Technology implementations are never easy. There could be unforeseen integration issues with back-end systems or perhaps more customization is required than originally thought. In the P2P world, one of the most significant issues overall, however, is supplier onboarding. This is particularly true in the case of payment solutions such as virtual payment cards.
Supplier onboarding is far and away the top barrier to electronic payment adoption; suppliers who’ve historically accepted only paper checks, for example, need to make an investment to start accepting electronic payments, such as staff training and new technology on their side. Suppliers that take some ePayments but not others will need to make similar investments. Virtual payment card implementations become simpler than most ePayments in the case of suppliers that already accept commercial cards for payment, but that’s not necessarily a guarantee.
For the enterprise looking to use virtual payment cards as a launching point into electronic payments, however, problems can arise. To alleviate as many potential pitfalls as possible, here are a few steps that we recommend. Six of them, to be precise, outlined below.
Step One: Analyze Payment Data
Almost every enterprise, and certainly all large ones, have captured and collected the details of every financial transaction it has ever conducted. Unfortunately for most, this data is locked in the general ledger or ERP system, collecting virtual dust, largely unusable and not analyzed for any possible insights. [Publisher’s note—if that is the situation in your enterprise, it’s time to take steps to fix that – visit CPO Rising for more ideas on how to get started.]
However, analyzing and understanding this payment data is of critical importance to a virtual card implementation. Before an enterprise starts down the road of virtual payments, these transactions should be collected and analyzed for insights. This analysis includes looking at all aspects of an enterprise’s payment operations, such as the type of payment, the suppliers, spend categories, spend amounts, recurring payments, and high- and low-dollar payments, etc.
Analyzing this payment data should allow the enterprise to segment suppliers and categories that are the most ideal for virtual payment cards. The goal here is to determine—as clearly as possible—which suppliers and/or categories of spend can be transitioned most readily into accepting a virtual card for payment, which leads directly into step two.
Step Two: Segment and Target Suppliers
Once the enterprise analyzes payment data, the next stage is to find suppliers that are best able or most likely to migrate away from paper checks (the most costly payment type). This could be slightly larger organizations with internal accounts receivable teams, or suppliers that have been identified as already accepting card payments.
This is the main reason an enterprise must analyze its payment data as the first stage in transitioning to virtual payment cards. It could result that some suppliers already have the infrastructure to accept virtual card payments, while others are unable—or unwilling—to accept virtual payment cards. Once enterprises know which suppliers are able, or willing, to accept virtual cards, those suppliers can be targeted with the appropriate messaging.
Step Three: Launch the Virtual Payment Card Campaign
This is really a multi-part step. With payment data analyzed and suppliers targeted, enterprises can develop the appropriate messaging and materials, such as using emails and/or phone calls, to communicate the benefits of enrolling in the virtual card program. Bank issuers, with strong support from the card companies like MasterCard, and solution providers like NVoicePay offer various levels of assistance in communicating with suppliers.
Obviously, the next step is to actually communicate those benefits to the suppliers identified in the previous stage. Check out our previous article on three of the benefits suppliers enjoy with a virtual card program if you need some messaging ideas.
Step Four: Education and Communication
The campaign to switch suppliers over to a virtual card program isn’t really a one-off thing. As an enterprise proceeds through an implementation program, there’s the possibility that more suppliers will get identified as virtual card payment candidates and that some suppliers will take longer than others to add into the program.
Each of these first four steps can be time intensive for its own reasons, but this outreach stage is when enterprises take the leap of communicating directly with suppliers. Whether it’s through messaging that forces suppliers to accept virtual cards as the “cost of doing business,” or something “friendlier” that prevails on the advantages of virtual payment cards, enterprises can ill afford to cut corners on this step in the implementation process.
Step Five: Monitor and Track Progress
Marketing teams are well aware of the need to monitor progress on campaigns. Marketers want to communicate any successes or failures, as well as collect the data that proves the campaign’s true performance. If a marketing campaign fails to meet its goals, for example, collecting data may allow the marketing team to learn from its mistakes. If a marketing campaign succeeds, collecting data could allow marketers to replicate those results.
It’s the same thing with supplier enablement initiatives with virtual card programs. Simply communicating the benefits isn’t enough—enterprises need to monitor the campaign’s progress and track how many suppliers have been onboarded into the virtual card program. If not all identified suppliers have joined, this allows for enterprises to determine a new avenue to convince those suppliers of the program’s benefits.
Step Six: Start Paying with Virtual Cards
The final step in this process is to begin paying suppliers with the virtual card. Now, while this is in fact the final stage in this particular process, this doesn’t mean the entire transition happens in a straight line. Enterprises may find that some suppliers require more communication and support than others, or perhaps there might be unforeseen issues with the progress of the payment card campaign.
For that matter, some suppliers may require significantly more hand-holding through the entire process. In fact, once a supplier accepts the idea that they need to accept a virtual card, the buyer should work closely with them to ensure that all onboarding is completed effectively. It’s for this reason, there can be a tremendous amount of variables in how well, or how long, the transition program takes. What remains, however, is that both sides (buyer and upplier) can benefit from a successfully implemented virtual card program.
Final Thoughts
Paper checks are slowly disappearing as a payment method for business invoices. Ardent Partners payments research has shown a 3% up-tick in ePayments between 2012 and 2014, with 55% of respondents to Ardent’s 2014 ePayments survey expecting commercial card payments to increase by 2016. Virtual payment cards are thus merely one of the many methods set to replace the venerable paper check, with the likely future becoming some mix of ePayment technologies.
The six steps discussed here create a seamless process designed to bring more suppliers into the fold of virtual payment cards, which are only one method enterprises can use to pay invoices electronically. Enterprises transitioning to a virtual card program should keep in mind the reality that the supplier enablement process isn’t necessarily easy or short, but should nevertheless remain steadfast in convincing as many suppliers as possible to transition.
Finally, it is also worth noting that there is no reason to go it alone. This is a process that hundreds of enterprises have followed and there are providers with significant experience driving these initiatives on behalf of their clients—the Payve team at American Express is one prominent player in this market.
Check out some of these other articles on virtual cards:
3 Benefits of Virtual Payment Cards You Might Not Know
How Virtual Payment Cards Can Help Optimize Working Capital
What are Virtual Payment Cards?
3 Ways Suppliers Benefit from Virtual Payment Cards
