In terms of payments, businesses seem to be behind the general public. A 2018 study found that only 6% of consumers preferred to make payments via check. A majority (54%) chose to pay by debit card, while 26% preferred using a credit card.
Businesses, meanwhile, are still using paper checks for B2B AP payments at a high rate. While the number dropped to 42% in 2018, it’s still a high number compared to everyday consumers.
For some reason, businesses are clinging to this old and outdated way of doing things. Part of it may be comfort with what a business has always done and uncertainty about making a switch to modern forms of payments.
The goods, though, is that more businesses are beginning to realize the immense benefits of using virtual cards for B2B AP payments. In fact, virtual card usage increased by 24% from 2017 to 2018. This makes them the fastest-growing category of B2B payments.
Virtual cards are a safe and secure method of making B2B AP payments. They reduce the labor hours needed to process payments and reduce the potential for human error mistakes. The best part? They give you the possibility to automate your Accounts Payable processes.
Here’s more about the benefits of using virtual cards for B2B payments.
Virtual Cards are Secure
Security is one of the most attractive features of virtual cards. Unlike paper checks or even traditional credit cards, virtual cards don’t have a set account number that’s printed on them. A virtual card is a single-use payment method generated for a specific payer and a particular payee.
Each virtual card has a 16-digit number, just like a credit card. But, again, it’s unique to that particular payment. For example, separate virtual cards are created for payments to your landlord and to your internet provider.
There are many benefits to just this facet of virtual cards. You don’t have to worry about your account number being stolen and used. Even if your vendors store the virtual card information in their system, it can’t be used again because it’s a single-use card.
In addition, you don’t have to worry about your account being overdrawn and one of your payments being rejected. Since each virtual card is funded for a specific amount, this eliminates the overdrawn possibility.
Virtual cards are also highly secure because of the way the payments are made. There is no reliance on paper to process the payments, so there’s no chance it can fall into the wrong hands. Your payment can’t get lost in the mail. It can’t be applied incorrectly in your vendors’ systems.
Virtual card payments are also secured by encryption technology your vendors use. This adds another level of security to them.
Virtual Cards Save Time
One of the biggest downsides to paper checks is that they require a lot of hands-on work. A check has to be drawn and then signed. It has to be stuffed into an envelope and then mailed. It has to be picked up by the Post Office, sorted, shipped, and sorted again before it’s delivered.
Once it arrives at your vendor’s office, it has to be opened, signed, entered into their system, and deposited in their bank account. Then, the check takes a few days to clear out of your bank account.
From start to finish, this entire process will probably take more than a week. In 2020, that sounds absurd.
Virtual card payments can be created, sent, and applied with a few types on a keyboard and a few clicks on the mouse. They can even be used to help you completely automate your AP processes.
An ePayables system can be set up to eliminate the demanding tasks of entering invoices, approving invoices, and processing B2B payments. All of this can be done digitally, with many of the manual steps eliminated.
When the invoices are approved and ready to be sent, the system can automatically generate a virtual card and send the payment to your vendor.
The most significant benefit here is that you will be able to free up some time for your AP employees to work on more important tasks to your company and less mundane than writing and mailing checks and tracking down invoices that need to be approved.
Virtual Cards Give You Rewards
Another great benefit of virtual cards is that they can generate cash back rewards. This works similarly to how cash back functions on a traditional credit card. You will get a certain percentage of your qualifying spend back in the form of cash.
If your company processes a lot of B2B payments, even a 1% cash back can add up quickly. Every $1 million you spend on virtual cards, for example, would total $10,000 cash back. That’s a considerable amount of profit your company can make just by doing business as usual.
And this, of course, is on top of the fact that you’re going to be saving money by cutting out the expense of printing, writing, and mailing paper checks.
Make the Switch to ePayables Today
Virtual cards give you plenty of advantages as a B2B payment method when you compare it to regular cards, checks or ACH. It is easy to understand why more and more companies are improving the way they do business in this simple way.
From cumbersome AP processes that take too much time to the chance for error and fraud, to the fact that you can gain cash back rewards, the benefits of using virtual cards for B2B payments are significant.
If you aren’t already using virtual cards, now is the time to make the switch. You can realize immense savings in time, effort, and money by doing so. You can also completely switch to an ePayables system that’ll make your AP processes so much easier than ever before.
Contact BluePenguin today to learn how you can do this for your business.