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

Best Accounts Payable Software for 2017 and beyond?

Posted by Chris Cosgrove

Sep 28, 2017 1:46:45 PM

Best Accounts Payable Software 2017

Let's take a trip down memory lane

So a while back we wrote up a similar post, but the time is night to revisit given time and change.  With respect to the landscape changes for AP no real seismic events have influenced the market from the need to automate manual processes, but the growth of electronic payments adds an interesting dynamic to the value creation component of a solid Accounts Payable process.

Therefore, we want to take a look at accounts payable software as we head to Q4 in 2017 and look toward the future.  

Certainly the promise of automation is looming large.  Now more than ever, there is a buzz in the tech community about the advent of artificial intelligence and its role in our future.  This question is interesting specifically in accounts payable automation and has been at play in many deployments of accounts payable software to date, especially as a machine learning approach to data extraction.  However, in the future things may be altogether different as AI could potentially be used to manage exception processing, handle vendor inquiries, and address a variety of other functions that we currently do manually.

With respect to the core set of approaches to improving the payables space we’re still presented with several key iterations that one must evaluate and choose from,


The shortlist:

Electronic Data Interchange - Otherwise known as EDI, this is the gold standard for bi-directional communication between vendors and customers.  While data transmission and transactions are dynamic, it’s cost prohibitive for smaller companies to deploy and tends to be best suited for organizations with massive transactional volume or high volume repeat transactions.  

E-Invoicing - The darling approach of many EU countries, e-Invoicing converts the process to an entirely electronic effort whereby an order from a customer can invoke a PO and the correlating invoice for a closed loop transaction that is essentially all digital.  While very efficient, adoption barriers abound in terms of getting suppliers set up as the lynchpin to this strategy is getting them on board.  While there are numerous benefits, the cost and time associated with driving suppliers to this method is a challenge.  It has not taken in America as many advocates of it have wished, largely due to the fact that America is much more ‘wild west’ and doesn’t have the governmental mandates driving the adoption that have made it more successful in Europe and other parts of the world.

Accounts Payable Automation - This is typically a blend of various accounts payable software components to include OCR, workflow, document management, and integration to back end systems.  This has been traditionally done on premises, though a marked shift to cloud based approaches is underway as the cost and delivery models are both less expensive and faster.  This also offers the least resistance from suppliers because they are largely not required to change anything of how they are currently conducting business with their customers.

The big BANG

While any of these approaches boasts advantages over traditional manual accounts payable processing, one item that is becoming an increasingly vital component of accounts payable software is the pressing need for integrated ePayments.

ePayments, whether ACH, wire, or virtual card offers the customer the opportunity to both enhance security and controls within their payment stream and presents the unique scenario whereby the payment stream can be monetized and AP can be converted from a straight data processor to an organizational value creator.  Literally speaking, accounts payable can be made into a profit center, where this was not a possibility even a few years ago.

While we have an obvious bent towards one of the specific models above, it is absolute must to evaluate the value of your payment stream since that represents an immediate and tangible opportunity to drive monetary value back into your business, which can serve as a springboard to implementing the automation system of your choosing if you take the transformation wall to wall.

Please check out the ebook below to take a deeper look at the comparisons between AP Automation and E-Invoicing!

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

Read More

Topics: Accounts Payable Automation, accounts payable software, epayments

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