CloudX Blog

3 Reasons To Consider Virtual MasterCard For ePayments

Posted by Chris Cosgrove

Oct 17, 2017 1:51:17 PM

Virtual mastercard is almost as tasty as krispy kreme!


They say you can never get enough of a good thing.


This certainly holds true for certain food items...especially if you’ve ever had Krispy Kreme’s when that magical red light is on in the window, but I digress.  In the realm of B2B payments and ePayments, one thing that you can’t get enough of is virtual card payments.  We’ve covered this in detail over here, and while we won’t go into the full laundry list of details that encompass the reasons why virtual card payments make sense, one of the big reasons is they make cents...lots of cents...specifically percents.  It’s no mystery that virtual card payments represent a means by which businesses can monetize their payment stream and thus make their back office a huge contributor to the fiscal health of the organization, but way beyond that, the security of said financial transactions can be greatly increased through this novel approach to payments.

Sometimes with change you typically encounter turbulence.  


One manner of turbulence that is a byproduct of the disruption that is happening in this specific type of payment is the adoption on the supplier side.  While suppliers are typically eager to cash in on the payments due to them, there is sometimes a sticky barrier to allowing for card payments because of the manual entry and reconciliation of these payments.  However, according to that specific item is even being addressed through service providers who are automating how the booking of virtual card payments is occurring, which in layman’s terms is very cool.  This means the pathway becomes smooth and mutually advantageous while providing a welcome financial incentive to adopt this payment mechanism to the payor.

So, for the duration of this article we want to focus on the security components that are enhanced through these newer virtual card payment types.  

  1. Invoices are paid via a single use virtual card account so there’s no data to steal and the account is funded just for that single transaction, which can encompass one or multiple invoices.  This means card data, where other might have used a regular card to pay invoices, can’t be used to pay things fraudulently and the exposure is minimal as it is isolated.
  2. Payment requests / invocation can be made to travel through an approval workflow, thereby securing the necessary stakeholders and authority, again cutting down the chances for fraudulent payments by way of visibility to a matter.
  3. Greater control for the timeline of payments is achieved through virtual card payments.  Instead of having to deal with physical output of a check and then the correlating wait for transit times, handling, and deposit times, these transactions are deliberate, scheduled, and prompt.

To learn more about how to extend the use of virtual cards in your organization, check out this brief here.

Virtual payments represent one of the four significant pillars that can contribute to maximum health in your AP organization, but there are various other ways you can extract even more value from this function.

Download The Four Keys To Maximizing The Strategic Value of Accounts Payable

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Topics: virtual mastercard, epayments, virtual card

How much does AP Automation cost? - Updated 2017

Posted by Chris Cosgrove

Oct 12, 2017 10:55:54 AM

AP automation price tag

How much is it?


If you’re anything like me then these are four words that can make or break the moment when you are talking about whatever the item is in question…..a car you’re thinking about buying, a planned vacation, a piece of clothing...whatever. However, the same question needs to be asked of AP automation because while it’s a great concept and certainly a needful one for most businesses, answering this question will by and large determine whether a business can make the decision for or against automation. The good news is that depending on your version or approach to AP automation, the costs vary greatly.


The models:

Scan & Archive: While this is admittedly a bit of a tame approach to automation, some businesses cut their teeth on process improvement through this approach. While it does help with archival and retrieval, it does little to improve the process and some could argue that it actually encumbers the process more by requiring an additional post-process step of scanning and indexing. Now, this can be achieved on the most basic of levels through some kind of a shared drive / folder-based storage approach, but this is typically not the best solution for finding things unless you’re a very small business. The moment your transactional levels jump into the hundreds or thousands per month, you’ll find this to be a less than adequate solution. Still, it can be done for mere hundreds of dollars on the micro scale. If you’re looking at layering in an electronic document management system, you’ll be looking at anywhere between $10,000-$100,000 depending on how robust it is plus annual license fees and any technical support required to maintain it.

Front End Invoice Processing, Auto Matching, Approval Workflow, and Archival: This has been a tried and true approach for many businesses but in a deployed setting the costs can run amok quickly as the systems necessary to power this approach (OCR, bi-directional integration, business intelligence, workflow, audit trail, and storage) are all complex and costly. These types of deployments are typically taken on by businesses running upwards of 10,000 invoice transactions a month and the associated spend can easily range from $100,000-$500,000 for deployment plus annual software license fees and related personnel support costs. For this reason many businesses shy away from the model because the costs outstrip the benefits and the return on investment is beyond a 12 month period and thus becomes seemingly unfavorable.

Cloud-Based AP Automation: Essentially this approach is similar to the above, but because the infrastructure investments are in the cloud and generally deployed across multiple tenants, the cost is shared. Further, hardware requirements are obviated, especially if data center elements are hosted and therefore the point of entry costs for businesses are vastly reduced. In many cases, the providers of this approach charge transactionally instead of software license model. Implementation fees are typically proportional to the number of invoices processed per month, but piggybacking off the scenario above at 10,000 invoice transactions per month, it’s not uncommon to see an implementation fee of $20,000-$35,000 and transactional costs ranging from $.65-$.95 depending on the scope of services / automation provided.

AP automation & ePayments: This is where things get interesting. In all the above cases the typical play for a CFO, Controller, or Treasurer is to look at AP automation as a means to cost cutting and process improvement, which it certainly is. However, when we start to consider the vital role of physical payment execution and the byproduct of automation (ie. time saved and visibility generated through data lifting and automation) there are a world of possibilities. For starters, ePayments (ACH, EFT, wire, and virtual cards) are growing quickly and displacing the heavy reliance on checks in the B2B space, but more importantly they provide a more secure conduit and one that can actually monetize the process (virtual card payments). Through this one payment type alone, many companies can generate a 1-1.5% tap on eligible spend.

The math looks like this:

Spend / mth = $20,000,000Invoices / mth = 5,000VCards @ 25% / mth= $5,000,000Rebates @ 125 bps / mth= $62,500Annual impact= $750,000

This does not even factor additional cash saved through the elimination of checks, but The Accounts Payable Network estimates the average cost to cut a check at $5.14, so a simple formula multiplying that value with the forecasted number of checks saved by using a virtual card in their place will yield the result.

Beyond that the other strategic gain is early payment discounts, which can be massive and will be something we look at more deeply in future posts.

All that said, remaining in the state of a painful, dysfunctional process is not really an option in today’s networked economy. If you’re unsure of what approach is right for you, may we suggest checking out our eBook on AP automation vs E-Invoicing?

Free eBook on AP Automation vs E-Invoicing:  What's Right For My Business?

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Topics: Invoice Processing, ap automation, epayments

Making the best use of data in Accounts Payable Software

Posted by Chris Cosgrove

Oct 3, 2017 12:16:54 PM

Best Accounts Payable Software Makes Big Data Meaningful

It’s all Greek to me.

We’ve all heard this adage in one context or another.

In the day and age of big data however, this is not necessarily a good thing and for too many businesses, their data is unfortunately all Greek to them.  With that said, there are many savvy and intrepid businesses that are maximizing the raw power of their data to achieve enhanced business outcomes.  That’s all well and good, but what does it have to do with Accounts Payable software?

We’re glad you asked!

We’re going to look at a few different scenarios as it pertains to this question over the next week or so, and in the first example we want to share with you a client win who was able to leverage cloud based accounts payable software deployment to achieve multiple things.  In this instance the client was a large consumer packaged goods maker who had multiple, disparate accounting and inventory system that presented a major challenge to integration and data aggregation.

Here are the main take-aways from their experience with cloud based account payable software:

  1. They were able to streamline their frenetic and highly seasonal approach to invoice processing to be something that was streamlined and scalable.  Where they used to have to augment staff heavily to meet the demands of their yearly peaks, they now possess the ability to scale and adjust through the automation afforded to them with accounts payable software.
  2. They were able to make their data meaningful.  This is probably the key to the entire post today in that data is entirely useless unless you can digest and interpret it.  For many businesses, especially as it relates to AP invoice processing, there is little to no data analysis and certainly less intentional action around invoices.  For too many business the raison d’etre for AP is simply pay the bill when it come in.  This is a major disservice to the strategic function of AP and ultimately will cost said organization lots of dollars through blown opportunities by way of missed discounts and tacked on penalties.  We believe the best way to make data meaningful from the steady stream of invoices that pour in is by utilizing a tool like advanced OCR technology to extract all the data from an invoice and then run it through a logic based automation tool that looks for and identifies key data sets...invoice number, vendor name, due dates, terms, line items, totals, tax, freight, etc.  All of this can then be used for later analysis and action.
  3. They were able to assemble a data warehouse where their legacy system was unable to.  This is partly due to the flexibility of cloud based accounts payable software and the implications that most cloud technology has over fixed, static, legacy systems, but in this case, the client was actually able to establish vendor contract data in the cloud based upon the stream of invoices that was pouring in.  Granted one of the assumptions that was made and accepted by the client was that there was a certain good faith element to accepting the customer pricing as listed on the invoice.  However, by implementing logic controls around price / item / and location variance, the client was able to triage invoices that underwent any kind of a price augmentation above a standard, pre-defined acceptable change threshold.  Where there legacy system was incapable of providing, clean, dynamic data, by housing this data in a new cloud based system, they were able to transform their insights and reporting to achieve never before seen clarity within their process and which ultimately ended up with enhanced vendor management and optimized financial outcomes in terms of payment. Beyond this they were able to monetize their payments through virtual Mastercard payments and make AP a profit center!

If this means something to you don’t let your process or lack of quality data hold you hostage any longer! Check out the eBook below or give us a shout and see if we can help you transform your accounts payable process!

Free eBook on AP Automation vs E-Invoicing:  What's Right For My Business?

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Topics: Accounts Payable Process, accounts payable software, virtual mastercard, data

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