WEX: How Companies Are Slashing Costs by Optimizing Business Payments

Choice can be both a necessity and a paralyzing paradox.

Particularly in the world of business payments, finding the optimal mix of payment methods has become a critical challenge for companies seeking to maximize operational efficiency, reduce costs and improve cash flow management.

After all, no two businesses are the same — and no two payments, no matter their monetary value, are ever alike either.

“Understanding your supplier relationships, what’s best for you as a company, and what best supports your size and growth goals is crucial,” Eric Frankovic, general manager of corporate payments at WEX, told PYMNTS.

The rise of options like virtual cards, ACH payments and real-time payments gives businesses unprecedented flexibility. However, each method presents its own set of advantages and challenges, leading to a complex landscape that requires strategic decision-making.

Frankovic pointed out that there is no one-size-fits-all solution, and businesses must carefully consider their payment goals, supplier relationships and operational requirements when selecting payment methods.

Still, if there is one mechanism he sees as a cut above the rest, it’s virtual cards. And their benefits are only set to grow as other complementary innovations like artificial intelligence (AI) mature and scale across the financial landscape.

Read more: Three Hidden Assets That Define Modern Business Payments

The Role and Rise of Virtual Cards in B2B Payments

Optimizing a company’s payment mix is a complex task that requires careful consideration of multiple factors, from supplier relationships to cash flow needs and compliance requirements. Against this backdrop, virtual cards have gained significant traction in the U.S. as a secure, efficient and often rewarding payment method.

Frankovic emphasized their value in the payments ecosystem, especially for businesses seeking a balance between control and return on investment. “In the U.S. specifically, if implemented correctly, virtual cards give you the best mix of security, control and return on that investment,” he said.

The ability to generate rebates or returns from virtual card usage has been a key driver of adoption, particularly for companies with strong leverage over their suppliers. However, Frankovic noted that while virtual cards offer substantial benefits, their optimal usage depends on the specific needs and structure of the business.

Understanding supplier relationships and which suppliers are open to virtual card acceptance is crucial in determining how this payment method can be effectively integrated into a company’s payment strategy. For businesses with large supplier networks, such as multinational corporations, optimizing the use of virtual cards becomes more nuanced.

“It’s much more about vetting that entire supplier list, trying to understand the different tranches of suppliers, those that are considered highly strategic, and you don’t want to upset because they’re critical to your supply chain.” Frankovic said.

Tailoring the Payment Mix to Business Needs

But virtual cards aren’t the only recent advance in B2B payments. Real-time payments are another payment method that offers distinct advantages when compared to legacy mechanisms and methods, particularly in terms of speed and efficiency. As Frankovic noted, real-time payments allow for the instantaneous transfer of funds, 24/7, including on holidays and weekends. This can be particularly beneficial for improving cash flow management and meeting immediate financial needs.

“I think as this next generation or two grows up and starts to enter the workforce, that’s when real-time payments will have a bigger and bigger role to play. Right now, I wouldn’t say they are widely adopted at this point,” Frankovic said.

And as digital payments continue to evolve even further, he highlighted AI as a technology with the potential to transform the payments landscape. While still in the early stages of development, AI could drive significant improvements in areas like supplier enablement and payment timing optimization, leading to greater efficiency and adoption of virtual cards.

“What I’m most excited about is the future of payments, how quickly it’s moving,” Frankovic said. He believes AI will play a key role in advancing digital payments, helping businesses automate processes, enhance fraud detection and optimize payment strategies, all key capabilities when it comes to the importance of tailoring the payment mix to the specific needs of businesses.

As Frankovic pointed out, the payments landscape is evolving quickly, and businesses need to be proactive in selecting the right payment methods and partners to stay competitive.

“And all of this is underpinned by people. People are the key. And understanding how your provider is going to approach your business will become more important than ever. You’re going to need a sherpa on this trip,” he said.