Accounts Receivable (AR) is a vital component of cashflow management for any business, but often causes major headaches that can keep finance teams up at night. It’s not hard to see why: late or delayed payments can significantly impact the ability of a business to operate and invest in growth.

Typically, these problems occur as a result of inefficient, manual processes, susceptible to human error, limited resources and poor oversight of data. The end result can be severe: risking payment defaults, increased collection costs and the breakdown of valuable business relationships.

So what’s the tonic to these ills? Three things: technology; automation; and control. Let me explain…

Existing and evolving B2B payment technologies

Virtual cards are not a new technology, but have been underutilised by businesses for years. As the benefits become more tangible and the use cases more numerous, businesses large and small are recognising the potential the technology holds to remedy their AR headaches.

A virtual card is a card number generated for a specific purpose. It could be used for a one-time transaction, allocated to a specific employee/department within a company, or assigned a spending or time limit for its use. Buyers like how virtual cards enable them to pay suppliers using an extended line of credit, allowing buyers to easily pay on time, while maintaining their own working capital to reduce cash flow headaches for all parties.

“But does accepting more cards really help ease the burden on my AR team?” I hear you ask. We understand your concerns. Handling sensitive card information and uploading invoices can be incredibly manual, sharing card numbers via email to process them individually. Sometimes, such emails go to centralised accounts departments, which means non-approved staff members may have access to card details. This presents another unwanted headache for cashflow management and PCI compliance. While virtual cards have many controls, such as specific transaction values, the last thing businesses want is thousands of card numbers insecurely stored on suppliers’ email servers.

The good news is that things are changing.

Take technology, add automation, promote growth

It’s important to recognise that the infrastructure around virtual cards is unrecognisable from just a few years ago, and this is a major factor in their rocketing adoption rates. Straight-through processing (STP) is a B2B payment technology increasingly being implemented by businesses to automate their payment processes, reducing exposure to card numbers and minimising the resources required to make payments.

The process is breathtakingly simple: STP can process a virtual card, settle the funds, and deliver payment results to both AR and AP (Accounts Payable) without human interaction, offering a breakdown of cost in real-time and better visibility of cashflow. It automatically 'pushes' payments to suppliers, rather than ‘pulling’ them from buyers. This means instead of a supplier needing to manually enter multiple details into a virtual terminal, the buyer can instead issue payment instructions directly via email, API or SFTP (Secure File Transfer Protocol). The STP service, such as Adflex PushPay, then executes the transaction automatically, in near real-time, returning transaction results without hassle, again via email, API or SFTP. As a result, delays and the potential for human error are drastically reduced.

Accepting virtual cards through a managed payment gateway can also reduce resource requirements for calling and emailing customers to take payments, or having to handle sensitive card data. It’s also easy for AP teams to enhance KYC and reduce fraud by generating Verifiable Credentials (VCs) from within the platform. This enhances trust by delivering complete assurance in the verified identities of those issuing and using the virtual cards.

Adflex works with a number of issuers such as Barclaycard, Bank of America and HSBC, helping their corporate clients reduce their days sales outstanding (DSO), provide extended payment terms to new and existing customers, manage credit risk and reduce late payments. Their customers have recognised that automation does not mean less oversight of payments, in fact, it’s quite the opposite: transparent reporting enables more informed decision making on resource allocation.

For many business today, using an API-enabled platform to automate virtual card processing via STP is a straightforward decision; Mastercard estimates that businesses can drive cost savings of $0.50 to $14 per transaction.

Establishing greater control over cashflow

Automating these processes saves time and money, while delivering transparent reporting and actionable data insights to AR teams. It also helps deliver supplier enablement, creating a fast and efficient way to onboard more suppliers efficiently, enabling them to accept your commercial credit cards. Adflex can quickly set up suppliers with the right MID (Merchant Identification number) to simplify AR processes, which drives down costs and turbocharges your working capital.

Next-generation reconciliation

As we’ve explored, STP is redefining AP, without loading up additional costs. By taking a low-code approach, integrating with gateways can be done within hours not days. STP offers affordable, automated processing of commercial cards, typically by notifying the buyer via API response or email notification once it’s complete. However, suppliers typically depend on an email remittance to manually allocate the payment and associated invoice. It’s time this changed too.

At Adflex, we are always innovating the next iteration of B2B payment technologies, to make your lives easier. We ultimately want to deploy interfaces with AR systems so that once a payment is made, transactions are auto-allocated via API or Amazon EventBridge notifications. Our self-service portal will also identify how a transaction is made and whether it is buyer or supplier initiated, so you can personalise your payment offer for each customer and grow stronger client relationships.

Our developers have already created an Approval to Pay system that allows the buyer or supplier to approve a transaction (both sales and refunds), ensuring the correct invoice details, such as description and value, are visible at the point of approval. For refunds, this approval step is extremely important for transactions processed via STP, reducing the risk that a buyer could request a refund and ‘pull’ funds from a supplier without their permission.

These innovations are all designed to ensure B2B payments are quick, simple and reliable, enabling time-consuming, error-prone manual processes to be automated, reducing the compliance burden at the same time. In the same way you wouldn't ignore a long-term headache, it's crucial not to overlook your Accounts Receivable. Don't wait for the pain to become unbearable, take action now and keep your cashflow and growth prospects in good shape.