With virtual payments offering greater control over spend and data, the automation of corporate finance payments could result in seamless experiences for users as well as new strategic roles for CFOs.
We discuss how with Maria Parpou, Managing Director of Commercial Product and Strategy at Barclaycard.
Over the past five years, Barclaycard’s virtual card payments solution Precisionpay has gained a foothold in the B2B travel sector, driven by the control it offers CFOs as well as the ease of reconciliation and richness of data it makes available. Now, these benefits are being brought into mainstream corporate finance, paving the way for other sectors to take advantage.
Maria is spearheading its development – fundamental to Precisionpay’s evolutions, she says, is ease of use. “Our aim is to make supplier payments as easy as possible for both buyers and suppliers. For corporate buyers, it’s about ensuring they can buy in a controlled fashion.”
Precisionpay works by creating a virtual credit card for each transaction, based on information provided by the buyer. That card is then provided to the supplier as payment. From its very beginning, Precisionpay has worked through an online platform with an embedded workflow approval process, giving users visibility of itemised spending data rather than a consolidated monthly spend. Developments since have added mobile-friendly improvements for buyers on the go, and bespoke integrations into some company systems – notably in the fast-moving travel sector where high volumes of smaller transactions are the norm.
The latest development tackles one of the biggest barriers for virtual card use, namely acceptance issues among suppliers, where associated Merchant Service Charges can create a deterrent.
The answer is a new bank transfer option, enabling buyers to pay suppliers irrespective of whether they accept cards or not. Maria says the initial uptake has been greater than anticipated. “As soon as we put it on BACS, we saw a tremendous interest. Within six months we processed £140 million of turnover just on this optionality.”
Virtual card technology can also provide a greater degree of control through tailored approval processes. Maria explains “Because it’s an online system you can set up controls any way you like, which could be for each category of purchases, or for individuals. It’s a many-to-many relationship. This is quite revolutionary, particularly for smaller spend and expenses.”
This level of flexibility gives finance the option to work with a full range of suppliers and payment frequencies, from those who are paid on a regular basis to one-off payments with infrequent suppliers. In those cases, a cost reduction in onboarding can also be achieved through Precisionpay.
Maria says “For a lot of companies, onboarding a one-off supplier’s details into an ERP system is a headache – it’s detailed, time consuming and costly. With Precisionpay you no longer need to do that.” That can improve the experience for the suppliers, which may then lead to additional reputational benefits for the buyer.
The typical payment cycle of a card solution gives businesses using Precisionpay an additional tool for working capital benefit.
“Say a business has 30 days to pay an invoice. By introducing a card-based solution, they can still pay the supplier on time, but the business can extend the corporation’s terms by up to 86 days because of the payment cycle back to the card provider,” says Maria. “They now have additional days to use the extended working capital provided by the free credit period.”
Not only does that create an option to release cash into the business, but this payment flexibility can lead to new conversations with suppliers and a new twist to finance’s role.
A richness of management information is built into virtual payments technology. Using the data Precisionpay makes available can help finance teams work out the best way to pay suppliers. “Finance can therefore be more strategic about extracting discounts from suppliers if they pay early, and as a result become a profit centre in its own right,” says Maria.
In the future, finance will be expected to spend more time on those value-added strategic conversations, and they’ll need the time to do so. It’s one of the reasons CFO interest in automation is increasing. As a payments technology that can be integrated into existing ERP or corporate procure-to-pay systems, Precisionpay can accelerate the path to automation by streamlining the payments process. For small and mid-sized companies without an ERP system, it removes the need to manually log information across multiple spreadsheets.
Ultimately, says Maria, Precisionpay brings the B2B payments experience in line with that of consumer payment. “Commercial pay rounds have been very clunky, but if you think about the taxi and food apps that have made payments seamless for consumers, that’s the type of experience that will also make life easier for B2B.”
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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