Payment methods for both business-to-business (B2B) and business-to-consumer (B2C) transactions have changed dramatically in the last several years. This is all thanks to the internet, which has brought rise to virtual card solutions, helping to streamline business transactions. One such innovation is the virtual card solution which has become a widely accepted payment method by businesses worldwide.
One thing about virtual card solutions that are attracting the attention of most business owners is that they help lower the overall cost of doing business. It’s no surprise that virtual card solutions are so popular, given that saving costs is one of your key business goals. If you’re still not convinced that virtual card solutions are a good fit for your organization, continue reading this article.
- Higher Security Reducing Fraud Risks
Fraud is every entrepreneur’s concern, ranging from loss of physical assets, such as credit cards or cash, and theft of critical banking information. Additionally, it may comprise the utilization of erroneous or unjustified payment methods. With such incidences becoming much more prevalent today, you should switch to using a virtual card instead. This way, you’ll be able to safeguard your business from financial theft that might affect the day-to-day operation of your business.
Switching to virtual cards also makes it easier to keep track of your expenditures. This makes it much easier to spot fraudulent transactions. You wouldn’t be able to take advantage of this ability if you decided to hand out a physical card to everyone, whether it be your vendors or staff. In addition, to reduce the risk of fraud, you can enable your virtual card to be a single-use card.
If you become a victim of identity theft; you’ll find it far easier to use a virtual card than a physical one. Physical cards have the disadvantage that you have to cancel the old ones, reissue new ones to your employees, await their arrival, and notify your vendors of your new payment details before using them. The only way to use your physical card is to complete this lengthy process, which usually takes a few days.
You can erase or freeze a virtual card at any time and use other cards tied to the same account instead. This ensures that your day-to-day business operations are uninterrupted.
- Earn Cash-Back Rebates For Each Payment
Paying your vendors and suppliers is a must and is a routine part of doing business. And if you’re an innovative entrepreneur, you’d realize that using a virtual card opens up the opportunity to generate more significant revenue. A virtual card allows you to accomplish this goal by earning cash-back rebates when making payments to your suppliers or vendors. All you need to do is choose the right program and start earning a cash rebate for each dollar of virtual credit card payment made.
With this in mind, you should strive to do more transactions using your virtual card and generate greater rebates for your business. This extra revenue stream will undoubtedly help your company in other areas. However, before deciding on a virtual card contract, do your homework and make an informed decision. If you meet specific goals, you may receive a quarterly or annual rebate from your bank. If your goal is to increase profit margins, you should opt for a monthly cash back program.
- Gain Greater Control
Another benefit of virtual card solutions is that they give you more control. This is because you can put limits on transaction amounts, periods, suppliers, and merchant categories. As a result, you’ll have more control over your company’s everyday financial operations by being able to create, manage, or freeze virtual cards swiftly. This, in turn, helps to curb out-of-control expenditure.
Virtual cards alongside account payable (AP) automation also promotes secure and predictable transactions. This makes life easier for your financial personnel and gives them greater peace of mind.
- Reduce Manual Processes
The use of virtual card solutions helps automate specific processes, saving you time and money in the long run. This is because manual payment methods, such as paper use, forced your accounts payable and receivable teams to print, sign, pack, postmark, and eventually mail checks. Besides being time-consuming and tedious, it also costs your business money because you need to invest in a lot of paper and posting material such as envelopes.
On the other hand, making payments is much easier with virtual cards. Adopting virtual cards also reduces the likelihood of errors and inefficiencies, which can be costly to your organization. Since virtual cards contain a unique transaction identifier, automatic reconciliation is possible. It’s because of this that huge corporations such as General Motors have adopted the use of virtual card payment tools.
- Lower Your Operational Business Costs
Obtaining virtual cards does not require you to pay any money. On the contrary, using checks has certain costs linked to them, ranging from USD$10 to USD$20 for big companies and USD$3.50 to USD$5.00 for mid-sized corporations. These costs associated with check payments arise due to postage, envelopes, MICR toner, and check stock.
In addition, there are “soft costs” connected with check payments, such as the labor and time required to fold, stuff, and post the letter. These costs can add up. When virtual cards are used in conjunction with automation software, they eliminate the fees associated with many check payments. You could save money by switching to virtual cards rather than using checks.
- Eliminates Or Minimizes Overseas Fees
Overseas payments are often quite expensive because of the foreign exchange (FX) fluctuations, FX mark-ups, and cross-currency transaction fees. This is one area where switching to virtual card solutions would be advantageous. With virtual cards, you can altogether avoid costs or pay fewer fees when making overseas payments.
This enhances the convenience of doing business while also lowering operational costs. Saving money with virtual card solutions makes your company considerably more efficient in its operations.
Takeaway
Traditional payment methods, such as writing a check, are now obsolete. Instead, businesses today rely on new payment methods such as virtual cards, which are more appropriate and successful. If you were wondering how moving to virtual card solutions might help you minimize business costs, this comprehensive article has covered all you need to know. As a result, your business will become significantly more profitable.
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