5 reasons your suppliers will welcome virtual credit card payments

For most organizations paying suppliers, the benefits of a virtual credit card program  are clear: rebate revenue, processing efficiencies, reduced risk of fraud and improved cash flow. But did you know virtual card payments also offer valuable benefits for your suppliers? The U.S. Bank Supplier Enablement team  works closely with suppliers of all sizes across a variety of industries and has found many enthusiastic about virtual card payments. 

There are five key virtual card benefits suppliers cite for making the shift from traditional payment methods:

1. Guaranteed payment, faster

In a world where cash flow is everything, prompt and guaranteed payment can make a meaningful business difference. For your suppliers, this is a huge advantage, which makes it a powerful selling point for switching to virtual credit cards from checks. Virtual card payments are processed immediately once submitted and there’s no more risk of checks being lost in the mail or transit.

Maximizing this benefit for suppliers depends somewhat on your payment terms strategy, which is a valuable tool to help your accounts payable department play a more strategic role in the organization. For example, your payment terms could be to offer virtual card payments within seven days versus 60 days for checks.

2. Less time reconciling payments

Virtual card payments deliver efficiencies to both buyers and suppliers, including easier and more streamlined reconciliation on both sides of the transaction.

Matching checks and ACH transfers to invoices can be time consuming for suppliers. These supplier payment methods provide minimal remittance information and reconciliation is typically a manual process. Whether done when the payment is received or at the end of the month as part of a larger reconciliation process, accounts receivable teams can spend hours digging through emails and paperwork to reconcile check and ACH payments.

In contrast, virtual business cards provide rich remittance information that can include level III data (robust line-item detail such as quantity, product code, description, etc.) as part of the payment. This makes reconciliation easier and month-end significantly less stressful.

3. Resources focused on higher-value work

Employee time is precious. As companies face ongoing pressure to accomplish more with fewer resources, ensuring team members can focus on the most impactful work is key.

Virtual card payments eliminate the need for suppliers to manually handle checks and associated paperwork as well as reduce the time spent on collections and following up on overdue invoices.

Virtual card payments also simplify the reconciliation process. Remittance data and electronic processing enable automated reconciliation that not only saves suppliers time but also reduces the need for manual data entry and record keeping.

4. Preferred supplier status

We all want to work with people and companies that make our lives easier. Many organizations automatically include card-accepting suppliers in their expense management system and showcase these suppliers on internal purchasing websites.

This makes it easier for employees to find and place orders with these preferred suppliers. While not every company has this kind of system, card acceptance is an increasingly important factor in supplier selection due to program rebates and speed of payment.

5. Flexible payment method

One aspect of virtual card acceptance is finding the right payment method for your suppliers. For suppliers without card processing capabilities, our U.S. Bank Payment Solutions team can work with them to accept virtual credit card payments. We can also provide straight-through processing, which doesn’t require any action by your suppliers to process the payment.

Alternatively, we can introduce them to proxy pay, which allows virtual card payments through the supplier’s preferred channel (such as a website or by phone) and they can still benefit from the reconciliation data and streamlined process of accepting cards directly.

Making the switch

You don’t want to overwhelm your suppliers with all the ways they can be paid but it is important for them to know they have options when it comes to making the switch.

While there are costs to accepting card payments, there’s greater value in accepting a virtual credit card payment because it eliminates the carrying cost associated with waiting up to 90 days for payment. Virtual card payments also offer several additional benefits to suppliers, making them an attractive option for receiving payments.

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Notice: Foreign-denominated transactions are subject to foreign currency exchange risk. Customers are not protected against foreign currency exchange rate fluctuations by FDIC insurance, or any other insurance or guaranty program.

The foregoing products are available solely for business transactions and not for personal, family or household transactions.