Before routinely sending off that electronic payment file for processing
by Jamie Radford
As AP professionals well know, the bulk of payment transactions made by businesses in the UK are settled via electronic funds. BACS is the most common form of electronic payment transfer from bank-to-bank, and typically requires three working days to clear. When expedited funds are needed, a CHAPS transfer offers same-day settlement but typically requires a premium fee for this service.
With these well-refined services in existence since 1968 and 1984 respectively, B2B payments in the UK have become nearly frictionless. But if you’re among those comfortable with the status quo and questioning the need for change, consider this: as that electronic payment file transfers to the bank, so does the opportunity to generate significant revenue from those payments. In this article, globalVCard is going to share insight into uncovering that potential.
globalVCard’s Journey to the UK
Since 1989, globalVCard has been at the forefront of corporate payments in North America. The company enables its finance-savvy corporate clients to continually innovate in an area previously thought immune from innovation: accounts payable (AP).
The company’s virtual card payment system was introduced in 2011 and has grown exponentially since – annually processing billions of dollars in corporate payments throughout North America.
Ironically, the technology behind virtual credit cards originated in the UK. While virtual credit card payments have yet to gain traction for B2B payments in the UK, they have evolved into a highly desirable form of payment in the US as businesses have grown to recognize the value of gaining better control over costs and security.
An even greater benefit for globalVCard customers has been the ability to create a new source of revenue, turning AP into a profit center for many companies. This revenue is generated when companies pay their suppliers with a virtual credit card; the company then earns rebate revenue based on that transaction. Although globalVCard clients openly share their initial skepticism in these video case studies, they are also quick to share how those concerns were immediately erased by the discovery that 30-50% of their suppliers enrolled in the virtual card payment program.
As a result, those same CFOs are able to show their Executive Board up to seven figures of new revenue from a department that has previously been considered an unavoidable cost center.
Companies in the UK and elsewhere in the world have been watching this success with great interest. Now, at this opportune time, virtual card technology is coming full circle back to the UK where businesses are also eager to begin realizing similar benefits.
As globalVCard carefully evaluated its imminent global expansion, they chose to begin where demand is the greatest and recently announced the opening of their London office. Although the overall payment process in the UK is generally more streamlined than in the US (where cheque payments remain prevalent), there is still room for improvement with new revenue gains.
Uncovering Your Hidden Revenue Potential
Just as invoices are carefully examined to ensure there are no hidden costs or overcharges tucked away, there is also a case to be made to conduct a similar audit to discover revenue potential hidden in those invoices. As globalVCard is showing their UK customers, at least 30% of those payments likely could be made with virtual credit cards, allowing your business to earn rebate revenue simply by paying your bills.
Naturally, the prospect of bringing about change in financial systems or processes requires close scrutiny, particularly when existing systems do not appear to be broken. Below, globalVCard addresses three of the most common concerns expressed by financial executives who are considering adding virtual card technology to their arsenal of preferred payment methods.
Concern #1: my suppliers won’t accept credit cards
In our increasingly cashless society, the UK Card Association reminds us of the importance of card acceptance, as customers expect to pay for their purchases using a card. Businesses, like consumers, also enjoy the convenience of paying via credit card: it’s quick, easily reconciled, and there’s the added benefit of the reward programs.
Despite this knowledge, businesses have a tendency to assume their suppliers won’t accept card. In reality, 30-50% of them likely already do – you simply need to ask. Better yet, globalVCard will do this for you as part of their full service solution. They’ll even provide a complimentary vendor match before you commit to the program. With your vendor list, globalVCard will conduct an analysis and provide a reasonable estimate of your expected card acceptance rate.
Concern #2: my suppliers will charge me more to compensate for credit card fees
As discussed above, it is rare to find a business that does not accept credit cards. Most businesses consider card fees as an unavoidable cost of doing business. In a competitive marketplace, the days of vendors charging a surplus fee for credit card payments are on the way out. Why? Because as the buyer, you hold the power. If that supplier doesn’t accept credit card, there will typically be another equally-qualified supplier that will.
Another consideration is that since many businesses already recognize the credit card processing fees as a cost of doing business, they may have already adjusted their pricing accordingly. So if they’ve already increased their prices a couple of percentage points to cover the cost of credit card processing and you pay via cash without discounted pricing, you’re paying a higher price without reaping the reward of rebate revenue that could have been earned on a virtual card payment.
Concern #3: I don’t have time to move my suppliers to a new payment method
The prospect of change – no matter how promising it may seem – is often met with resistance simply because there are not enough hours in the day to take on more tasks. The thought of contacting hundreds, if not thousands, of suppliers to discuss a new payment method can be daunting.
But the good news for globalVCard customers is that they don’t have to. globalVCard provides a full service solution, which includes vendor enrollment. Their specialists will handle your vendor outreach process and get your card-accepting suppliers set up on the new payment system. For your remaining suppliers, you simply continue paying them electronically as you currently do.
So while the time investment will be minimal, the return can be tremendous. Like globalCard’s current customers, you’ll be eager to present your next quarterly report that shows not only full accountability of costs running through your AP department, but also a new and growing line item called ‘revenue.’
If you have additional questions, would like to see a demo or take advantage of a complimentary vendor match, contact the globalVCard team below.
For businesses content with status quo, the current electronic payment process may serve its purpose well. But for businesses with an eye on improving efficiencies as well as bottom-line financial performance through more advanced technology, the future has arrived. Visit globalVCard online to learn more about its award-winning payment system and customer success stories.