As a full-service payment solutions provider, EML can accommodate practically any payment method to become your single provider of payment solutions. In general, Supplier Payment Optimization utilizes several different payment methods, including paper checks, ACH, and virtual cards.
First, let’s explain these terms. A virtual card is simply a card number sent to a supplier electronically for a single payment. They are issued via email and settle just like a physical card payment. The Automated Clearing House (ACH), also known as Electronic Funds Transfer (EFT), is the electronic network for financial transactions in the United States. It is used to processes transactions between bank accounts for both businesses and individuals. The ACH can be used for anything from payroll deposits to vendor payments to bill payments. Companies initiate ACH payments by creating a NACHA formatted payment file for the bank.
Benefits of Virtual Cards vs. Paper Checks
Virtual cards are one of the best payment solutions, because they can be easily integrated with your AP process to make things simpler for you and your suppliers. Accounts Payable (AP) is money owed by a business to its supplier, and it is shown as a liability on a company’s balance sheet. Virtual cards offer a seamless process that usually does not require IT or ERP projects. Enterprise Resource Planning (ERP) is the integrated management of core business processes that take place in real-time. They’re often mediated by software and technology and can cover product planning, service delivery, materials management, inventory management, shipping and payment, etc.
Virtual cards cost less than ACH or checks to send, and they provide detailed remittance to suppliers. Remittance details are included with payment to a supplier and describe the reason for the payment by noting details such as invoice numbers, transaction amounts, purchase order references and customer IDs. Virtual cards also come with more fraud protection; each card is only good for a specific payment, and they are sent directly to the email address confirmed in the enrollment process. They also generate revenue through monthly cash rebates. When you pay suppliers with a virtual card, your AP department brings in incremental revenue with each payment made. A rebate is a monthly revenue share generated by card use, and varies based on how much was paid using a virtual card. Both parties benefit in a virtual card payment situation—your suppliers receive their payment and remittance in one email while you can generate new revenue and reduce costs.
Another benefit to virtual payment cards is that they arrive faster than ACH or paper checks. Virtual cards can be delivered to a supplier immediately giving them certainty of payment and, most importantly, cutting down on all the phone calls made to the AP department by suppliers checking the status of their paper checks. If you’re looking for payment solutions that save you time and money, virtual cards are a great option.
Benefits of ACH Over Paper Checks
ACH payments have lower error rates, fraud risk and transaction costs than paper checks. These payments are best suited for suppliers receiving a large volume of payments from the same customer on a weekly/monthly basis or for suppliers that have a large average transaction size ($50k+). ACH payments usually settle in the supplier’s bank account within 24-48 hours of being transmitted, making for a much faster and more predictable process than checks. In addition, ACH costs just cents to send and usually carry zero cost for the supplier to receive.
Perks to Supplier Payment Optimization
Supplier payment optimization from EML is one of our most cost-effective payment solutions, because it reduces your existing accounts payable costs. At EML, we handle all the heavy lifting, including implementation, training, supplier enrollment, payment execution and ongoing program management. All you have to do is benefit from the reduced costs and monthly rebate payments.
Learn more about our supplier payment cards, or contact us if you think our payment solutions could benefit your business. We’re all about solutions, so let us know how we can tailor our services to match your needs—we would love to help!