The B2B payments landscape has long been characterized by competing interests, with buyers seeking to extend payment terms while suppliers push for prompt remittance.
In joint research from WEX and PYMNTS Intelligence as part of the continuing Business Tracker series, virtual cards present a compelling solution that offers significant advantages for both accounts payable (AP) and accounts receivable (AR) departments, yet supplier adoption faces notable obstacles that require strategic intervention.
Gaining Traction
Virtual card payments are gaining traction, with nearly 9 in 10 firms adopting or pursuing their use for business payments, the data show.
While buyers benefit from enhanced security, improved spend management, and potential rebates, suppliers stand to gain significantly from faster payments and improved cash flow.
Despite these clear benefits, some suppliers are hesitant to embrace virtual cards, citing concerns about adopting buyer-driven innovations or lacking the necessary technical infrastructure. This hesitancy is particularly challenging as half of suppliers report registering on new payment portals as a top pain point, surpassing even delayed checks.
Persistent Pain Points
However, the most significant pain point reported by suppliers is late payments, which over 70% say impede their business operations. Suppliers prioritize reliability, instant or near-instant payment speed, and straight-through processing to their bank accounts — all attributes that virtual cards can deliver. Unlike legacy methods such as checks and wire transfers, which can take weeks to clear and require manual reconciliation, virtual cards enable faster processing and simplified invoice reconciliation.
They embed invoice-specific details directly into each transaction, ensuring secure payments linked to specific invoices. This faster access to funds allows suppliers to reinvest in their business without incurring costly debt.
Supplier enablement programs play a critical role in prodding suppliers to embrace new payments modalities. While 94% of finance teams are aware of virtual card solutions and prioritize improving AP efficiency, a significant percentage still rely on checks, often because suppliers prefer them. Furthermore, some buyers are concerned that virtual card implementation would be overly complex. These concerns suggest a lack of awareness regarding robust supplier enablement programs designed to smooth the transition to electronic payments.
Experienced payment providers skilled in supplier enablement can help surmount virtual card obstacles. They work closely with suppliers to address reservations and educate them on benefits like faster processing, reduced fraud risk, and simplified reconciliation. The enablement process typically involves analyzing the supplier base, outreach and communication to encourage adoption, and technical support for integrating virtual card acceptance into existing ERP or accounting systems. Continuous support helps optimize adoption and assist future enrollments.
By actively engaging and onboarding suppliers through targeted education and hands-on support, payment specialists can help suppliers understand how virtual cards guarantee prompt payment, improve cash flow, and streamline reconciliation, directly eliminating the late payments that hamper operations. Facilitating the technical integration builds trust and fosters collaboration.
