Benefits of B2B Virtual Card Payments You Probably Don't Know

by Ashley Poynter

Content Manager

The Benefits of B2B Virtual Card Payments You Probably Don’t Know

So you’re ready to get serious about B2B virtual card payments? Good news: this is one of the best things you can do for your business. Better news: by coupling virtual card onboarding with vendor onboarding, you can make a big impact fast. Best news: We’re going to walk you through how to do this.

Ready? Let’s go.

Understanding B2B Virtual Card Payments

The Importance of an Optimized Payments Strategy

Benefits of B2B Virtual Card Payments (You Might Not Know)

Streamlined reconciliation process
Flexible cash flow management
Enhanced vendor satisfaction
Data-driven insights
Reduced risk of payment fraud
Easy integration with your existing financial tech stack
Environmental sustainability

How to Make Virtual Cards a Part of Your Payments Strategy

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Understanding B2B Virtual Card Payments

B2B virtual card payments are growing in popularity and with good reason. Virtual cards are just like their physical card counterparts, except they exist solely digitally. A unique number is generated for each transaction, serving almost like a one-time password.

Since it’s a one-time-use (or sometimes limited-time) payment method, it inherently comes with an extra layer of security. In other words, even if some bad actor had gotten ahold of the number, it would have already served its purpose and expired. Additionally, you can’t lose a virtual card.

Why we love them

So, what’s the hook with B2B virtual card payments? It boils down to this:

Security: In a world where data breaches are as common as coffee breaks, the added security of virtual cards is a huge win. The unique number for each transaction? It’s like having a bodyguard for your payment, ensuring that your financial details stay under wraps.
Efficiency: Remember the days of printing, stuffing envelopes, and buying postage to mail paper checks? Then waiting for the check to clear? Virtual cards cut through that red tape, making transactions faster and smoother. B2B virtual card payments can be processed almost instantly, which is pretty much a dream scenario for accounts receivable teams. (AP teams dig the easy reconciliation too.)
Control: Virtual cards give businesses unparalleled control over their payments. You can set exact amounts, specific dates, and even tailor usage to particular vendors. It’s like having a remote control for your company’s spending, ensuring you stay within budget and on track.
Convenience: Without the need for physical handling, storing, or even mailing, virtual cards streamline the entire payment process. They fit snugly into the digital workflows that businesses are increasingly adopting, making for a seamless integration into your existing systems.
Insights: With each transaction tagged and trackable, virtual cards offer a treasure trove of data. This can be a goldmine for businesses looking to analyze spending patterns, negotiate better terms with vendors, or simply keep a tighter leash on finances (like reducing maverick spend and tail spend!).

B2B virtual card payments are quickly becoming the payment method of choice. More specifically, they blend security, efficiency, and control in a way that traditional payment methods just can’t match. It’s clear that virtual card payments are not a passing fad but a cornerstone of modern business operations.

The Importance of an Optimized Payments Strategy

An optimized payments strategy isn’t just a nice-to-have; it’s a must-have for any organization that wants to grow. But here’s the thing—amidst the daily grind, especially for teams knee-deep in manual vendor onboarding and management tasks, strategizing might feel like a luxury you can’t afford. For clarity, let’s break down why it’s crucial and how it can be more achievable than you think.

Firstly, without a streamlined approach to payments, businesses often find themselves tangled in inefficiencies. We’re talking about the painstaking process of writing checks, the never-ending wait for them to clear, and the all-too-familiar game of phone tag with vendors over payment statuses. This isn’t just time-consuming; it’s a drain on resources that could be better spent elsewhere. Huron consultant Snow Rutkowske details just how draining this can be:

By comparison, B2B virtual card payments offer speed, security, and simplicity. And for vendor management teams that are really on top of their game, they offer a clear path to an optimized payments strategy.

However, optimizing your payment strategy is also about more than simply switching from paper checks to electronic payments. To be sure, you need a holistic view of your vendor onboarding and management processes to identify areas for improvement. That said, there are some inherent benefits, like taking advantage of early payment discounts and leveraging data from electronic payments for smarter financial decision-making.

Marrying virtual card onboarding with vendor onboarding

Now, you might be thinking, “That sounds great, but how do I even start with all the manual tasks on my plate?” Or “We’ve tried bank calling campaigns for virtual cards in the past, and it was a big flop.” This is where automation – and a strategic approach to vendor onboarding and management – comes into play.

Imagine a world where vendor information flows seamlessly into your systems, where payments are processed with the click of a button, and where your team has the time and bandwidth to focus on strategy. That’s the power of an automated vendor onboarding platform.

The key is to marry virtual card onboarding to the vendor onboarding process. In other words, you can drive preferred payment methods when vendors onboard by configuring your vendor form to feature favorable payment terms, easily converting the majority of vendors to electronic payment types right from the start.

Vendors enjoy fast, seamless payments, and you earn rebate revenue from the very first invoice you pay. Listen to Sharon Loosman and Megan Catt of North Carolina State University talk about their virtual card program and how they were able to turn it into a profit center:

Working with an automated platform to enable this doesn’t just make payments easier; it transforms them into strategic tools. Enabling electronic payment types, including B2B virtual card payments, opens up a world of possibilities for optimizing your payments strategy. So, paying vendors becomes more than checking a box. Instead, you’re also enhancing operational efficiency, improving vendor relationships, and gaining insights to grow the business.

Don’t let manual processes hinder you from a game-changing payments strategy. Choose the right tools and technologies as stepping stones to a more strategic, successful organization.

Benefits of B2B Virtual Card Payments (You Might Not Know)

B2B virtual card payments have long transformed the way businesses handle their financial transactions with vendors. While the primary benefits (read: enhanced security, improved efficiency, and significant cost savings) are widely recognized, there are several other advantages that might not be as obvious. That said, these benefits are equally crucial for modern organizations striving to thrive in today’s digital-first market.

#1. Streamlined reconciliation process

B2B virtual card payments make reconciliation a breeze. Each transaction has detailed information, enabling businesses to easily match payments with invoices. This level of granularity helps your accounting team close the books faster and with greater accuracy. Additionally, it significantly reduces the manual effort involved in tracking down payment details.

#2. Flexible cash flow management

Virtual cards allow businesses to maximize the time they hold onto funds by controlling exactly when payments are made, providing an opportunity to optimize cash flow. This flexibility is huge when it comes to managing working capital more effectively. Your organization can keep funds in interest-bearing accounts for longer periods or negotiate better payment terms with vendors based on their payment capabilities. Equally important, your vendors get paid faster

#3. Enhanced vendor satisfaction

Quick, reliable payments contribute to stronger vendor relationships. Vendors appreciate the predictability and speed of virtual card payments. What’s more, it reduces vendor payment inquiries (Quick- go and ask your AP staff how many times each day they get a call or an email with this question: “Where’s my payment?”) and the subsequent admin work.

#4. Data-driven insights

B2B virtual card payments generate a wealth of data that you can use for strategic decision-making. Organizations can analyze spending patterns, identify opportunities for consolidating vendors, or uncover potential areas for cost savings. This data-driven approach helps you develop more informed business strategies, stay competitive, and remain agile.

#5. Reduced risk of payment fraud

B2B virtual card payments often include additional customizable security features that go beyond the unique number generated for each transaction. For example, you may be able to set specific payment windows and spending limits tailored to each vendor. This slashes the risk of fraud and provides the vendor desk with peace of mind (and better ZZZs), knowing your (and your vendor’s!)financial assets are protected.

#6. Easy integration with your existing financial tech stack

The right automated platform will make integration with existing systems and processes a breeze. This compatibility is essential for a smooth transition. Undoubtedly, no one wants to disrupt established workflows. The faster you can be up and running – and realize benefits – the better.

#7. Environmental sustainability

It sometimes gets overlooked, but sustainability is a pretty important factor for many organizations today. So it’s easy to see how switching from paper checks (and the ink, paper, envelopes, and other resources that go into them) to B2B virtual card payments can make a pretty big difference. It’s the greener option, to be sure. Organizations looking to lower their carbon footprint and align with sustainability goals can benefit from making the switch.

B2B virtual card payments offer a bunch of benefits that extend beyond the obvious. Maybe most importantly, they help the vendor desk navigate the complexities of vendor onboarding and management (and payments!) with confidence and agility.

How to Make Virtual Cards a Part of Your Payments Strategy

Ok, you’re convinced that B2B virtual card payments are the bee’s knees. How do you incorporate them into your payments strategy? We can help you make the smooth transition so you can reap all the benefits virtual cards promise. Let’s go through step by step.

1. Assess your current payments landscape

The first step is taking a comprehensive look at your current payments strategy. Identify the volume of transactions handled through traditional methods like checks or wire transfers, and pinpoint the challenges you face with these methods. Understanding the specifics of your current situation will help you recognize the most impactful areas for virtual card implementation.

2. Document your virtual card payment goals

What do you want to achieve by integrating virtual cards into your payments strategy? Whether it’s improving security, reducing costs, enhancing vendor relationships, or gaining better control over cash flow, defining clear objectives will guide your implementation process and help measure success down the line.

3. Identify what has (and hasn’t) worked in the past

Maybe you’ve tried to pay vendors with virtual cards previously. Maybe you still do, but it’s not a primary focus. You may have had bad results from bank-calling campaigns in the past (we know they can be disruptive), so you’re a bit put off by the prospect of trying again. Make a note of what you’ve done and how it panned out. Also consider factors like how new tools might integrate with existing systems and software.

4. Automate vendor onboarding and management

Automating vendor onboarding and management is key to a smooth transition to virtual card payments. An automated system simplifies the process of enrolling vendors for virtual card payments and keeps vendor information up to date. It reduces manual data entry and errors, ensuring vendors are ready and willing to accept virtual card payments.

5. Train your team

Ensure your vendor desk, accounts payable team, and any other stakeholders are well-versed in how virtual card payments work and the benefits they bring. Training should cover how to onboard vendors into virtual payments at the time of vendor onboarding, best practices for managing virtual card transactions, and troubleshooting common issues. Give your team the tools and info they need to succeed. Sharon Loosman and Megan Catt of North Carolina State University talk about just how important this is in the video below:

6. Monitor and Adjust Your Strategy

Payments optimization is not a one-and-done task. Continue to monitor your vendor onboarding (and B2B virtual card payments onboarding) processes to make sure they’re aligned with your goals. Analyze transaction data to identify trends, cost savings, and any areas for improvement. Be open to making adjustments to your strategy as needed to maximize the benefits of virtual card payments for your business.

Integrating virtual card payments into your payments strategy is a forward-thinking move that can improve operations, reduce costs, and bring some peace of mind. Get the most out of virtual cards with the right prep, collaboration, and continuous improvement.

Get Ready For Vendor Management Appreciation 2024

The party continues all year long! In short, we’re still celebrating Vendor Management Appreciation Day (VMAD), and we highly encourage you to join us!

Why? In truth, there’s no expiration date on honoring one of the most important, under-recognized roles across industries: vendor management.

Join us in observing Vendor Management Appreciation Day (VMAD)! We’re gearing up for the 2024 celebration, and we want you to be a part of it!

VMAD is a new holiday geared toward unifying vendor management professionals and celebrating innovation in the field.

Moreover, we’ve released gifts each month to help you supercharge your vendor management efforts. Additionally, we’re planning some awesome events so everyone can connect and celebrate the important, strategic role of vendor management.

In the meantime, learn more here, and grab some free vendor management goodies.