When office spaces closed and staff began working from home in response to the COVID-19 pandemic, employees still needed to send and receive payments on behalf of their companies. As a result, companies had to support daily expenditures for their remote workforces as well as reduce the costs of accounts payable (AP) and accounts receivable (AR) processes.
Those needs will continue. Forty percent of businesses plan to let their employees work remotely in the future, PYMNTS reports.
To support the payment operations required by a virtual workforce, businesses have been making changes to their digital infrastructures. Seventy-six percent of small and medium-sized businesses (SMBs) report that the pandemic has prompted them to enhance their digital capabilities.
Firms with remote employees have had to improvise to keep their payment operations running smoothly. This has often entailed replacing paper-based payments with cloud-enabled AP and AR solutions that employees can access from their desktop computers, laptops, tablets and mobile devices to process expenses online. In fact, 82 percent of SMBs say they are changing how they send or receive payments to or from other businesses.
Historically, B2B businesses have been slower to adopt digital innovations than the consumer sector. While consumers have been using digital payments technologies such as digital wallets, cards on file and mobile banking apps to make purchases for years, the average business organization was still using checks to settle 42 percent of their supplier payments in 2019.
As businesses look to innovate, one digital payment method that has been adopted is virtual cards, which offer a mobile, contactless option that is ideal for use in the “new normal” created by the COVID-19 pandemic.
Virtual cards also offer three other key benefits in the B2B space. One benefit is that they support remote workforces. Virtual cards can improve employees’ user experiences for everyday professional purchases. Cards can be sent directly to employees’ smartphones via banks’ or companies’ AP portals.
Another benefit is reduced payment costs. Virtual cards cost nothing to issue. What’s more, many issuers incentivize companies by offering monthly rebates. Virtual cards can also be integrated into companies’ broader enterprise resource planning (ERP) infrastructures and issued to employees and vendors without manual intervention. They can also be automated to reduce long-term operational costs, making them an attractive option for corporate accounting departments.
A third benefit is that they enhance firms’ ability to monitor and forecast their cash flows. Virtual card issuance and payment functions give businesses greater insights into their AP and AR operations. Virtual cards that are connected to businesses’ ERP systems can transmit information about where payments are in the transaction process. This allows for end-to-end visibility into payment flows and helps cash flow managers make more informed financial decisions about cash flows and credit.
Like other digital innovations, virtual cards have not only helped companies solve challenges created by the pandemic, but also enable improved processes that will deliver benefits well into the future.