| ePayables/Virtual Card Basics |
ePayables/Virtual Card BasicsWhat are ePayables/Virtual Cards? In contrast to distributed Commercial Card products (such as P-Cards that are issued to employees throughout an organization), Electronic Payables (ePayables) is an electronic Commercial Card product issued to credit card network-accepting suppliers. This payment solution is designed to allow end-user organizations the ability to utilize some part of their traditional procure-to-pay (P2P) processes, specifically invoice receipt and approval, prior to payment. ePayables are initiated and managed centrally within end-user organizations, usually by Accounts Payable (A/P). Virtual Cards are gaining momentum in the travel space for infrequent travelers. ePayables solutions emerged as a complement to P-Cards, targeting purchases often excluded from a P-Card program, such as inventory or large spend transactions. The increased acceptance in credit cards and the efficiencies associated with accepting an ePayables solution has sparked an increase in the number of organizations accepting or implementing ePayables. ePayables is known by several names: payables automation, Virtual Card Payments, push payments, straight-through payments (STP), buyer-initiated payments (BIP), electronic accounts payable (EAP), single-use accounts (SUA) and electronic invoice presentment and payment (EIPP). Typically, providers of these payment systems have their own proprietary name for the solution. Additionally, the functionality of each solution varies. An organization interested in pursuing ePayables may wish to start the process with their current card issuer, determining what the issuer offers and the related pros and cons. The IOCP's Annual Global Provider Directory is another option for finding information about many different issuers/providers. It's possible that an organization could implement an ePayables/Virtual Card solution from a provider other than its P-Card or Travel Card issuer. However, if using one issuer for several products, the organization may have a better opportunity for increased efficiencies and/or revenue share opportunites.
Why Adopt? Given how the procure-to-pay (P2P) process differs from P-Cards (see How Electronic Payables Work), ePayables do not offer the same process savings of a P Card program or some of the other P-Card benefits. Nevertheless, some benefits do overlap, as reflected in the bulleted list below. Benefits to end-user organizations generally include:
If an organization is able to integrate card spend, additional benefits include having more timely reporting and improved reconciliation as well as increased spend/payment visibility. ConsiderationsItems to keep in mind and/or consider when implementing an ePayables program may include:
How ePayables/Virtual Cards Work Generally speaking, electronic payables (ePayables) fall somewhere between traditional procure-to-pay (P2P) processes and P-Cards. For the end-user organization, the front-end process (procurement through invoice approval) can take
many forms, as ePayables are primarily about the payment process. Following invoice approval, the common practice is for the end-user organization (e.g., A/P) to notify its card/ePayables provider to initiate payment for the approved invoices. This notification usually occurs in the form of an electronic
file uploaded through the provider's designated website. In most cases, suppliers receive remittance information from the end-user's provider. The following outlines ePayables P2P processes and includes links to view graphical depictions of various models. ProcurementWith an ePayables solution, there are no cardholders like in a P-Card program. Rather, employees might initiate purchases using a requisition process, perhaps via an ERP system, or with suppliers directly, perhaps via a supplier's website portal dedicated to the end-user organization. The procurement department may or may not be involved; orders may or may not involve a purchase order (PO). View a comparison between P-Cards and ePayables.
Invoices As with a traditional P2P process, suppliers provide an invoice upon order fulfillment. (In contrast, a P-Card P2P process should eliminate the invoice in most cases, replacing with, say, a priced packing list, as the supplier should process the charge upon order fulfillment.)
Payments to Suppliers A/P does not pay suppliers directly like non-card payments (checks, ACH); rather, ePayables payments utilize the card infrastructure. The nuances of a particular ePayables solution impact the steps of the process. Generally speaking, A/P provides some type of electronic payment instruction file to its card/ePayables provider, reflecting approved invoices to be paid. This typically occurs via a file upload into the provider's system. Then the provider initiates the payment process to the respective suppliers. Depending on the ePayables solution, a supplier may or may not need to process a transaction to a designated virtual card account number.
How Various Models Work See graphics of how various models work here. Become a Member
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