A virtual world

Commercial cards under the microscope.

Traditionally the preserve of the business to consumer (B2C) payments space, card use is on the increase for business to business (B2B) payments. Rob Tuckwell explains why there may never be a better time to explore the benefits of B2B card payments.

Rob Tuckwell

Payments Leader at Barclaycard Payments

Stability in the supply chain

Virtual cards bring a range of benefits to corporates in terms of enhanced working capital, greater insight into buyer-supplier relationships and process efficiencies. Cards can provide benefits across an organisation – not just across payables and receivables teams, but also to treasury and procurement.

A 2023 study by payments and fintech specialists Edgar, Dunn & Company suggests that globally B2B payments will reach an aggregate of:¹

Four key benefits of card use for suppliers

Improved working capital

Where buyers pay at the point of order or earlier than the agreed payment terms – reducing Days Sales Outstanding (DSO).

Security

Buyers can be confident of protection against late or non-payment, mitigating and managing bad debt.

Process efficiency

No more manual reconciliation processes in accounts receivable. With Straight Through Processing (STP), no card details are handled or processed – its automated end-to-end.

Increased customer volume

Accepting the payment method your customers want to use increases convenience, conversion and sales – both new customers and facilitating increased volume from existing customers.

Four main advantages of card use for buyers

Save money

Process efficiency matters for organisations paying for high volume of low-priced items sourced from a range of “ad hoc” or “one off” suppliers. Virtual cards can be assigned a value and allocated per supplier, enabling straight through processing and improving visibility of supplier activity. For higher invoice volume suppliers – the ability to aggregate 30 days invoices into one statement, saves time and money in accounts payable.

Diversify your supply chain

With increasing number of supply chain issues – having agility and resilience in how you source goods and services is critical. Utilising card opens up millions of suppliers where you can source and pay for items. This flexibility can support the use of smaller and more innovative suppliers. It’s not just good for buyers, but can give a necessary cash boost to smaller suppliers and improve the resilience of overall supply chains.

Enhanced working capital

Comparatively high levels of interest rates have increased the value of managing trade payables and receivables - pay your supplier today and benefit from up to an additional 56 days interest free credit – improving Days Payment Outstanding (DPO).

Additional source of finance

The rising cost of trade finance makes the use of cards more attractive than before. Topping up existing credit lines to supplement existing relationships is beneficial.