Your company wants to reduce its costs and improve its cash flow. One way to do that is to embrace affordable, convenient payment technology. Your accounts payable department most likely has multiple invoices to pay various vendors each month. Switching to digital B2B card payments and away from paper-based or physical card payments helps streamline the process, saving you money and time. B2B virtual payments can also be more secure than other payment options.
Which Type of Electronic Payment Does B2B Typically Favor?
Generally speaking, companies have been slow to switch from paper-based payment methods — such as checks or physical credit and debit cards — to B2B mobile payments. There are a few reasons for the hesitancy, such as companies lacking the infrastructure available to accept virtual cards. Some companies also have the “if it ain’t broke, don’t fix it” mindset. Paper checks or physical cards seem to work perfectly well, so why change?
In some cases, the pandemic and the sudden preference for virtual contact pushed many companies to switch to B2B payment methods sooner than they would have otherwise. As many businesses shut their doors and had employees work remotely, it was less feasible to issue paper checks to pay vendors. Remote employees might not have access to the company credit or debit card. Virtual cards quickly began looking more attractive to companies that were previously hesitant about using them.
How Virtual Cards Work for B2B Payment Solutions
In many ways, virtual cards are similar to traditional, physical cards. Your company can create a virtual card to pay each invoice or assign an account number to each vendor or supplier you work with. The virtual card has a 16-digit account number, an expiration date, and a security code. Depending on how your company sets it up, the virtual card number can work only once to pay a single invoice, or it can pay all approved invoices from a supplier.
Since a virtual card number stands alone, you can quickly cancel it if the number gets compromised. There’s no need to change bank accounts or update payment information with all your company’s vendors, as only one account number is involved.
When your company uses virtual cards to make B2B payments, it speeds up the payment process for the vendors. They get their payment instantly, rather than having to look for a paper check and wait for the deposit to clear.
Common Myths About Virtual Cards for B2B Payments
Though virtual cards might be the future of B2B payments, some myths about them have kept companies from making the switch. Let’s look at some frequently repeated myths and get the facts on using virtual cards for B2B payments.
Myth 1: Vendors Don’t Like Virtual Cards
You might hesitate to use virtual cards because you worry your vendors won’t be happy about the switch. You might be afraid your vendors will refuse to accept virtual card payments because they still rely on paper checks.
For the most part, many vendors are happy to accept digital payment methods, especially if getting paid virtually means they get their money sooner. Like you, your vendors have bills to pay and businesses to run. They are just as concerned about cash flow and aging receivables as you are.
If some vendors are reluctant to accept virtual card payments, you don’t have to force the issue with them. You can issue virtual payments to the vendors and suppliers that want them and continue to pay others with paper checks.
Myth 2: Once You Switch, You Can’t Go Back
Any transition can present challenges to your company. You may worry you won’t like the results of switching to virtual payments. If that happens, you can always go back to the conventional ways of paying your suppliers or vendors. You can chalk up using digital card payments as a learning experience that didn’t work for your business.
You might also find that a hybrid model of using virtual payments for some vendors and alternative payment methods for others works best as you make the transition. Slowly switching gives you time to iron out any wrinkles and figure out what works best for your business.
Myth 3: Digital B2B Payments Cost More
While there is a cost associated with digital or virtual payments, they are typically a more affordable way to pay vendors than other methods. Paper checks often have various related expenses. There’s the cost of the checks themselves, plus the postage associated with mailing each check. There’s also a labor cost associated with having employees ordering the checks, printing them, and putting them in envelopes.
It can be helpful to directly compare the cost of your current payment methods and virtual cards to see how much money and time your company can save.
Myth 4: Virtual Cards Are Risky
The reality is that virtual cards tend to be more secure and lower-risk than other payment methods. If your company uses a traditional, physical card when paying vendors and that card gets lost or the number gets compromised, there’s a chance a hacker or thief will get access to all your company’s financial information. A virtual card number can be one-time use only or linked exclusively to a particular vendor, meaning there’s less risk of exposure if the number gets leaked.
Virtual cards are also more secure than paper checks. Someone can steal a check payment from the mail, or the check itself might get lost. Many checks have all your business’ bank account information printed on them, meaning there’s a risk that your data will get exposed.
Myth 5: You Have Less Control Over Virtual Card Payments
If you switch to using virtual cards, you’re likely to find that you have more control over your payments, not less. You can assign cards to specific vendors or decide who has access to which accounts. Since you have such granular control over the cards, you have much more say over who gets paid and how much they get paid.
Issue Virtual Cards for B2B Payments With Hydrogen
If you’re ready to make the switch to virtual cards for your B2B payments, Hydrogen can help. Our platform simplifies the process of issuing virtual cards, so you can focus on running your business. To learn more, request access to our platform today.