can feel safe that the risks of theft and fraud are virtually zero.
Ready to streamline your AP process and monetize supplier spend? Join the operators that have eliminated inefficient, manual processes and optimized revenue share from virtual cards.
Contact our sales team to learn more.
Discover the latest from our blog.
We examine the five most used reports in onePAY, our intelligent AP automation software.
We explore the tangible value that intelligent AP automation delivers to each key stakeholder in the AP process.
We examine several examples of how food brands are leveling up with their mobile app offerings.