The B2B payment landscape has always been a balancing act, with suppliers wanting quick payments while buyers aim to stretch out payment terms.
Recent research from Wex, part of our ongoing business tracker series, sheds light on the benefits of virtual cards, which offer advantages for both Accounts Payable (AP) and Accounts Receivable (AR). However, convincing suppliers to adopt these solutions presents some real challenges that need strategic attention.
Gaining Momentum
Virtual card payments are on the rise, with almost 90% of companies either using or considering them for their business transactions.
These cards provide buyers with heightened security, better control over spending, and potential rebates, while suppliers stand to gain from quicker payment processing and enhanced cash flow.
Nonetheless, many suppliers are hesitant to embrace virtual cards, often due to worries about adopting buyer-driven technologies and lacking the necessary tech infrastructure. This hesitation is troubling, especially since half of the suppliers report they are registering on a new payment portal.
Ongoing Challenges
The biggest issue raised by suppliers, however, is payment delays, with more than 70% stating that this hampers their business operations. Suppliers value reliability, fast payment speeds, and direct deposits to their bank accounts—features that virtual cards can provide. In contrast, traditional payment methods like checks and wire transfers often take weeks and require manual handling, while virtual cards streamline processing and simplify invoice adjustment.
Each transaction includes invoice-specific details to guarantee secure payments linked directly to those invoices. This quick access to funds allows suppliers to reinvest without incurring expensive debt.
The Supplier Enablement Program is crucial in helping suppliers adopt new payment methods. While 94% of finance teams are aware of virtual card options and look to improve AP efficiency, many still rely on checks because that’s what suppliers prefer. Moreover, some buyers find the implementation of virtual cards overly complex, indicating a lack of understanding about a comprehensive supplier enablement program designed to facilitate the transition to electronic payments.
Experienced payment providers can navigate these hurdles. They collaborate with suppliers to clarify the process and highlight the benefits, such as faster processing, minimized fraud risk, and easier settlements. Activation typically involves technical assistance to review the supplier’s setup, outreach to encourage adoption, and seamless integration of virtual card acceptance into existing ERP or accounting systems. Ongoing support can enhance recruitment efforts and assist with future onboarding.
When suppliers are actively engaged and educated through targeted support, payment specialists can demonstrate how to secure prompt payments, enhance cash flow, and streamline settlements, effectively reducing late payments that disrupt operations. Emphasizing technology integration helps build trust and fosters collaboration.
