Traditionally the preserve of the business to consumer (B2C) payments space, card use is on the increase for business to business (B2B) payments, with virtual cards bringing 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 feature by payments and fintech specialists Edgar, Dunn & Company, suggests that globally B2B payments will reach an aggregate $113 trillion by the end of 2023 and $137 trillion by 2027. The figures reinforce the argument that cards, and particularly virtual cards, hold an increasingly significant place in the payments ecosystem.
Where buyers pay at the point of order or earlier than the agreed payment terms – reducing Days Sales Outstanding (DSO).
Protection against late or non-payment, mitigating and managing bad debt.
No more manual reconciliation processes in accounts receivable. With straight through processing (STP), no card details are handled or processed – it’s automated end to end.
Accepting the payment method your customers want to use increases convenience, conversion and sales – both new customers and facilitating increased volume from existing customers.
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).
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 STP and improving the 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.
With increasing number of supply chain issues, having agility and resilience in how you source goods and services is critical. Utilising cards 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 overall resilience of supply chains.
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.
So, in addition to the traditional use of cards in areas such as expenses, they can provide another useful tool in a treasurer’s financing armoury, ensuring stability in the wider supply chain environment.
Barclays Bank PLC is registered in England (Company No. 1026167) with its registered office at 1 Churchill Place, London E14 5HP. Barclays Bank PLC is authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority (Financial Services Register No.122702) and the Prudential Regulation Authority. Barclays is a trading name and trade mark of Barclays PLC and its subsidiaries. Find out about the Financial Services Register.