Understanding the role of virtual card provider

Raj Dutt, Capital One: When you choose a virtual card supplier, set your expectations high

Your organisation’s satisfaction with its virtual card provider is the single most important factor determining the return you will receive on your investment.

Findings from the RPMG Research Corporation’s 2015 Electronic Accounts Payable (EAP) Benchmark Survey Results are unequivocal: “Organisations with higher overall levels of satisfaction with EAP economics, service and support, data integration, and reporting have higher average monthly EAP spending and capture a higher percentage of transactions on the EAP platform (at all dollar levels).”

The differences are dramatic. Those customers in the high satisfaction group reported 44% higher average monthly spending than those in the low satisfaction group and 25% higher spending per transaction. High satisfaction customers also reported higher capture of transactions at every level surveyed, from 64% higher capture of transactions $2,500 or less to 67% higher for transactions between $100,001 and $1 million.

In essence, this means that the success of your virtual card implementation rests with your provider – and your provider’s influence extends beyond maximising spend and consequently maximising rebates. The quality of your provider can also minimise the time, effort, and money you will expend in launching a virtual card programme.

For a successful implementation, you need a partner who is thoroughly committed to virtual cards, with the knowledge and experience to guide your organisation seamlessly through launch and beyond. Your provider should offer a superior feature set and proactively support business case development, systems integration, and supplier enrolment, all the while delivering responsive customer service.

In other words, when you choose a supplier, set your expectations high.

Advanced product features

Virtual card providers are not created equal. Some banks are devoted to the segment. Others offer it simply to flesh out their treasury management suite. It is easy to see the difference. One obvious differentiator is the quality of the interface. It takes an immersive understanding of virtual card processes and a significant investment of resources to produce an interface that customers find intuitive and full featured.

This commitment will also be reflected in the feature set. Look for such advanced features as:

• Buyer-initiated payment, which offers buyers greater security and control by enabling them to push payments directly to suppliers’ bank accounts without using a card number at all.
• Out-of-band authentication, which requires users to login with a PIN number sent via phone, email, or text.
• Integrated payables, which enables buyers to send one file to their provider with multiple payments and multiple payment types (virtual card, ACH, wire FX, etc)

As important as the power of these new features are, their importance ultimately lies with what they say about the provider’s attitude about the future. Providers who invest in innovation today are likely to continue innovating—and that is important because once you commit to a particular virtual card system, it will be difficult to build the momentum needed to switch to another provider if you become dissatisfied.

Support for building a business case

The amount of resources an organization can devote to even the most promising cost-saving programs is limited – and there are often many credible initiatives vying for your CFO’s approval. For virtual cards to rise to the top of the list, you need to make a business case for them – and making a convincing business case will require guidance and analysis that only a seasoned virtual card provider can supply.

Your provider should be able to employ a robust set of analytics that compare your accounts payable data with standard and proprietary industry databases to identify those suppliers who are already accepting cards as well as those likely to adopt virtual card, based on their relationship with your organisation. In other words, your provider should provide all the necessary data, so that when you walk into the CFO’s office, you have the percentage of your organisation’s expenditures that you are likely to move to virtual card at your fingertips.

Your provider should also help you translate expected virtual card spending into rebate revenue, extended days payable outstanding, and decreased check-processing expenses—and roll all these numbers into savings expressed as return on expense, return on investment, or, in some situations, earnings per share.

A good provider not only will do the math, but will also know your business so well that it can tailor its analysis to highlight the information that will resonate most fully in your business environment.

Support for systems integration, automated reconciliation, and detailed reporting

Whether your virtual card implementation is stressful or successful depends on your virtual card provider’s ability to integrate virtual card data with your back-end systems and automate the flow of information. This includes synchronisation between its virtual card platform and your AP/invoice management system as well as your enterprise resource planning system.

Auto-reconciliation of virtual card payments – automatically matching transactions to invoices and virtual card numbers – is a sign of successful integration. This will entail much less work on your part if your provider has a file mapping system that accommodates the way you format your payables.

The aforementioned EAP Benchmark Survey found this a crucial consideration:

The seamless electronic transfer of transaction-related data between the EAP provider and the organizational information system (without manual intervention to correct, delete, or add information) is a notable goal which the majority of respondents report is “very important” (30%) or “important” (30%) to the growth of EAP spending.

Another important differentiator is the virtual card provider’s reporting package. Reporting helps organisations evaluate and analyse virtual card payment activity. You should look for a provider that can supply level three data, which can help you gain a fuller picture of the transaction, including such information as quantity, item description, unit price, and line discount. 

Support for supplier enrolment

Next to systems integration, supplier enrolment is the most labor-intensive element of implementing virtual card. A good supplier can help you structure the effort and assume responsibility for a large portion of the burden so that your organisation can focus its resources where they can have the most impact – on strategic suppliers most likely to adopt virtual card.

Of course, a key element in supplier enrolment is the analysis that went into preparing your business case. Your provider should have the ability to translate that analysis into a coherent, staged and segmented plan for supplier enrolment. This should include such activities as determining the specific selling proposition that best applies to each segment, developing scripts for voice and email contacts, laying out a reasonable schedule, not simply for multiple contacts with each supplier, but for your supplier base as a whole.

In addition, your virtual card provider should take the lead in helping you set up the enrolment process. If a supplier agrees to accept virtual card, you want to be able to sign it up immediately.

Responsive customer service and support

Throughout the implementation process, your organisation should have the benefit of a dedicated account manager. After becoming immersed in your business processes and purchasing/payables software, this account manager should be equipped to guide your working group and help coordinate all the moving parts required by implementation. Even after implementation, your account manager should maintain frequent contact. The RPMG EAP Benchmark Survey found this a crucial consideration:

46% of organisations that communicate weekly or monthly with their account manager are very satisfied with the performance of their account manager, but only 22-25% of organisations that communicate quarterly, biannually, annually or other express a similarly high level of satisfaction.

A vital service at implementation is training. You should expect your provider to introduce your staff to virtual card payments and help them learn to use the virtual card platform to monitor and manage payments securely and to troubleshoot when necessary.

But customer service and support only begins with implementation. Providers should have a help desk that can answer questions and resolve disputed transactions – and do so promptly.

Choosing the right virtual card provider

Finding a virtual card provider that meets these expectations can be difficult. Before setting up meetings with potential suppliers, take a moment to articulate your goals. The best provider for your organisation is the one not only with the best products and services, but also with the products and services that are right for you.

By Raj Dutt, head of product development, marketing, credit and analytics at Capital One