CloudX Blog

3 Easy Ways To Harness Accounts Payable Software To Optimize Vendor Payments

Posted by Chris Cosgrove

Sep 7, 2017 4:46:40 PM

Accounts Payable Software is the best!

You can lead a horse to water, but you can’t make him drink.  


However, I had a buddy who once said that “you can salt the horse’s oats though”.   Point taken.  It is entirely possible that the whole B2B payments landscapes moves at a glacial pace in terms of adoption of new technologies.  Ironically, in a business sector that certainly could really use a healthy dose of innovation, it seems to lag far behind the pace of innovation that is occurring on the B2C side of payments.  This isn’t a total mystery however as the fact is that corporations are hesitant to change things that are already working in the face of people and process pressures.

In this article over on PYMNTS, The Fed’s COO of the St. Louis Federal Reserve Bank went on record to discuss the slowly changing nature of payments as the new Payments Strategy Director for the Fed.  Even he admitted that payments have been changing at a seemingly glacial pace, due to the aforesaid pressures.  That notwithstanding, people are slowly coming around to new technologies and methods to pay to include wire, ACH, EFT, and virtual credit card payments.

From our perspective, we clearly see and understand the advantages afforded by the newer, digital payment types and the enhanced controls and security derived through these means over traditional payment types.

So, here are 3 Crucial Ways Optimize Vendor Payments through Accounts Payable Software:

1.  Priority Payments - Whether you assess priority payments on a monetary (size of payment) or vendor (strategic)  basis, either way it’s a good idea to optimize your payments through accounts payable software in this way.  You can triage your vendor payments pipeline using business intelligence to help expedite or otherwise order your payments against the logic that is useful to your enterprise.  This is not always a one size fits all approach, but you can typically sequence and prioritize payments against the criteria that drives your business or AP process.

2.  Automation By Payment Methodology - Yet another way you can harness the power of accounts payable software is to streamline and automate your payments based upon the methodology.  For instance some AP software functions as something of a prioritized payment broker.  Essentially the technology allows you to set payment preference by vendor and in so doing eliminate the hassle of having to make manual selections for each payment.  This level of automation can both enhance security and controls around payments in general, but also recoup wasted time and effort.

3.  Monetization By Payment Methodology - An integral point to the above is going a step beyond the automation of the payment task.  Tapping into the raw power of accounts payable software and taking it a step deeper is where it’s at, especially as it relates to making it worth something tangible in the positive sense.  Consider that when using certain electronic payment types to include ACH / EFT or virtual payments, you are streamlining your payment types to cut into costly and arduous check printing and will certainly contain your payment production costs.  However, the real value to accounts payable software here is to automate and drive payments forward to monetization through virtual payments powered by virtual credit cards.  This way you can drive 1-1.5% of your eligible spend back to your bottomline.  In most cases you can flip the script of traditional AP and take a cost center and convert it into a profit center.  In most cases the cash rebates derived from existing spend, that nearly 30% of vendors across the board will accept via virtual credit card, will more than pay for your accounts payable software and AP automation costs, so it’s definitely not an area you can afford to neglect or not establish a plan for!

Good stuff!

Thanks for spending some time with us today! To keep learning what the other crucial keys are to AP value maximization check out our eBook below!

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Topics: accounts payable software, Virtual Credit Card, epayments

4 reasons virtual payments are the best kept secret in Accounts Payable

Posted by Chris Cosgrove

Jan 25, 2016 11:04:36 PM

virtual payments and virtual credit cards are the best kept secret in accounts payable automation

Everybody likes a good secret...if they’re in on it.


Not everybody likes a good secret that gets out, but we think that you’ll dig this one.  Besides, it’s not going to have any adverse effects.  That is, unless, you embrace it and realize that you status quo may not be satisfactory anymore.  This is especially the case for those who lead finance organizations and who are responsible for setting the direction of their accounts payable process.


Well, we’ll reveal it here and unpack it from there.


Here goes…

Virtual Payments!  By that we mean virtual credit card payments.  This may come as a surprise to you but from an adoption standpoint in the marketplace they lag behind traditional forms of payment like checks, wires, ACH, and wampum.  That being said, we don’t believe that will be the case for too long.


Here’s why:


Virtual Payments are a massive, on-going source of recouped payment expense.  

With monthly cash rebates ranging from .5%-1.5%, virtual payments represent a unique, innovative way that nearly every business can capture some measure of their spend and stash the rebates generated.  Because many CFO’s are constantly looking for ways to increase their margins, this serves as a double benefit, from the perspective of the free earned cash, and the fact that their bottom-line gets padded in a new and renewable way.


Virtual payments require little process change.  

Whereas other card types, such as purchase cards, require significant effort from procurement teams to deploy successfully before their benefits can be attained, virtual credit cards are a relatively simple adaptation within the existing accounts payable process.  The payable is processed as you would any other invoice, and once it is ready for payment, the mechanism of the single use virtual card is invoked.  The lynchpin to this approach is the vendor onboarding.  Depending on your provider of the virtual credit cards, you may have to be responsible for soliciting and winning the hearts and minds of your vendors.  This feat however is not for the faint of heart, and nor is it a competency for most Accounts Payable teams.  As such, we recommend that you determine the vendor onboarding strategy and resources for your virtual credit card provider prior to working with them to gauge their viability in this area.


Virtual payments don’t require a long time to deploy.  

As mentioned above, because there is little process change required, once your vendors are onboarded, there aren’t extraneous personnel to train within your organization to achieve a successful implementation.  Additionally, because only AP personnel have to interface with the virtual payments platform, there is no on-going need to support outside departments or personnel, which can cost gobs of unforeseen time.


Virtual payments cut into your existing operational costs.  

Be they hard or soft, the fact is that if you are dependent on checks or wires, you’re leaking out anywhere from $5-15 per transaction in cost.  With virtual payments, whatever you convert to the new payment methodology becomes a total swing to the good for the house, also while contributing to paperless initiatives.


In conclusion, if you're not looking into virtual payments today, then you're missing the boat.  Besides the obvious attraction that these can literally fund an entire AP organization through rebate generation, it's worth noting that proceeds from these initiatives can drive your traditional accounts payable automation efforts too!

Free Whitepaper on Why CFO's Are Ditching Checks!

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Topics: Accounts Payable Automation, Virtual Payments, Virtual Credit Card

Is payment by Virtual MasterCard the key to AP payment transformation?

Posted by Chris Cosgrove

Jan 21, 2016 3:37:43 PM

Virtual MasterCard and Virtual Payments are where it's at!

Some questions are easier to answer than others.


 When I ask my 4 year old the color of an object, or its shape, I get concrete answers back...and quickly...sometimes too quickly!


However, when it comes to deeper things, the answers aren’t always so clear, and that’s why we’re posing the issue above as a question.


Here’s a look at the facts about payment methodologies for Accounts Payable departments in the US courtesy of Paystream Advisors

Virtual Payments are the future!


What’s obvious from this chart is that most American businesses are still heavily reliant on check cutting to make payments.  Considering that many businesses are looking to enhance their productivity and profitability it’s kind of ironic that they are dependent on antiquated and costly ways of doing things, and in this case, paying the bills.


When you couple the fact that cutting a check has an average cost of $5.14 per check according to The Accounts Payable Network, and that wires can exceed $15 per transaction, you can start to grasp the magnitude of what you are literally sending out the door.  To do a quick analysis, just look at your non-payroll related checks that went out last year and multiply times those figures depending on your spread of payment types and you’ll have a healthy approximation for the total process costs you’re looking at.


So, how to evaluate whether virtual payments are a good option for you?


  1. Will my vendors accept?  - Well some make this evidently clear on their invoices in the remit or payment instructions areas.  For those, the task is easy to figure out.  For others, it may require a more assertive campaign of vendor onboarding, which can be an arduous process for the company deploying the virtual payment inititative.  However, certain virtual payment providers actually act on behalf of your organization for the vendor enrollment and as such, can considerably offset the time investment required to advance it.
  2. Is it worth it? - Again, you’ll need to some quantitative and qualitative analysis on how your current payment metrics look.  If the bulk is via check or wire, then you have some basic math to do to determine your extraneous costs.  Beyond that, ask yourself what your payments are earning you.  If it’s either of the two mentioned here, that would be zero, zip, nada.  However the virtual MasterCard option could be anywhere from 1-1.5%.  Multiply that range by about a third of your payables spend (to allow for a conservative estimate of those who would accept the virtual payment) and you’ll have an idea of the annual contribution to your business.  Secondarily, multiply the correlating number of checks that you would normally produce for that spend times $5.14 or $15 for the wires and you’ll know what hard costs are going to be recouped….then ask yourself is it worth it?
  3. Is security an issue? - That’s definitely a worthy question.  Security is an issue for some AP departments, but the virtual MasterCard is more secure than checks and individual corporate card accounts that are used to pay multiple vendors.  Why? For starters, they are single-use, and a unique 15 or 16 digit card account is created per payment.  A payment may encompass multiple invoices, but the point is it can be reused.  Secondly, the amount paid is funded specifically for the payment amount invoked, and can’t be expanded.  Therefore, it can’t be run through multiple times or for increasing amounts and is therefore a better alternative than using one traditional card to pay multiple accounts.


So, there are certainly some compelling elements to making the case for virtual MasterCard, but probably none more-so than profitability.  If you’re looking for a way to make your accounts payable process strategically valuable and profitable, then this is a key thing to consider!

Free Whitepaper on Why CFO's Are Ditching Checks!

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Topics: Accounts Payable Process, Virtual Payments, Virtual Credit Card, virtual mastercard

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