03/29/2018

New Virtual Card Automation Transforms AR Departments

Virtual cards are growing in popularity to meet the growing electronic expectations

Today, accounts payable automation is an issue on the minds of both buyers and suppliers looking for ways to make the payment process less expensive, more efficient and more secure. According to PRNewswire, virtual card payments are growing in importance in the $1.9 trillion commercial cards industry and make up 50 percent of all B2B payments.

Used for a widening variety of payment purposes, virtual cards are growing in popularity to meet the expectation that buyers pay suppliers electronically. According to a Kaiser Associates survey, this virtual method also benefits suppliers who have seen an increase in B2B sales because they accept virtual credit cards. Obviously, the market is shifting toward accepting virtual cards as the preferred form of payment but how does that impact businesses?

AR Payment Struggles Identified
Today, 95 percent of the payment remittance for an electronic payment is sent from the customer to the vendor via email. Banks never see this remittance data. Thus, traditional lockbox services can only go so far in enabling invoices to be cleared and cash to be applied. As a result, most AR departments are left with the tedious task of hand keying data from these remittance emails into an AR system to clear the invoices, before the cash can be applied.

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