If you're like most professionals who are responsible for making payments for a corporate or nonprofit organization, you're continually seeking to maximize efficiency and minimize the cost of doing business. Virtual card technology does both, offering the opportunity to turn a manually intensive operating expense into an automated process that actually generates revenue for your organization.
The Mechanics of Virtual Card Technology
The key to this process is a new twist on traditional credit card-based payments: An evolution in payments technology now allows card-based payments to be made through a user-friendly software interface that automatically steers payments to an organization's vendors. The process utilizes the Visa and MasterCard networks to transfer payments to vendors' bank accounts - quickly and exceptionally securely, thanks to single-use ghost account (SUGA) technology.
Organizations that employ this technology are able to enter vendor invoices into their virtual payments platform, and an email notification of the remittance is automatically sent to the vendor. This email includes the total amount of the payment and other specifics regarding the payment. Upon acting on this email notification, the vendor immediately has funds transferred into their account. Here's a quick glance at how this process works at Kontrol:
Reduce Expenses, Increase Revenue
The most significant benefits to an organization that adopts virtual card technology are rooted in the expense-cutting and revenue-generating features of this process.
The reduction in expenses results from the seamless interface between a virtual payments application and an existing ERP or accounting system. That means a significant reduction in manual accounting processes, as payments are automatically recorded upon acceptance of the payment by the vendor. A reduction in manual processing means less errors and less re-work; it also means reduced paper costs. If an organization transitions from a payment process that is majority check-based to one that is powered by virtual card technology, the savings realized will be even more significant.
Virtual card is also a revenue generator, thanks to a rebate paid on every virtual card transaction. When you pay your vendors who already accept credit cards with a virtual card, the fees they pay to accept those cards come back in part to you, in the form of a quarterly rebate. Simply put, you get paid by paying your bills.
The Bottom Line
Virtual card is a simple concept with extraordinary results. Organizations looking to get more efficiency and effectiveness out of their internal processes and boost cost-savings can tap virtual card technology to revolutionize their AP process, reduce expenses and access hidden revenue. With no up-front investment, this automated alternative to ACH and checks is an unparalleled means for organizations to do much more with less.
Interested in learning more about virtual card technology and how electronic payments work? Download our quick primer on the topic, Virtual Card 101, by clicking the button below.