Virtual cards are quickly becoming one of the most powerful tools in businesses’ payment portfolios. As more businesses embrace the digital world, from online purchases to homeworking, being able to make payments without the need for a physical card makes sense. Plus, there are a number of added benefits to using virtual cards, which can help unlock real value for both buyers and suppliers.
Added convenience
Virtual cards can be used quickly and easily, with no need to pass around an actual physical card. As more businesses move to a fully remote or hybrid working model, with lots of buying done online, they can help reduce the hassle around making purchases. Virtual cards can also make managing your payments simpler – for example, you can easily cancel one vendor/service without affecting any other payments or set up ad-hoc payments without a time-consuming payment process.
Save time
Using a virtual card can simplify your accounts payable (AP) process by replacing cumbersome paper checks and time-consuming manual processes. It’s easier to obtain approvals, and enhanced data matching, analysis and reconciliation of transactions eliminates manual administration processes.
Greater spending control
Virtual cards allow you to set spending limits and choose which suppliers can be paid using them. With some cards, it’s also possible to close them automatically after a certain date or after a set number of payments have been made, adding an extra layer of internal control.
Increased security
Virtual cards can’t be stolen and reused in the same way as physical cards, reducing the risk of fraud. Being able to set a clear spending limit and tie the sum on the card to particular invoices also minimises misuse.
Improved cash-flow management
If you have lots of payments going out, there are times of the month when it can be difficult to manage cash flow. The fast payments associated with virtual cards make it easier to get an accurate picture of your business’s cash flow at any given time. The fact payments are made instantly also helps improve your working capital position.
Increased transparency
The linked budgets on virtual cards make it easy to see who is spending what and when, simplifying reconciliation. It’s also possible to set monthly budgets for departments or individuals, reducing the risk of overspend.
Improved supplier relationships
Quicker payments and reduced collection costs can have a positive impact on your supplier’s working capital, strengthening your relationship. You may even be able to negotiate favourable rates.
Despite the wide range of benefits associated with virtual cards, there remain some barriers to their use and acceptance. In particular, suppliers can be resistant to move away from more traditional payment systems or have concerns over fees and security implications. Supplier education is key to overcoming these barriers, and it’s worth having open chats with your supply chain about the benefits using virtual cards can have for both of you. The security benefits offered by virtual cards, in particular, can be a real selling point to your suppliers if they are proving reluctant.
Using your data, we are able to help you identify which of your suppliers – or potential suppliers – accept commercial payment solutions. The more data you are willing to share, the greater the insight we can offer to your business. Analysing AP, purchase order and invoice data together enables us to offer the optimal level of insight for the benefits card payments can deliver.
If your suppliers remain unconvinced, there are solutions that can help you reap the benefits of a virtual payment solution – even when paying non-card-enabled customers.
Corporate purchasing card straight-through processing enables you to settle invoices directly to your suppliers’ merchant acquirer, even if they are not currently card capable. Each month you’ll simply receive a statement for all the payments you’ve made, which can be settled by direct debit.
You and your suppliers will benefit from many of the advantages of virtual cards, including improved working capital, simplified reconciliation and prompt payments, without the need for significant process change or investment in additional technology.
The scale and nature of businesses’ B2B payment challenges varies hugely, and different businesses can require very different solutions, which is why we offer a number of virtual payment solutions.
And we’re always improving and enhancing our offering to help meet changing requirements. We’ve committed to a road map of change, which aims to address our customers’ pain points, overcome the barriers to B2B commercial card use and create a frictionless transaction landscape for both buyers and suppliers.
The next step is the upcoming launch of our eOptimise product, which will address challenges around transaction size and offers both suppliers and buyers greater levels of control.
We’re keen to hear about your individual needs – whether you want to make ad-hoc payments simply and easily, improve data capture around your card spend or get greater visibility of transactions. We can help identify the right solution for your businesses and ensure you’re making the most of virtual payment solutions as part of your overall payment strategy.
James Sykes is Head of Commercial Cards, and David Legg is Head of Corporate Card Products at Lloyds Bank
To see how we can support your payment needs, visit lloydsbank.com/cardsolutions or email us here.
All lending is subject to status and credit application. Please note that any data sent via email is not secure and could be read by others. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278.
