Businesses have realized the pain behind processing checks and cash payments. The result? The shift to digital payment methods. It didn’t happen overnight. After trying out many unreliable and delaying mediums, they have landed at virtual card payments. Virtual cards are randomly generated credit cards, each having its unique identification numbers. They are highly safe and quick to process. Hence, in a short time, B2B virtual card payments have become preferable for all sectors. Their versatility makes them stand out among other popular B2B payment solutions. With more success rates, quick payment deliveries, and centralized controls, virtual card payments surely need its spotlight.
Popular payment methods available for small businesses
From earlier days till now, there have been different payment methods available for businesses to send funds to their vendors. Some of the common ones that small businesses can use are,
Check payments – A check is an authorized document that instructs a bank to deliver funds from your account to the recipient’s account. You will have to contact your bank to obtain checkbooks by paying a nominal fee. They were the only mode of payment available once. But it involves too much time and manual work. It’s a lagging process as you depend on banks to clear them. Also, the documentation needs to be accurate for a clear audit trail.
ACH payments – They are bank-to-bank transfers that involve direct transfers between two bank accounts. You will need the bank account details of the recipient and add them as beneficiaries. There is a waiting time for this process. Also, depending on the recipient’s account type and location, the payment takes its time to reach the recipient’s account.
Though this is more suitable for personal transfers, businesses that want to transact faster can’t rely on this.
Card payments – Card payments are already dominating in B2B payment space. The reason is their applicability. Whether it’s a POS or an online payment, you can use your credit or debit card to make payments. If it’s from a debit card, the money is withdrawn from your checking account. You can also have business credit cards from payment solution providers. This smooth checkout favors many, especially small business owners. They can also track processed payments using monthly statements.
Online payments – These are electronic payments made using e-wallets provided by private financial institutions. Take Stripe or Apple Pay, for example. These payments can be initiated from any gadget if you maintain an account with them. All you need is their phone number, scan code, or their unique ID to transfer funds. They are instant and processed with the help of payment gateways. There will be a small processing fee associated with every transaction you make. Digital wallets are revolutionizing the B2B payment industry, changing the way we pay and receive money.
What are the challenges with B2B payments?
All the above methods have some drawbacks when used in the B2B accounting world. How do traditional B2B payment solutions negatively impact accounting management?
You can never manage your vendors and payments in one place. You can add them as beneficiaries and track their respective payments under that. But the banking information is all you can do is view and store there. It doesn’t give an extensive picture of who the vendor is or what the bill is for. The AP team still needs to have a separate database to store vendor-related information and map payments from one place to another. It only adds to the manual workload and reduces transparency. Advanced functions like payment reminders, outstanding balances review, and auto-receipts download are not possible with the above methods.
Subscriptions across the organization
SaaS tools are commonly used by all teams in the organization. They are there to automate many complex functions like payroll, HR management, marketing ads, and many more. They work on a monthly automated payment basis. You can use credit cards to schedule monthly payments automatically. Though credit cards are convenient for this, they offer limited control. For example, you will use a single card for all recurring payments. If anything goes wrong with the card, your whole business functionality gets affected.
There is no way to manage all subscriptions in one location unless you maintain them manually.
The most challenging factor is that different payments get processed differently. Some are received in the form of paper checks. Some go out in the form of ACH, while the rest are sent through credit cards. Employee rebates and expenses are processed as bank-to-bank transfers.
They not just have to manage multiple systems and pay for them, but they also can’t have a unified view. The AP department has to juggle different screens constantly. And the payments are all over the place. This gives finance managers little or no insight into their company’s financial health.
Disconnected finance software for reconciliation
Reconciliations are rebates made to cover the business expenses spent by the employees. Reconciliation in traditional ways is much more complicated and involves paperwork. Both employees and processing teams struggle as their workload increases. Submitting receipts and filling long forms is a concern for employees, whereas approving and processing multiple requests in one go is a challenge for accountants. If the finance department has to track a request back, they can’t do it. This gives birth to employees submitting fake receipts, expenses outside policies getting approved, and more such fallacies.
Many small businesses have distributed workforces that work from remote locations. Traditional B2B payment solutions don’t support remote working as they can’t communicate properly. Working from the same physical location gives room for discussions where shortcomings of the payment methods can be matched somehow. Remote workers need transparent, open, and multi-user access platforms where there is no room for questions.
What is a virtual payment card?
A virtual payment card is similar to a credit card and used for making online payments. It also has a 16-digit card number, CVV, and expiration date, similar to other cards. But the difference is that it all exists online in the case of a virtual card. They are created online from a card management system. You can create many, and each will have unique card details. This splits one card from the other, making all of them unique.
B2B virtual card payments are similar to normal card payments that get facilitated through payment gateways and banking institutions.
You can use the card details while shopping online or scheduling recurring payments.
What is driving the adoption of B2B virtual card payments globally?
We can already see a preference among small businesses for using smart digital applications. The presence of digital innovation is there in all departments and levels, and it increases the need for digital payment solutions. They have realized that virtual card payments are the ultimate solution that meets their goals. As automation has become the widely accepted solution in all fields, B2B virtual card payments have found their place in the AP department.
In a survey conducted among US small business owners, Visa found that almost 90% of business owners find virtual cards an attractive option.
Earlier businesses weren’t comfortable enough with electronic payments as they found it complicated. The hesitation was also there due to the security and compliance issues around it. But modern business owners trust technology and find it a convenient replacement for painstaking traditional methods.
Accounting teams who are always watchful on upcoming payment trends in the B2B landscape. They are familiar with B2B virtual card payments and how they can simplify outgoing payment management. They prefer solutions that give them centralized control and monitoring abilities rather than being in multiple places.
As they are on the receiving end, they bear all the burden of organizing, managing, and scheduling payments. This pushes them to push their managers to get speedy, automated, and manageable solutions like virtual card payments.
Another threatening element for new-age businesses is safety and confidentiality. They have to find safe and secure solutions to save and encrypt their data. Saving their data safely is also a challenge, which virtual cards can help with.
Compelling factors accelerating the use of virtual cards for B2B payments
Here are some more facts about virtual credit cards that have managed to convince business owners to move to virtual card payments.
Low plastic usage – Reduced carbon footprint
Every time you print a plastic physical card, you use it for some time and discard it later. This goes into the landfill, polluting the environment. Even if you use virtual cards in unlimited numbers, you cannot expect a similar impact. They are also safe to keep. You won’t lose them like physical cards.
Simplified one-time and recurring payments
You can make both single instance and monthly payments with virtual cards. Just like a virtual card to a monthly SaaS subscription and let it automatically go out every month. Each card can be specifically kept for one particular subscription. The same goes for one-time payments. You can create one card, send out the money, and delete or freeze the card to stop using it.
Centralized access to cards and their spending
As all cards can be accessed and controlled from one dashboard, working with payments becomes stress-free and straightforward. Accountants can create, delete, or modify cards, and managers can set controls and limits, all from the same location. Finance teams can monitor the spending and view the spending categories.
Map invoices with relevant approvers
Certain B2B virtual card payments need approval before sending out. The admin has the ability to set approvers for each card, guiding how the payment should travel from end to end.
As everything happens automatically, where you can still view and control, it reduces workload while increasing efficiency.
Digital trails – So you can track every payment
Anyone who takes a look at a company’s books must understand why the payment is made and who received it. Get a clear understanding of each payment synced with your books and trace it back to its root. That’s what digital trail is all about. You will know the category of payment, recipient, approver, and its whole workflow.
Smart spend management
You have to run a month with whatever working capital is available for you. For that to happen, you need to plan your expenses strategically. And also track them frequently. Both of that is possible with B2B virtual card payments. They allow you to allocate your resources equally and utilize most of the available resources.
Let your finance team thrive, and so do your company
A data-driven and analytic finance team functions in its best form. They are fed with the necessary data to make potential financial decisions. Hence they can support the organization in the best possible way and help them efficiently manage their funds. They don’t have to unnecessarily follow up with the accounting team or others for reports. Rather they can go into the system, see for themselves, and monitor budget adherence.
Volopay virtual cards— an incredibly smart way to manage all your company spending!
Imagine if you can achieve all the above points with the bonus of having an integrated payment system. That’s what Volopay does. So far, it has helped 500+ finance teams to organize and automate their accounting.
Talking about virtual cards, Volopay has an efficient card management system with access to both physical and virtual cards. You can create unlimited virtual cards and make B2B virtual card payments through them. The admin will link each card to a specific department from where the spend comes. They also set monthly limits above which it would require permission.
This platform is effective because within the same platform,
- You make one-time and recurring payments (both domestic and international)
- You monitor, modify, create, and delete cards and change their controls
- You sync the payments with your bookkeeping app in one click.
Make your subscription management stronger by switching to a better spend management platform. Never face interruptions with accessibility as payment goes on time. Don’t want to continue a plan? Simply block or freeze the card to cut at its source.
That’s how virtual cards are making life easier for accountants around the world. Get yours today!
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