Businesses wrestling with sluggish cash flow and escalating fraud are increasingly looking to digital payment solutions, according to a recent PYMNTS Intelligence report highlighting the challenges of legacy methods.
The report, titled “Virtual Cards Boost Commercial Payment Speed and Security,” examines how traditional business-to-business (B2B) and other commercial payment processes continue to compromise firms’ financial footing. It notes that manual, paper-based methods present significant obstacles, including delays, fraud threats and operational inefficiencies that can strain buyer-supplier relationships. Virtual cards are presented as a modern alternative designed to eliminate many of these pain points by offering a streamlined, secure payment experience. By minimizing delays, reducing fraud risk, and improving efficiency, virtual cards can help businesses stabilize cash flow and strengthen B2B relationships.
The analysis details how corporate and commercial payment delays can tie up working capital, inhibit growth and exacerbate inefficiencies. It also underscores that traditional payment methods are increasingly susceptible to fraud, potentially leading to financial loss and reputational damage. In contrast, virtual cards offer built-in digital safeguards. Optimizing cash flow and minimizing operational friction are deemed critical for maintaining long-term B2B relationships, and virtual cards are presented as checking these boxes for companies seeking to streamline operations while increasing customer and supplier satisfaction. Despite these benefits, the report indicates the virtual card solution has yet to be fully tapped.
Key data points from the report include:
- Nearly 3 in 5 United States businesses contend with late B2B payments. A chief culprit cited is the continued reliance on paper-based, manual methods, with 75% of companies still using paper checks.
- 80% of organizations were targeted by payment fraud last year, up from 65% the previous year. Paper checks remain the top source of fraud vulnerability, with 65% of organizations confronting check fraud in 2023.
- 80% of B2B buyers favor working with vendors that accept virtual cards for payments, yet 52% of accounts payable leaders report encountering vendors that refused virtual card payments, leading 64% of vendors to report lost revenue due to nonacceptance.
Beyond outlining the challenges and benefits, the report includes insights from industry professionals. Dean M. Leavitt, founder and CEO of Boost Payment Solutions, highlights how virtual cards offer cash flow benefits for both payables and receivables, noting internal data showing suppliers accepting cards via the Boost network see an average 40% reduction in their days sales outstanding (DSO). He also addresses the misconception that virtual cards cost more than traditional methods, arguing that the operational costs of manual processing often exceed the transactional costs of digital card acceptance.
The report also features a quote from Widad Chaoui, VP, corporate program product management at American Express, emphasizing the enhanced security, budget control, spend tracking, and speed virtual cards offer. The report concludes by offering a strategic action plan for businesses considering virtual card adoption, including analyzing payment flows, choosing the right partner, strategic implementation, integrating with existing systems, and managing organizational change.
