Four Reasons Vendors Should Accept Virtual Card Payments
For small business owners making the switch to virtual cards, it can be hard to figure out which vendors can be paid using VCards. Luckily, more vendors are willing to accept virtual card payments than one would assume. In fact, according to Digital Transactions, virtual cards will take over as the largest segment of the commercial card market by 2021, registering $300 billion in volume and taking over the lead from purchasing cards. The reason is simple: virtual cards benefit everyone involved, including vendors.
The key to determining which vendors will accept virtual card payments is first seeing if they accept payments made with credit cards. Fifty-two percent of vendors already accept payments electronically. For the minority that do not, communicate the benefits of accepting virtual cards and let them know it’s your business’s preferred payment method. So if you’re worried that your suppliers might want to stick with old fashioned payment methods, here are four ways your vendors will benefit by accepting virtual card payments:
1. Streamline the Payment Process
The top reason vendors will want to accept VCard payments is also the simplest: they receive payments faster that way. Businesses often waste valuable time every month collecting account payments. With virtual cards, the entire process becomes quicker. There’s no more waiting for checks in the mail or sorting through paperwork to reconcile accounts.
In a case study conducted by Corporate Spending Innovations, Steve Morauski, owner of a dry cleaning company that services some of Florida’s largest hotels, found, “It wasn’t a good business practice to spend valuable time chasing down large account payments; businesses are busy and we understand that, but waiting for someone to sign and send a check just isn’t convenient anymore.”
By accepting virtual cards, vendors receive payments quickly, simplifying their jobs and allowing them to cultivate better relationships with their corporate clients.
2. Reduce Costs
Every virtual card payment your vendor accepts saves them valuable resources. Now, instead of wasting employees’ time chasing down payments and calling clients about outstanding payables, vendors can receive payments immediately—no more waiting for checks to arrive and clear. According to Morauski, “There is a cost associated with being an accepting vendor, but the benefits far outweigh the processing fee, especially when you look at the bigger picture.”
With VCards, vendors can avoid the long hours spent searching for lost checks, sending overdue accounts to collections, and writing off bad debts, leading to cost savings. Plus, virtual payments are less expensive to process than checks and ACH transactions.
3. Eliminate Payment Fraud
Like traditional credit cards, accepting virtual card payments offers suppliers a sense of security. With VCards, vendors know that the payment will always clear, unlike checks. Because they don’t require businesses to share bank account information, virtual cards protect businesses’ sensitive information. They even allow vendors to initiate payments without wasting time sending invoices because they keep the entire process digital.
4. Improve Cash Management
For Morauski, knowing exactly what cash his business had on hand was one of the biggest benefits of accepting VCard payments, saying, “This new payment system also saves time and money. By not receiving paper checks, we no longer worry about getting deposits to the bank on time—we receive the email notification and then process the payment, no questions asked.” As Corporate Spending Innovations points out, the detailed remittance information included in the transactions will give vendor’s accounting teams new insights into payments after settlement with the bank and credit card company.
Collecting payments can be a hassle for vendors. When discussing switching your payment method with your suppliers, be sure to communicate the streamlined process, reduced costs, increased security, and simplified cash management they can expect with VCards. Virtual cards offer a true win-win scenario for small businesses and their vendors, and you can make sure no one is missing out.
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