5 Virtual Card Benefits for B2B Industry

Debit cards have steadily replaced the use of checks in B2C payments – allowing for faster and more secure transactions. But the B2B industry has been slow to follow suit. Today, checks are still the most prevalent form of payment when it comes to B2B transactions. And the reasons why are complicated.

For starters, buyers want to make larger purchases utilizing negotiated credit terms, but debit and credit cards don’t offer the credit limits that buyers often desire. With the average payment cycle of B2B transactions taking 34 days to complete and 47% of the invoices being paid late, it makes sense that a better solution is needed to kick checks to the curb and speed up the sales cycle.

Virtual Cards Can Close the Gap Between Suppliers and Buyers

With so many buyers looking for flexible payment options, virtual cards can be the best fit for themselves and their suppliers. Suppliers also have an opportunity to use virtual cards to their advantage to solidify the relationship with their buyers and significantly increase the speed in which they see revenue.

Virtual cards are one-time use, auto-generated credit card numbers sent by Accounts Payable (AP) departments to their suppliers. Once an invoice is approved for payment, the buyer’s virtual card platform (which usually lives in their bank or AP portal) automatically emails a one-time use credit card number to the supplier for the exact dollar amount of those invoices.

5 Benefits of Using Virtual Cards

“Suppliers may be limiting their customer base by not accepting virtual cards,” according to i3 Commerce Technology Director of Inside Sales, Eric Fette. Eric identifies five benefits of using virtual cards instead of checks in the B2B industry.

1. Easy Payment Option: Accepting virtual cards provides an easy way to do business and buyers like having different payment options.
2. Easy Reconciliation: Suppliers get detailed remittance information when receiving payments which makes for an easier reconciliation process.
3. Improved Working Capital: Suppliers will have improved working capital because virtual cards are processed and deposited into your bank account the next day.
4. Reduced Fraud and Fees: Accepting virtual cards can reduce the risk of fraud, lost checks, or delayed checks. This can save businesses a lot of money by avoiding non-sufficient funds fees or overdraft fees.
5. Reduced Payment Terms: Sometimes buyers will reduce their payment terms if a supplier is willing to accept their virtual card which can be greatly beneficial to a supplier who needs liquid funds quick.

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