1. You make purchases with your p-card.
2. Every purchase goes on file in your Accounts Payable (A/P) department.
3. At the end of every month — or whenever you choose — your A/P department sends all of its most recent invoices as a file to your e-payables host to pay.
4. E-payables handles payment to all vendors in a timely manner. Payments are made within 10 days, but you don't have to pull any money from your pockets for another 45-60 days.
5. After all payments to vendors are made, e-payables provides your business with in-depth reporting for that period and continues to track this information over time.
With this kind of quality control, businesses can rest easy knowing bills are being paid promptly and regularly, and vendors can close their books sooner. Additionally, e-payables provides a trusted payment process that boosts vendor confidence, improves supplier spend visibility and in turn enhances supplier negotiations leverage and increases the probability of your business obtaining discounts on purchased goods and services in the future. Several studies have suggested payments automation can help drive up to 4 percent supplier discount savings on indirect spend.
Improving Detection of Fraudulent Spending
With p-cards, when it comes to purchases made, business owners are ultimately in control over how much money is spent and on what. The purchase controls that come standard with most p-cards these days allow you to decide who can spend what and where, and online account management can alert you immediately if purchases ever fall out of your preset limits, allowing you to react quickly.
With an e-payables program linked to your p-cards, every time a payment is made to a vendor — whether it is for a solitary purchase or multiple purchases detailed on one invoice — a single-use account is generated to pay for that one ticket item. This means that once a user approves a purchase or payment request, a unique credit card number is generated for each separate payment that must be made. Single-use payment programs significantly minimize the risk of fraud by reducing the amount of time that an account is open — these accounts are generated instantly and only stay open for a certain number of days. As an added layer of protection, the single-use accounts are only good for the amount, merchant category and date range stated. And since the account is only used once, vendors an unable to maintain a credit card number "on file" for future transactions or add-ons that are not approved.
So What's the Hold-up?
If p-cards and electronic payments are becoming standard across industries, you might ask yourself why so many companies are still using the traditional, non-electronic check payment method.
Many businesses view delayed payments as an "interest-free loan" — a major profit generator. What they do not realize is that e-payables reduces vendor payment time without reducing float time, meaning your business still reaps the benefits of the interest-free loan because it does not have to actually settle up on bills for up to two months while satisfying the vendor with speedy payments made in less than 10 days.
Oftentimes clients are also unsure of whether or not the merchant will agree to use credit cards as a form of payment, as 2-3 percent of purchases paid for with a card are kept by the credit company. This can be an especially difficult pill to swallow for merchants that only account for a small number of purchases a month. Other companies lack the IT know-how and resources necessary for implementation, and many are unwilling to change, satisfied with the purchasing and payment systems they already have in place.
The truth is, the road to increased p-card usage and electronic payment processing will have its twists and turns, since many cash-strapped, budget-conscious organizations will have excuses to maintain the status quo. But with p-card usage and e-payables integration on the rise, it seems likely that somewhere down the line, all paper will be eliminated from payment processing due to the accessibility of these options.
With guaranteed savings of time and money, and no up-front software fees for implementation or any ongoing fees, both businesses and their vendors will feel the positive effects of p-card and e-payables integration. So encourage training your partners and those companies further downstream on the benefits of — and ways to get on board with — e-payables. There is really no reason not to go electric today.