Generating Rebates and Optimizing Accounts Payable with Virtual Cards
Accounts payable (AP) optimization is easier said than done – especially at a time when a majority of B2B payments are still made with checks. Keying errors, complex manual processes and a lack of vendor insight can all take their toll, and even mid-sized firms become mired in paper. For large, fast-growing organizations making frequent acquisitions, such inefficiency is not sustainable.
To address these concerns, EML client WOW! implemented a virtual card payment program. The 6th largest cable provider in the United States, WOW! offers television, internet and phone services to more than 7 million consumers across 10 states. With hundreds of suppliers and thousands of checks to write each month, they needed a more efficient – and profitable – way to pay. By partnering with EML for their supplier payments, they’ve converted their AP department from a cost center into a revenue center, saving untold labor hours in the process.
Replacing Paper Checks with Virtual Cards
Due to rapid growth, WOW!’s AP department faced constant overload.
“We were processing about 95 percent of our payments on checks, which is almost unheard of,” says Sandy Sakhon, WOW! AP Manager. “We were a small company that had doubled in size in a short period of time, and we didn’t have the bandwidth to reach out to vendors for enrollment.”
With nearly 40,000 checks to write per year, the company’s entire AP staff was devoting one day per week to printing, signing, stamping and mailing.
To ease their AP burden, WOW! contracted with EML in October 2016.
“The first thing we did was analyze their master vendor file against the Mastercard® database and predict how many suppliers we’d be able to convert,” says Doug Seaberg, EML Director of Business Development.
EML then designed a custom enrollment campaign and reached out to vendors on behalf of WOW!, tailoring their messages based on suppliers’ size, spend, industry and current credit card acceptance.
WOW! was quickly making virtual card payments by January 2017, and just 5 months into the program, their virtual card spend had reached $6 million per month. And the success continued. Now, instead of writing thousands of checks each week, they send a single file to EML containing all their scheduled payments from card-accepting vendors. EML, a certified payment processor, then converts that file into virtual card payments and sends them directly to WOW!’s suppliers via email, web portals and STP.
“Not having to print, stuff and mail checks has led to major savings and lower labor costs,” says Sakhon.
Generating Rebates with Every Payment
Rapid growth requires liquidity, and WOW! needed to turn its bogged-down AP department into a source of cash flow. Fortunately, virtual cards do more than cut down on printing and labor costs. They allowed WOW! to earn a rebate from the interchange fee on every payment to a card-accepting vendor.
“We’re also different from a bank in that we pay out rebates monthly,” adds Seaberg.
Instead of a lump sum payment at year’s end, WOW! receives monthly payouts that fuel additional growth. They generated $328,000 in the program’s first five months, with a projected $880,000 total rebate by year’s end.
With EML’s enrollment help, WOW! has even been able to generate rebates from traditionally tough-to-convert suppliers.
“One group that’s been really surprising, and that we originally excluded from the campaign, is utility vendors,” says Sakhon. “The EML team researched which ones already used credit card portals for online consumer payments, and they turned out to be great candidates for virtual cards, as well.”
In addition to utility companies, WOW! has earned significant rebates from payments to consultants, phone service providers, office suppliers and local service companies.
Enabling Greater Accounts Payable Efficiency
The cash flow created by WOW!’s supplier payments program will lead to even greater accounts payable efficiency. They’re currently using their newfound revenue stream to implement a new ERP, which will in turn allow for fast, automated payments to larger and more strategic suppliers. Ultimately, these operational improvements will afford WOW! faster growth and greater stability.