Faster for Less Cost: Why Digital Payments are a Win/Win
If your organization is like most, 2020 presented major challenges to your financial operations. Thankfully for many, digitalization came to the rescue.
New ways to save time and money were born from advances in cash cycle management, from procurement to payables, trade financing, receivables and reconciliation.
The long-term benefits are undeniable. Organizations who are quick to maximize their digital payment capabilities now have a distinct advantage over organizations who lag behind – which is why BBVA is constantly evolving our suite of card and treasury management solutions to be ready to help you take your program to the next level. Leading the way is the use of virtual cards, which revolutionize automated payments in the commercial card industry – and eliminate the “old school” accounts payable challenges that can harm your business continuity, cash flow and even supply chains. You may know those problems all too well.
- Duplicative, paper-based legacy systems.
- Limited transaction visibility.
- Costly research and re-work from high error rates.
- And perhaps worst of all, greater risk of payments fraud.
If you're looking for a reason to becoming more digital, here are two important ones:
1. Save money
According to a report from the Association of Financial Professionals (AFP)1, the median cost to process a check is $3.00, compared to a virtual card payment cost of $0.00 – yes, zero cost! What’s more, the savings are even greater if you add in the potential offsetting expense of a rebate. And that’s not all. A check requires 1-2 days to process and up to 3 additional days to mail, which can leave you guessing at the settlement status. But virtual card payments are processed immediately and often settled with a supplier in just a single day – saving you the added expense of follow up.
2. Save time
Virtual cards also benefit both buyers and suppliers by virtue of the impact on working capital management, allowing buyers to increase Days Payables Outstanding (DPO) and suppliers to decrease Days Sales Outstanding (DSO). Take a look at the difference below.
As seen above, the use of virtual cards in the payables process extends buyer working capital and allows the buyer to offer suppliers faster payment receipt and settlement. It’s truly a win-win situation, since sellers also gain improved working capital by having invoices settled faster. The end result: supply chains are healthier, business partners are happier, and working relations are improved.
BBVA is continually seeking ways not only to help you digitize your accounts payable payments process, but also to educate your suppliers on the benefits of virtual card payments. Our supplier enablement team can provide guidance on how to maximize supplier acceptance and drive improved cash management for both parties. Talk to your account manager to learn more.
BBVA and BBVA Compass are trade names of BBVA USA, a member of the BBVA group. BBVA USA Member FDIC. All accounts and credit are subject to approval, including credit approval. All trademarks, service marks and trade names referenced in this material are the property of their respective owners.
1Association of Financial Professionals, https://www.afponline.org/publications-data-tools/reports/survey-research-economic-data/Details/2015-afp-payments-cost-benchmarking-survey/
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