6 Ways Virtual Card Numbers (VCNs) Can Help You Improve Cash Flow

Cash flow management is one of the biggest challenges that businesses face. Poorly managed cash flow can lead to, at best, high interest loans to cover the gap, and, at worst, business failure. Small businesses in particular are vulnerable, with 25% of small businesses failing due to cash flow problems. For more established businesses, cash flow problems, which impact the amount of working capital available, lead to lower profits and slower growth. A recent survey of business CFOs found that 88% believed that improving working capital management would boost their company’s profitability, but most admitted that they didn’t have a plan to make that happen.

The way you pay your suppliers can have a huge impact on how you manage your cash flow. Through the use of VCNs, you can pay your suppliers on time while improving your cash flow and even generating additional income. Here are six ways VCNs can help:

1. VCNs give you more flexibility with payment deadlines by providing access to a credit line at no cost. This flexibility allows you to pay your suppliers according to their terms and then settle with your VCN provider at a later date. This extra time gives you a buffer to allow customer payments to come in or to invest your working capital in other areas to grow your business.
2. Quicker payments create better supplier relationships. Since VCNs allow you to pay suppliers more quickly, you can also benefit from early payment discounts and better terms with suppliers in the future.
3. VCNs create an extra revenue stream. Unlike traditional payment methods, such as checks or bank transfers, with VCNs you can earn rebates on payments made. This means more money coming in to use as working capital for your business.
4. VCNs save up to 3% on each international payment. When you pay your international suppliers with VCNs, you save on FX rate mark ups and cross currency fees, which typically add up to 3% per transaction.
5. VCNs help you save the interest fees you’d pay on corporate loans or overdraft services. When you use credit-funded VCNs instead of prefunded payment methods you avoid the need to take corporate loans out or use overdraft facilities to cover cash flow gaps. Therefore, you save on the interest you would have paid and can use that cash toward other areas of your business.
6. In addition to the many ways you can save money and generate extra income by paying your vendors with VCNs, there’s one more benefit that can improve your bottom line indirectly. The enhanced data capture that is available with VCNs can greatly improve efficiencies in your accounting process and can even free up resources in your accounts payable team.

VCNs, while just one tool in your cash flow management toolbox, can be a critical tool in helping you improve working capital. With just one payment method, you can effectively manage payment deadlines while generating additional income, saving on fees and improving your processes overall.

Learn more about how VCNs can help your business improve cash flow – download our fact sheet ‘Credit Vital To Travel Industry Success’ or read our blog post ‘The Innovative Way to Optimise Cash Flow & Working Capital’.