Virtual cards optimize B2B trade


The adoption of digital business-to-business (B2B) payment solutions has been accelerated by the pandemic but will continue post-COVID, driven by the many benefits they offer, RJ AnconaVice President and General Manager, B2B, Global Merchant and Network Services American Expresssaid PYMNTS.

Purchasing organizations have relied on accounts payable (AP) automation solutions, including virtual cards, and suppliers have adopted accounts receivable (AR) automation platforms that streamline the receipt of digital payments.

Difficulties with paying by check during the pandemic accelerated adoption, but businesses soon discovered other benefits, including improved cash flow and visibility. “I see this as a trend that will continue as accounts payable and accounts receivable departments look for efficiency,” Ancona said.

Enabling a win-win situation for buyers and suppliers

Suppliers, in turn, benefit from increased visibility and the confidence that they will be paid more on time, with more of them accepting digital payments and adopting other solutions such as portals and supply chain finance operations.

Virtual cards make payments more efficient by eliminating manual processes like data entry and streamlining reconciliation. For suppliers, they improve communication and alignment on invoices and billing.

Continue reading: How virtual cards are reinventing the way companies pay their suppliers

For shoppers, they provide an extra layer of security and control, as single-use virtual cards ensure only specific charges or bills are authorized. They also offer buyers bonuses and cash back rebates.

“You don’t get those features with things like ACH or debit cards, so we’re seeing more and more companies finding it a win-win between the buyer and the supplier,” Ancona said.

Helping B2B keep up with consumer trends

The use of virtual cards is growing, particularly in sectors such as manufacturing, construction, industrial, and advertising and media – where timely billing over a set period of time is critical.

“We’re keeping an eye on things like shipping, business services, hospitality and various B2B industries, which I think we’ll see grow more and more as digital infrastructure really catches up with small businesses and consumers. ‘ said Ancona.

Businesses are also making an increasing portion of their day-to-day spending digital, with various forms of virtual cards and digital wallets.

“There are a number of things American Express is doing to continue growing in this space as well as in the B2B space,” Ancona said. “So I would argue that the consumer trend will be just as big — it might just happen in a slightly different way.”

Maintaining flexibility in uncertain times

An ideal B2B digital payment is frictionless, Ancona said, and doesn’t require a lot of back-and-forth between buyer and seller. It also optimized float and cash flow for both parties.

“I know we often talk about back-office efficiency between companies, but most importantly, your buyer who buys from a supplier has a good experience, and the supplier who receives payment from the buyer also has a good experience” said Ancona.

See more: Lockstep in leveraging the power of virtual cards to improve AP efficiency

Ancona said 2022 will be all about flexibility between buyers and suppliers. As spending and commerce continue to grow, many industries still face unpredictability.

“One of the things we spend a lot of time with companies is helping them maintain their flexibility,” Ancona said. “I think the adoption of B2B digital payments also gives you more flexibility to optimize your spend and streamline commerce in this environment where there are many unknowns.”

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