Virtual cards, a promising solution for businesses to tackle late payments and cash flow issues, hold significant potential as highlighted in a report by PYMNTS Intelligence and American Express (NYSE:AXP). Despite growing interest, implementation lags behind, necessitating more practical strategies for widespread adoption. Companies are urged to transition from expressing interest to actual usage to realize the full benefits of virtual cards across various financial workflows.
In recent years, virtual cards have been recognized for accelerating payments and minimizing invoice chasing, yet misconceptions persist about their complexity. Previously, reports have pointed out barriers such as perceived burdens on suppliers who view virtual card programs as cumbersome. The current analysis reinforced educational initiatives to dispel these perceptions, advocating for clear communication of how virtual cards can boost cash flow and reduce administrative burdens. Historical hesitations among suppliers continue to shape the current adoption climate.
Why Are Suppliers Hesitant?
Supplier reluctance remains a barrier due to misconceptions about virtual card complexity. Educating suppliers about the ease of use and direct benefits like improved cash flow proves to be an essential mechanism. Suppliers need concise insights on how virtual cards can streamline processes, reduce days sales outstanding, and lessen administrative burdens, making them a crucial part of a finance leader’s toolkit.
How Interest is Shaping Implementation?
Financial executives are notably interested in virtual cards, with 78% of middle-market CFOs showing enthusiasm. However, less than half of companies globally use them, showing a gap between interest and implementation. Converting this interest into action necessitates clear strategies that focus on payments modernization and internal advocacy to promote virtual card adoption among suppliers.
“Virtual cards can significantly accelerate payments and improve efficiency,” stated a representative from American Express. Companies can achieve faster market integration by leveraging automation and emphasizing streamlined integration, highlighting the relatively low IT demand for virtual card programs. Boost Payment Solutions reports rapid implementation timelines through straight-through processing.
Application of virtual cards extends beyond supplier payments, with functionalities applicable to employee expenses and cross-border transactions. This multifaceted utility allows organizations to broaden use cases, achieving efficiency gains, reducing fraud risk, and enhancing visibility within finance teams. By showcasing this versatility, companies can inspire a shift in how virtual cards are perceived and deployed.
“Organizations risk falling behind if they delay virtual card adoption,” emphasized PYMNTS Intelligence. Projected growth from $14.65 billion to $61 billion by 2032 illustrates these cards’ growing importance and competitive advantage in the market. Firms already utilizing virtual cards plan expansion, highlighting the necessity for others to align with market momentum.
Widespread adoption of virtual cards could lead to improved cash flow and fortified buyer-supplier relationships. By focusing on supplier education, encouraging internal advocacy, leveraging automation, and promoting market trends, businesses can position virtual cards at the center of B2B payments. As the promise of virtual cards unfolds, 2025 presents itself as a pivotal year for these financial instruments to enter mainstream business practices.
