Virtual cards: 5 ways to fast-track supplier enablement

Traditional supplier onboarding can be slow, often involving manual paperwork and lengthy approval times. In fact, for some organizations the supplier enablement process – equipping suppliers with tools and support to effectively conduct business with an organization – can last up to six months. This can hinder collaboration and lead to friction in the supply chain.

Virtual cards offer a powerful solution to expedite supplier enablement, bringing significant advantages to both parties.

What are virtual cards?

Virtual cards are unique electronically generated card numbers specifically designed for a single purchase or a set of invoices. Unlike traditional plastic cards, they exist only in digital form, allowing for better security and flexibility. These numbers are linked to a specific spending limit and can be single or multi-use with controls to specify timeframes, where it is used, and how. This reduces the risk of fraud and unauthorized transactions.

How speeding up the supplier enablement process can benefit your business

Eliminate manual processes and bottlenecks for greater efficiency

Inefficiencies in the supplier enablement process can be a headache for both the merchant and the supplier. These issues often lead to poor or slow communication, supply chain delays, and, most critically, revenue loss. 

Adopting efficient supplier enablement eliminates manual processes and bottlenecks, resulting in smoother workflows and reduced administrative burdens for both merchants and suppliers.

Improved visibility and control over transactions

Real-time access to supplier data is essential not only for effective inventory management but also risk mitigation. Additionally, speedy supplier enablement ensures you have the necessary integrations and data exchange protocols in place to get them on-boarded within your enterprise resource planning (ERP). Clear data can provide important insights into operational efficiencies while also helping to identify gaps.

Build stronger and sustainable supplier relationships

A frictionless onboarding process fosters positive supplier relationships from the get-go. By prioritizing supplier enablement, you demonstrate your commitment to collaboration and open communication, leading to long-term partnerships.

Five ways virtual cards can fast-track supplier enablement 

Virtual cards can significantly accelerate supplier onboarding by offering enhanced efficiency, security, and convenience. Here are five key ways they can achieve this:

1. Simplified transaction reconciliation

With virtual cards, each transaction is clearly itemized and linked to a specific payment, making it easier for suppliers to reconcile payments with invoices. This simplification reduces administrative burdens and errors, fostering quicker and more efficient supplier enablement.

2. Faster payments than traditional methods

Moreover, virtual cards facilitate faster payments compared to traditional methods like checks or ACH transfers. Payments are made electronically, eliminating delays associated with physical checks or waiting for ACH transactions to clear. Reducing payment delays and improving cash flow for suppliers can make them more inclined to participate and engage in the enablement process.

3. Set spending limits to control what goes out

Both merchants and suppliers have greater transparency and control over virtual card transactions. For example, merchants can set spending limits and restrict purchases to specific categories, while suppliers receive digital updates on payments.

4. Improved cash flow for new revenue opportunities

Faster payments through virtual cards improve cash flow for both merchants and suppliers. Merchants can optimize their working capital by delaying payments until after goods or services are received, while suppliers receive funds quicker to manage their own financial obligations. 

Many virtual card providers, such as WEX, also offer financial incentives in the form of rebates that allow merchants to receive a portion of their transaction back. The rebate typically comes from interchange fees –  the fees that merchants pay to banks whenever a customer makes a purchase using a credit or debit card.

5. Embrace automation for streamlined processing

By leveraging automation tools, you can efficiently complete repetitive tasks such as data entry, document verification, and certain forms of communication. As a result, allowing automated processes to take over these manual tasks not only saves you time but also saves on resources. Consequently, this enables you to shift your focus towards the core functions of your business, driving greater efficiency and productivity.

6. Prioritize virtual card acceptance

Virtual cards offer enhanced security, flexibility, and control. So by encouraging virtual card acceptance, you streamline the payment process for suppliers, eliminating the need for manual check processing or ACH transfers. They also provide superior security with single-use numbers, minimizing the risk for fraud.

Yahoo Finance reports that global virtual card transactions are projected to grow from $35.8 billion in 2023 to $174.3 billion by 2028 – a 37% annual growth rate. The report highlights the benefits of virtual cards for flexibility and security, and the opportunities for merchants in B2B segments, including financial services, healthcare, insurance, fleet, and more.

Get started with virtual cards for supplier enablement

For businesses looking to leverage virtual cards for supplier enablement, here are some key steps:

Choose the right virtual card provider for your business

Several financial institutions and fintech companies offer virtual card solutions. Among them, WEX stands out with its robust features, competitive pricing, and seamless integration capabilities with existing financial systems. WEX provides a comprehensive suite of tools designed to simplify and enhance your virtual card experience.

Identify suitable suppliers

Not all suppliers may be equipped to accept virtual card payments. Start by identifying suppliers who already accept virtual cards or those who are open to adopting new payment methods. Furthermore, WEX offers a variety of resources and support to help you onboard suppliers effectively, ensuring a smoother transition to virtual card payments.

Communicate clearly with your suppliers

Clearly communicate the benefits of virtual cards to suppliers and provide them with any necessary information or training on using them. WEX provides extensive training materials and support to ensure your suppliers understand the advantages and usage of virtual cards.

Virtual cards offer a compelling solution for businesses seeking to fast-track supplier enablement. By streamlining the onboarding process, expediting payments, and enhancing security, virtual cards can create a win-win situation for both merchants and suppliers. 

As businesses increasingly look to optimize their supply chains and improve cash flow, virtual cards are poised to play a transformative role in supplier enablement. 

For more insights and updates on corporate payments, check out:

• Your guide to virtual card rebates
• Current trends in finance
• Accounts payables: Terms you need to know

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.

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The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax, and investment advisers.

Source:
Yahoo Finance