How a virtual card payment program can unlock efficiency savings, increase security, and help you put your working capital to work.

October 26, 2022
By Taulia
By Taulia

Over the last decade, there has been explosive growth in the range of digital working capital management solutions that are available. This has radically expanded the selection of options businesses have to manage and make better use of their capital.

The flexibility these solutions offer has empowered businesses, making it easier for them to build more resilient supply chains while retaining agility. This fundamental change in their operational opportunities acts as the bedrock for future growth – at its core is the popularization of digital payments.

Traditional payment methods carry enormous amounts of friction by the standards of today’s digitized economy. Paper checks are costly and resource intensive, keeping cards on file makes internal access control difficult, and ACH (automated clearing house) payments offer no opportunities for working capital management.

Alternative solutions, like supply chain finance (SCF) and dynamic discounting (DD), facilitated through digital payment processing platforms, open up new opportunities for companies. But they are primarily oriented towards and adopted by larger suppliers.

For those seeking a more nimble, small-scale solution that targets tail-end suppliers, virtual cards hold the answer.

Virtual cards is a digital payment method that features unique 16-digit numbers and CVV security codes, just like physical credit cards. The key difference they have with traditional cards is that they’re not physical. Instead, they are generated virtually for one-off transactions, with programmable value and expiry rules.

Thanks to their flexibility, ease of use, and suitability for high-volume, low-value transaction flows, they are particularly suited to the needs of businesses that may not yet have reached the scale where SCF and DD become most valuable. They offer a range of benefits for businesses that make them well-worth consideration as a new element to any accounts payable strategy.

Benefits of using virtual cards in accounts payable

Increased security

In any online payment solution, security is a top priority. JP Morgan found that 74% of organizations were subject to payment scams or fraud in 2020, and there is little reason to believe this tide will turn.

Paying with a traditional card exposes confidential information, which is often stored by the payee, creating the risk hackers or other malicious actors can access it. With limited lifespans – starting from as little as a single, specific transaction – virtual cards sidestep that risk, while pre-set virtual card value controls make overcharging impossible.

At the same time, the risk of internal fraud or maverick spending is significantly reduced by the improved internal access controls that virtual cards offer. And, finally, the lack of a physical representation of the card means that a virtual card cannot be lost or stolen.

Streamlined accounts payable process

Traditional accounts payable processes are labor-intensive in the extreme. Most companies in the US still conduct B2B transactions with check payments.

As with any process that involves physically moving paper from one location to another, this is inefficient and time-consuming – to say nothing of the time wasted settling the check or the opportunities for errors that creep into the process.

Virtual cards, by contrast, are near-universally accepted and enable built-in controls and approvals that can make reconciliation instantaneous. Categorization and receipt-matching can be automated, and remittance data can be embedded into transactions, freeing up finance teams for more important work while simultaneously granting them confidence in the process.

Improve your working capital position

Virtual credit cards also create opportunities to onboard smaller suppliers into working capital management programs. Unlike bulkier working capital management solutions, they are appropriate at all spend levels.

SCF and DD are generally not seen as one-size-fits-all solutions, and many providers have volume thresholds suppliers must cross to be onboarded. Electronic payment via virtual cards, however, circumvents some of the more taxing parts of the traditional onboarding process. This opens the door to extending working capital solutions to a greater proportion of your supply chain.

Using virtual cards for transactions with smaller suppliers grants you the benefits of digital credit-based payments where previously traditional payment options would be the only option. This means your accounts payable team can leverage virtual cards to hold on to working capital for longer – up to a full payment cycle.

Also, their flexibility means payment terms can be extended without engaging in lengthy negotiations.

Create rebate opportunities

Finally, virtual cards often create rebate capture opportunities, allowing you to turn a cost center (the financial and labor burden of traditional manual accounts payable) into a revenue center.

This is because they can offer cash-back rebates on every transaction when you pay your suppliers. These can be tiny in proportion to the sum of an individual transaction – but over time, they will add up.

Integrating Taulia’s Virtual Cards into your AP department

Taulia’s Virtual Card solution is the latest addition to our suite of working capital management solutions.

It offers a way to extend your working capital strategy across your entire supplier base, integrating tail-end suppliers who are characterized by low-value, high-volume transactions.

Taulia has the capability to manage the outreach and onboarding of your suppliers. Our Virtual Card solution can work in tandem with any SCF and DD programs you deploy for larger suppliers. The sophisticated cash analytics, utilizing the embedded remittance data, can also facilitate new approaches to measuring ROI, forecasting cash flows, and more. All while offering dramatic efficiency and cost-saving improvements through automated processing, and huge improvements in security and reliability.

Most of all, however, Taulia’s Virtual Cards dramatically increase a business’s options for working capital management, with a single partner assisting you in addressing the full spectrum of supplier spend.


To find out more about how virtual cards can be an integral part of your payments strategy, contact a Taulia sales representative today