How to streamline accounts payable processes with virtual cards?
Virtual cards have become popular in the business finance field because of their ability to ease the management and payments process and provide high-tech security. They have revolutionized the way businesses manage their finances and make payments to both domestic and international vendors.
Virtual cards have modernized traditional payment processes, which has directly impacted how businesses deal with their accounts payable processes. With features like real-time transaction tracking, advanced authentication and security tools, and various management algorithms, virtual cards can effectively streamline accounts payable processes for all companies and industries.
What are virtual card payments?
Virtual cards are similar to physical cards, just intangible and equipped with better security and management features.
To make payments through virtual cards, you are supposed to enter the card number, CVV, amount, vendor information, and PIN to initiate the transaction. If it is directly on a vendor’s payment portal, vendor information details are not required.
Virtual card payments are extremely secure, with features like two-factor authentication, real-time expense tracking, and more.
Read our article on 6 features of virtual cards to know more about the key features of virtual cards which makes them a valuable tool for businesses and enterprises.
Accounts payable process explained
The accounts payable process starts when the order is decided, and a purchase order is drawn. The purchase order is created by the buyer, containing all the necessary details related to the purchase and both parties.
According to the purchase order, the vendor prepares the purchase and sends it to the buyer along with an invoice. The invoice is then matched against the purchase order, purchase receipt, and some other documents to make sure that all the information is accurate and that no fraud alterations have been made.
The managers further approve the invoice for the payment, and the payment is initiated.
How virtual cards help streamline accounts payable processes
Making vendor payments through virtual cards is easy and fast. Enter the vendor details, amount, and currency of payment in the virtual card application — the payment will be initiated.
If the vendor has a customized online payment portal or website, just enter the required information of the virtual card, like card number and CVV, and complete the transaction. The payment will be made within minutes.
The automation software that comes with a virtual card program can take over all the manual time-consuming work involved in the accounts payable process.
Once the system is done processing the invoices, the virtual cards can be assigned to different vendors. It can also be set on a recurring payment cycle through which the money will be transferred automatically after approval.
Another great way virtual cards help streamline the AP process is in the aspect of auditing. As everything is automatically tracked and all the data is stored in a central database, auditing becomes hassle-free.
All the inconvenience of gathering the receipts and expense documents and arranging them for the audit is eliminated by adopting the software.
Making payments and managing cash during uncertain times can be challenging for any business.
However, with the right virtual card program and automation tool, including OCR invoice processing, you can plan the vendor payment, office purchases, and other expenses in coherence with the business's earnings.
These plans can be made effective with the expense reports and data provided by the system. Reconciliation can be made easy and instant.
As the payments process and invoice processing can be done through the system and cards, the chances of errors are reduced significantly.
Virtual cards provide a feature to set up a spending limit so there can be no overspending. Any error in invoice processing can be caught through the system, and it will be flagged for resolution.
If the system processes the invoices, there are minimal chances of any errors.
The most amazing of all benefits is fraud protection. Unlike physical cards, virtual cards cannot be stolen or misplaced.
Also, all payments made through the card have to be approved so there is no chance that someone misuses the card information.
Along with this, as virtual cards can be set up for single use, they are extremely safe. Virtual cards are equipped with bank-grade security tools, which make all transactions even more secure.
How to implement virtual cards into your accounts payable process
1. Identify the need for virtual cards
To effectively integrate virtual cards with your accounts payable system, start by determining the stages in your processing and payment procedure that are slow or challenging. Then evaluate which of those areas can be optimized with the use of virtual cards.
For example, if you frequently face late fee charges because of the slow money transfer speed, virtual cards can help make payments within seconds.
2. Select the right virtual card provider
According to the pain points you have identified in the process, look for a virtual card provider that can fill in all the gaps and improve efficiency.
The main features you are looking for are high-tech security capabilities, reporting and analytics offerings, faster payment processing, minimal or no errors, and international money transfer support.
Any other special requirements according to your business should be considered at this stage.
3. Integration with the existing accounting system
Virtual cards will not be advantageous if they cannot be integrated with the company’s accounting system.
Hence, when choosing a virtual card and provider, ensure that the ones under consideration can seamlessly integrate with the accounting system. This is important because all the spends made through the virtual card will automatically be entered in the accounting books, reducing the manual labor of data entry.
4. Implementation of workflows and processes
Once you get the most suitable virtual card for your business, work on an implementation workflow before you start using it. You cannot just give virtual cards to everyone and then manage them later.
Prepare a workflow of approvers who will have the responsibility to look over all the virtual cards' funds, limits, and usage. Establish a process of how the virtual cards will be distributed and managed using all the information offered by the automation system.
Read our article to know the different ways to simplify expense approval system in order to manage and control its expenses effectively and efficiently.
5. Create a strong expense policy and train the employees
Along with a virtual card usage plan, create a solid expense policy. As these cards provide the feature of setting spend limits, you can use them to the company’s benefit and set up other rules.
These rules can define which vendors to purchase from, how much is allowed for what kind of expenses, travel expense limitations, etc.
Along with this, set up training for your employees. Teach them how to use the cards to reap maximum advantages.
6. Monitoring and making changes
You cannot perfect the usage of virtual cards in just one go. Observe and analyze the usage and process after the implementation of virtual cards.
See where you can improve, determine where the cards are not being used properly, and use the reports and data to make further changes for better implementation.
How can Volopay help streamline your accounts payable process?
Everything boils down to one thing — a system that increases the productivity of your accounting and finance team is the best. What better than an all-in-one spend management system that can automate all the tedious manual tasks and present the most accurate results?
Let us introduce you to Volopay. Volopay is equipped with all those features and tools necessary to automate the financial management process for a business. One of the best suits of Volopay is its virtual cards.
Volopay offers unlimited virtual cards with advanced spending controls and analytic features. From receiving an invoice to making the payment, Volopay can do it all. Your accounts payable process will work with the speed of lighting and help you manage all other things proficiently.
FAQs on accounts payable process
Invoice processing is when a vendor invoice is received and checked against other purchase documents. All details are entered into a management database and reconciled with the accounting books, and finally, the payment is made to the vendor.
The accounts payable process can be easily automated with a spend management platform that also provides a virtual card program.
The Volopay platform integrates with Netsuite, QuickBooks, Tally, and Xero.
Yes, the Volopay platform allows its customers to make international payments at the lowest FX rate possible.
Yes, Volopay has the OCR tool that recognizes the invoice characters. All the important characters of the invoice are automatically captured and help the system for further processing.