Over the past several weeks, we’ve all seen an abundance of stories on the declining economy. Although the current news does not seem promising, as businesses reboot they will need to determine what key elements will add value to the business and meet the immediate and future needs of their organization. An obvious answer is automation.
Automation is part of our everyday life and is used more often than we think as consumers and in business. How many times have you felt, “I do this same task over and over, can’t this be automated?” Well, you’re not alone. Repetitive tasks, for the most part, can be completed faster, and in many cases, more securely and accurately without human touch. Automation saves time and allows resources to focus on more important, value-added activities.
In addition to increasing efficiency and productivity, automation reduces costs, leading to increased profit margins for businesses of all sizes. One department that has repetitive tasks is Accounts Payable (AP).
In a recent study by PricewaterhouseCoopers, it was stated that manual tasks are some of the biggest contributors to high AP processing time and costs.
The average Accounts Payable department:
- Makes 19 copies of each document
- Spends $20 in labor to file each document
- Loses one out of every 20 documents
- Spends $120 in labor searching for each misfiled document
- Spends 25 hours recreating each host document
That is work that companies would like to reduce, or better yet — completely eliminate. With AP automation, you can easily change these statistics and enable your business to substantially increase financial returns. The result is more efficient payment processing across supply chain activities.
If automation is the first step in creating a more efficient workflow, then virtual card payments naturally come next. A virtual card is a unique 16-digit computer-generated number used to settle a specific vendor payment transaction issued for a specific dollar amount. Designed as a more secure alternative to ACH and check payments, virtual cards are essentially “card-less” credit card payments. Virtual cards can be processed by anyone who accepts traditional credit card payments, which typically includes the majority of your suppliers.
Why aren’t more businesses paying more vendors by virtual card?
Three things need to be in place:
Integration with an automated payments system
The right virtual card program
Support for vendor enrollment & enablement
Financial Technology companies (FinTechs) can help businesses incorporate virtual cards into their AP process. Some tips in finding the right partner:
- Trust and Transparency: Is the FinTech a card issuer and processor? Card issuers and processors must follow the same strict regulatory and compliance guidelines as banks, so you can trust that your funds and credit card information is safe and secure.
- Vendor Analysis: How many of your vendors will accept virtual card payments? A vendor analysis will identify vendors that already accept card payments, as well as the ones that can be converted from check and ACH to virtual card.
- Vendor Enrollment and Enablement: Do you have the resources and time to contact every vendor and ask if they will accept payments on cards and the day-to-day vendor management? You need to select a FinTech that will do the heavy lifting and manage the enrollment and enablement of your vendors. Questions to ask the Fintech: What percentage of vendors do you convert? What is their vendor management program? Ask for customer references and get “real” results.
- New Net Income: Are you currently being paid to pay your vendors? With virtual cards, for every dollar spent, you can earn a cash rebate. The more virtual card transactions, the more you earn back, providing your company with a new revenue stream.
- Ongoing Support: Will you receive reactive or proactive support? In your review process, a critical element is customer service and support. Every FinTech offers support, but is it reactive when there are issues to be resolved or is it proactive to avoid issues in the first place? Speak with reference customers to better understand the level of service and support they receive.
- Data Analytics: Do you know how your vendors are performing? For continuous improvement, you should receive easy-to-use dashboards on spend, rebates, competitive information and similar vendors that accept cards, to supplement your business growth.
Finally, look for a FinTech partner that works with large brands in multiple industries.
A great partner will take on the heavy lifting, from streamlining implementations to vendor enrollment and enablement. Their goals should align with yours:
- Covert payments by check and ACH to virtual card
- Handle all payments on one platform, in one place
- Gain analytical insight to support overall company growth
- Optimize payment mix in favor of more efficient and lower-cost payment methods
- Transform accounts payable from a cost center to a profit center
You may be thinking, this sounds too good to be true, what’s the catch?
There really isn’t one. Payment automation is simple, fast, and cost-effective. If you want to maintain a competitive advantage, automate your Accounts Payable and start with payments. One thing is certain: If it can be automated, it will be — stay ahead of the curve and start today.