Virtual Cards Streamline B2B Commerce During Uncertain Times

The adoption of digital business-to-business (B2B) payment solutions was accelerated by the pandemic but will continue post-COVID, driven by the many benefits they provide, RJ Ancona, vice president and general manager, B2B, global merchant and network services at American Express, told PYMNTS.

Buying organizations have leaned into accounts payable (AP) automation solutions, including virtual cards, and suppliers have adopted accounts receivable (AR) automation platforms that streamline the receipt of digital payments.

Difficulty paying via check during the pandemic sped up adoption, but companies soon discovered other benefits, including improved cash flow and visibility. “I see that as a trend that is going to continue as accounts payable and accounts receivable departments look for efficiencies,” Ancona said.

Enabling a Win-Win for Buyers and Suppliers

Suppliers, in turn, benefit from the increased visibility and confidence that they’ll be paid in a more timely manner, so more and more of them are accepting digital payments and adopting other solutions like portals and supply-chain finance operations.

Virtual cards make payment more efficient by eliminating manual processes like data entry and by streamlining reconciliation. For suppliers, they increase communication and alignment on invoices and billing.

Read more: How Virtual Cards Are Reinventing How Businesses Pay Their Vendors

For buyers, they provide an added layer of security and control, as single-use virtual cards ensure that only particular charges or invoices are authorized. They also offer buyers rewards and cash-back rebates.

“You won’t get those features on things like ACH or debit cards, so we’re seeing more and more companies find a win-win situation between the buyer and supplier associated with that,” Ancona said.

Helping B2B to Catch Up With Consumer Trends

The use of virtual cards is expanding especially in verticals like manufacturing, construction, industrial, and advertising and media — where timely billing over a set period is critical.

“We’re keeping an eye on things like shipping, business services, food services and various B2B industries where I think we’re going to see this grow more and more as the digital infrastructure really catches up with where small businesses and consumers are,” Ancona said.

Companies are also making an increasing amount of their everyday spend digital, with various forms of virtual cards and digital wallets.

“There are a number of things that American Express is doing to continue to grow in that space as well as the B2B space,” Ancona said. “So I would argue that trend is going to be just as big in consumer — it just might take place in a slightly different way.”

Maintaining Flexibility in Uncertain Times

An ideal B2B digital payment is frictionless, Ancona said, and doesn’t involve much back and forth between buyer and seller. It also optimized float and cash flow for both parties.

“I recognize that a lot of times we’re talking about back-office efficiencies between companies, but most important is that your buyer, buying from a supplier, is having a good experience, and the supplier receiving the payment from the buyer is also having a good experience,” Ancona said.

See more: Lockstep on Harnessing the Power of Virtual Cards to Improve AP Efficiency

Ancona said 2022 will be all about flexibility between buyers and suppliers. While spend and commerce continue to grow, many industries still face unpredictability.

“One of the things we spend a lot of time with companies doing is helping them maintain flexibility,” Ancona said. “I think the adoption of B2B digital payments also offers you more flexibility in how you optimize your spend and how you streamline commerce in this environment where there’s a lot of unknowns.”