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How virtual card payments can improve the procurement experience

David Price

With potential to add real value to corporate procurement, Precisionpay’s new integrated solution drives convenience, flexibility and control for existing procurement departments and systems.

David Price, Managing Director of Client Coverage at Barclaycard tells us how.

Integrating for efficiencies

Traditional card-based solutions link one card to one individual. Virtual card solutions, on the other hand, link one ‘virtual card’ to one transaction. It’s a technology that has potential to add real value to corporate payments – especially as controls on credit limit and dates of use can be set per transaction – but one that is yet to be implemented across the entire corporate environment.

The key to unlocking their full potential is integration, says David; which is why Barclaycard’s latest evolution for Precisionpay, its virtual card platform, is about partnerships with existing procurement systems, especially in meeting the needs of multinationals.

“In B2B payments, we’ve had good traction for Precisionpay in mid to large corporates, but utilisation for the very largest multinationals has been limited, and that’s because of their significant investments in sophisticated procure-to-pay (P2P) software,” David explains.

Those systems allow businesses to procure in a compliant and cost-effective way, and provide a good experience for the user, except when it comes to payments.

David Price

The impact on buyer experience

Previously, procurement teams had to step outside the P2P environment to complete payment through a separate portal. Now, through an API, Precisionpay virtual cards are being integrated into procurement systems including Coupa, adding ease of use and another option for users within a technology that is already trusted and familiar.

“From procure-to-pay to procure-and-pay.”

“As soon as transactions are authorised, virtual card payments are triggered automatically so there’s no need to leave the environment or to process payment manually,” says David. “The common terminology is procure-to-pay; through integrations, it’s a move towards procure-and-pay.”

Integrated solutions have the potential to improve the buyer experience further, bringing additional benefits to the business such as greater efficiencies, control, data insights and cash flow flexibility.

Onboarding efficiencies

End-to-end procurement costs are often high because of bureaucracy and paperwork, with efficiency gains made elsewhere in the process lost at the point of payment. That’s especially the case in the tail-end spend of large volumes of small-value transactions. When suppliers are paid using Precisionpay, there’s no need for a business to run lengthy due diligence checks or set them up on internal finance systems – typically saving them 3-5 hours per transaction for a new supplier.

“Precisionpay helps to streamline a business’ payment system.”

Precisionpay can also be used to make payments directly into suppliers’ bank accounts meaning they can be paid using the platform even if they don’t accept card payments.

“That’s the through the card piece in procure-to-pay that we are addressing,” notes David. “Precisionpay helps to streamline a business’ payment system and also allows payments to be automatically reconciled to invoices and purchase orders, creating further efficiencies.

Flexible controls

Authorisations and controls are fundamental to the procurement department, as it looks to avoid uncontrolled or rogue spend. The result can be over-engineered and over-complex control policies, with a bias towards the buyer rather than supplier benefit. Such an imbalance can make it challenging for procurement to negotiate the best deal.

“Objective advice to create sustainable long-term relationships.”

“Therefore, what we suggest is adjusting your policy so that your authorisation and control strategy is reflective not just of a desire to create control but is also proportionate to the supplier you’re working with. As procurement functions start to implement appropriate, supplier centric payment strategies, that’s when some of Precisionpay’s capability becomes even more valuable.”

Moreover, by using a virtual card solution, companies can flex cash flow, much as a consumer equipped with a credit card could. Payments made today, for instance, can be repaid as per the billing cycle, plus an additional 28 days after the equivalent of a credit card statement has arrived.

“We offer flexible terms to all of our customers and they can negotiate those up or down depending on how they want to exercise working capital,” says David. On top of that, there is the potential for volume rebates for businesses processing significant spend via the platform – in effect, a way for Precisionpay to share economies of scale with its largest customers.

Building a strategic partnership

It’s unlikely Precisionpay would be the right payment vehicle for all suppliers. “That’s going to be a bespoke decision based on different dynamics,” says David. Where Barclaycard can help, though, is helping you to figure out where best to deploy virtual card technology. By analysing a client’s account payable file and understanding their business strategy, it can provide recommendations for different categories of spend and which result in the greatest benefit for the buyers, such as where to quickly drive efficiencies through volume.

“We offer objective advice to create sustainable long-term relationships, rather than a short-term and tactical approach,” David says. It’s this partnership approach and consultancy offer that is at the very heart of Precisionpay’s new integrated solution.

Create value from your everyday business payments

At Barclaycard, our payment experts work with you to unlock the smartest payment strategy for your business. To find out how much money your finance department could generate to your bottom line, fill out our simple form and a member of the team will be in touch. Or, you can give us a call on 0800 151 2586, Monday-Friday, 9am-5pm.

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