Virtual cards: 5 simple steps to make the transition

The transition from paper check processing to virtual card payments can be daunting, which is why we’ve created a five-step guide to making the transition as efficient and seamless as possible.

The value of running a supplier analysis before virtual card adoption

The first thing we do with customers when they are considering moving away from paper checks to a virtual card payments technology is to analyze the suppliers with whom they are currently doing business.

• How is the business paying suppliers in their day-to-day operations?
• Which of their suppliers are likely to accept virtual cards and would be willing to move away from current payment methods?

Some small businesses may be resistant to change. Despite the many benefits to virtual payments, risking moving away from traditional methods, like payments by check, ACH, or manual credit card entry, means spending valuable time learning a new system. It’s important to know ahead of time how many suppliers will convert, and what the annual spend will be when transitioning to virtual card. This will allow you to quantify the value and financial impact of implementing a virtual card program for your business.

When choosing a virtual card offering, ideally your business would want to work with an organization that offers a thorough analysis of your supplier file. Every organization that is selling virtual cards or corporate cards does some version of an opportunity analysis for their customers – what you’re looking for in a virtual card partner is one that conducts the most comprehensive and thorough version of opportunity analysis. You’ll also want to partner with a company that conducts an analysis that produces realistic projections. Not all suppliers that accept card payments will accept virtual cards. Now that we have a sense of the value of this process, we can get to the five steps that WEX has come up with to help assist clients with the transition. We’ll get down to the nitty gritty details which allow our clients to feel protected in this process.

WEX Supplier Enablement

Step one–Select your virtual card vendor

Before you decide whether or not to transition to virtual payments, you need to determine which virtual card supplier is going to be the best fit for your company. There are a lot of options to choose from so it’s good to know how to narrow down the field of competitors. One of the key qualities you should look for in a virtual payments provider, after determining the provider has the tools and the technology you require, is finding a vendor that provides a system that’s easy to use, quick to implement, secure, and flexible. Flexibility is really important. There are a lot of platforms that are in the market that appear sophisticated but the moment you want to do something that’s not pre-formatted and doesn’t come straight out of the box, you’re told that’s impossible – many companies don’t allow customization. Finding a payment tool that’s flexible to meet your company’s individual, unique needs allows you to get the most out of the transition to virtual payments.

Make sure you partner with a payments vendor who provides comprehensive supplier onboarding

Once you’ve further narrowed the field to a product that is easy, quick, and secure, it’s helpful to take note of how each company onboards its customers. You’ll want to partner with a company that will effectively implement your virtual payments program to ensure you are able to pay your suppliers with a virtual card. A lot of organizations will run the necessary supplier analysis, they’ll set your business up on the platform, they’ll show you how to facilitate payments, and then they’ll pass you the keys and have you take things from there. This can be problematic, because it does not include the sometimes onerous process of ensuring all your suppliers are in your system and are able to be paid during the next pay cycle.

You want to be sure you partner with a vendor who will do a comprehensive onboarding, assisting you through each step of the process. There are steps that have to be taken that are better done with the help of your payments vendor. Once you’re set up in the platform, you have to contact your suppliers, confirm that they can be paid with a virtual card, capture the method for the supplier to be paid, and then activate that vendor in the software so your business can begin paying them. There are also post-implementation steps you’ll want to be sure your selected payments company will walk you through after the technology has been set up for you. At WEX, we differentiate ourselves as a business through our team of on-shore resources. These WEX employees are fully dedicated to working with our clients and onboarding as many of their suppliers on their behalf as possible.

To what extent should you expect your vendor to help you onboard suppliers?

You will want to partner with a payments provider who will follow through with setting up your virtual card payments system all the way to ensuring you have your suppliers enrolled and set up in the system. It will benefit you to work with a payments technology company that is interested in cultivating relationships with your suppliers and helping them make the transition to virtual payments with you. At WEX we know that the best way for us to help our customers be successful is by helping their suppliers participate in the process as well. WEX engages with suppliers through whichever messaging you prefer, communicating with suppliers to let them know that you are implementing a virtual card program, and helping them understand the benefits of this solution. WEX reaches your suppliers via physical mail, email, and/or follow-up phone calls, making sure that you are comfortable with the process all along the way. Through these communications, WEX aims to collect the information you need to transition your suppliers to virtual payments. WEX differentiates itself in the marketplace because we will go through the supplier onboarding process for your entire supplier file.

It’s crucial to find a virtual payments technology provider with a robust supplier enablement team. That team will ideally help you onboard your entire supplier file and will have a dedicated process set up in advance to carry this out.

How the customer can partner with the payments vendor to onboard those last hold-outs

Once your vendor has communicated with you all the suppliers you can spend with and set them up in the platform, the next step is to go back and look at those suppliers who were unresponsive or did not agreed to accept virtual card as a form of payment. Now you can make an attempt at engaging with those last hold-outs and getting them on board. You can send an email, make a phone call, notify a supplier to let them know that “This is important to me, I would like to implement this program with you, and I need you to talk to my payments consultant team and see if you can get set up as a virtual card recipient.” Your payments technology partner should continue to support you in engaging the suppliers that were nonresponsive. When you are selecting a supplier to do business with you, you should select a supplier that has  tools, enablers, and a  process for converting those last stragglers into virtual card adopters.

Find a payments technology partner who offers additional payment services to address those suppliers that will not accept an email notification.

When a customer is selecting which virtual payments supplier they want to work with they should find a company that offers Agent Pay Service. This is a service which allows your business to pay suppliers that will not accept payment via email. Some suppliers may agree to take a virtual card as a form of payment, but request that instead of them receiving the payment from you via email, they want your company to take adjacent steps to ensure each payment is processed. Your supplier might ask you to go to their website, click on a button that opens up a form, and fill that form out as part of the payment process. They may require you to pick up the phone and call them as part of the process or suppliers might ask that you use their system to make payments. It’s probably somewhere in the neighborhood of 20% of all the virtual card payments that fall into this category. At WEX we can relay that payment information to our client and if they have resources, and the time to manage each of those particular, unique payments processes, then they can do it on their own behalf. WEX also offers to make it simple and easy for its customers and can manage those vendor processes that fall outside the steady stream of regular virtual payments. WEX has a team that will go through those individualized, customized processes for your suppliers on your behalf.

Your payment technology partner’s capacity to plan for all possible payment relationships will be the determining factor in whether or not you’re able to make a seamless transition to virtual payments. Each step of the way–from the opportunity analysis to the determination of whether or not virtual payments make sense for your company, all the way to the onboarding process–you want to work with a company that will give you comprehensive and effective support. Keeping an eye on the strategies and resources of each payment platform will help you make a decision that will strengthen your business and make day-to-day operations more efficient and secure.

Step two–Pre-opportunity analysis

Once you’ve engaged with your payments technology partner of choice you can then work with them to conduct an opportunity analysis. An opportunity analysis starts with providing your virtual card partner with your supplier file. Typically that data comes in the form of a spreadsheet and the information includes: supplier name, address, how much your company is spending on an annual basis with that supplier, the current payment terms, and the method of payment.

Determine which of your suppliers already accept virtual cards

Next, your payments technology provider takes that information and runs it through a database. WEX has proprietary tools that allow us to look at your supplier information in a holistic way. The first thing WEX can do is validate which of your suppliers is actively being paid via a virtual card by one of WEX’s customers. This allows your business an advantage by gaining insight into which vendors you immediately know will be amenable to the transition to virtual payments: if they’re already engaged in virtual payments with another WEX customer it’s likely they will quickly jump on board with your company as well.

Just because a vendor accepts credit cards does not mean they are ready to accept virtual payments

One common misconception is that if a supplier accepts Visa, Mastercard, or American Express that automatically means they will accept a virtual card. At WEX, we are fortunate to have a 25 year history and track record as a Virtual Payments provider which allows for access to robust supplier information. We can pass that information on to you as you determine how many of your vendors are going to be able to accept virtual payments from you as soon as you transition. When you make the move to virtual payments technology, you are much more likely to have a smooth transition if you are working with a commerce platform that can glean accurate data from your supplier file.

Determine which companies among your suppliers could easily transition to a virtual card

After we determine which companies on your database already accept virtual cards, we then determine which suppliers are currently set up to be paid with a Visa or Mastercard and could accept a credit card. We segment the supplier file based on information that we know from our database, and we share information with you that shows how many of your suppliers fall into each category. We also do an analysis of which segments make up which percentage of your overall spend. You are then able to determine, based on the data we’re able to generate for you, how much of your spend is likely going to be accepted on a virtual card once you make the transition.

Determine the financial value of transitioning to virtual payments technology

The next step within the opportunity analysis is to conduct an economic analysis based on the supplier data we provided, and based on the elimination of check costs, the benefits of increased security a virtual card brings, and the savings you can realize from creating efficiencies for your business. Knowing how much you’re spending and what rebates each supplier would bring, you can then determine your projected financial incentive return. It’s at this point that you ask yourself, “Hey, is there enough pay-off? Is the juice worth the squeeze? To what degree will this process benefit my business?” At this point in your analysis, you can get a good idea what the opportunity looks like, what the total return is, and what benefit you’d see coming back to your business. WEX gives you the tools to unearth all the data and get it in front of you so you can make a sound decision about whether or not to adopt virtual payments for your business.

Step 3 – Contract and approval

The next step after conducting an opportunity analysis and determining you will move forward with adopting a virtual payments platform would be to go through the contract and credit approval process. This step may require you to provide Beneficial Ownership and company financials depending on the credit terms that you are requesting.  At WEX, we have multiple credit terms that a client can choose from.

Step 4 – Implementation and supplier enrollment

After you have a signed contract with your chosen vendor, implementation involves validating all suppliers who will be in your virtual payments program. Your payments partner will gather detailed supplier information and launch a supplier enrollment campaign. At this point your payments vendor will be ready to start communicating with suppliers and reaching out and developing a database of all your partners that will get paid with a virtual card.

At the same time that your suppliers are being onboarded, your payments partner will be implementing integration technology with your accounting system or your Enterprise Resource Planning (ERP) tool. They will make sure that they can produce a file in the necessary format, and will adjust the process until they can put through payments on your behalf.

At this point in the process, your payments vendor will also be developing a system where they can create a reconciliation file for you. They will set up a customized platform specific to each customer’s needs. During this phase, your vendor will set up technology tools, get the suppliers to provide detailed information, and begin to implement the virtual payments system.

Step 5 – Ongoing payments strategy

This final step is about maintenance. You will have compiled a supplier list of everybody you’ve done business with in the past, and will be armed from the supplier research if any of them are already virtual payments adopters. Your payments vendor will train you on onboarding every new supplier that you set up in your system.

New suppliers will need to be approached and encouraged to accept virtual card as a payment. Your virtual card vendor will arm you with a list of benefits to share with your new suppliers if you meet with resistance. You’ll be encouraged to explain to each supplier that virtual card payments will help eliminate the cost of checks, will improve efficiencies, will increase security, and will provide financial incentives involving rebates.

Existing supplier contracts that are coming up for renegotiation will also be a target for these adoption campaigns. Accepting virtual card payments should be a part of that renegotiation. Your procurement team should be trained to make sure they are including the virtual card as a preferred method of payment for all renegotiated contracts. Then, when these members of your team are renegotiating contracts where the supplier initially rejected virtual payments, your procurement team can take another swing at adoption.

Following these five steps your transition to virtual card payments will be smooth and efficient and you will adapt your new payments processes with ease and clarity. Choosing a payments technology partner that will be by your side throughout the process ensuring ease of use for both you and your suppliers will provide the best experience for your business and for those with whom you conduct business.

Learn more about how WEX payment solutions can be tailored to your business, so you can accelerate and streamline operations while creating lasting growth and success for your organization. And check out our infographic below to learn more about the perks of virtual cards!

Editorial note: This article was originally published on June 23, 2022, and has been updated for this publication.