Paying Vendors Electronically: Virtual Card, ACH & More

Vendors and suppliers are the lifeblood of any business, playing a pivotal role in its success. They provide the goods and services necessary for companies to operate efficiently and meet customer demands. 

Understanding the relationship between businesses and vendors is important, and at the center of that relationship is the ability to manage timely payments. After all, any delay in payments can result in negative experiences. 

Historically, vendor payments involved writing and mailing physical checks, a time-consuming process prone to errors. Thankfully, with the digital revolution in vendor payments, businesses can streamline their vendor payment processes via diverse digital payment options. In this blog, we will guide companies on paying their vendors via virtual cards, credit cards, ACH, wires and more. 

Paying Vendors with Virtual Cards

Virtual cards stand out as one of the most reliable digital payment options for companies to settle their accounts payable. Virtual cards are the digital equivalent of traditional credit or debit cards. Similarly to credit cards, virtual cards include a 16-digit card number, expiration date and security code. 

Because of their ability to facilitate online and remote transactions with robust security and ease, they have become popular in the B2B payments landscape. Here are the reasons why virtual cards serve as a credible payment solution for your vendor payments: 

• Less manual labor and human error: Virtual cards reduce human error because they are digitally generated from within financial software; you can store your vendor payment information securely and quickly send payments through an easy-to-use platform. 
• Simplify reconciliation process: Matching payments to invoices and tracking expenses can be time-consuming and complex, especially for businesses with a high volume of transactions. Virtual cards simplify the reconciliation process because each virtual card payment is associated with a unique identifier, which makes it easy to link payments to specific invoices. Unlike paper checks, virtual cards can be tracked in real time, thereby streamlining reporting. 
• Single-use or limited use: One of the key features of virtual cards is  single-use or limited-use capabilities. This feature means you can generate a unique virtual card number for each vendor transaction and set an expiration date to add an extra layer of security by reducing the risk of unauthorized or recurring charges. Because virtual cards are single-use and come with spending limits, they minimize fraud. 
• Earn significant rebates: Another great benefit of using virtual cards for vendor payments is the potential to earn substantial rebates. Many virtual card providers offer rebate programs. These rebates add significant savings over time; business owners can reinvest this extra cash flow into their operations to fund other company growth initiatives. 

Our virtual cards support efficient vendor payments and they can be set up in as few as seven days. You can start paying your vendors and suppliers using our secure, single-use virtual cards all the while maximizing rebates and increasing cash flow. 

Paying Vendors with Credit Cards 

Before diving into credit card payments, confirm whether or not your vendors accept credit cards as a payment method. While many vendors do, some may have restrictions or charge processing fees. If your vendor has an existing invoicing software, you'll need to enter your credit card information into their system.

Credit cards come with robust security features, including fraud protection, dispute resolution and the ability to track transactions. Additionally, many business credit cards offer rewards programs, such as cashback, travel miles or discounts on business-related expenses. More importantly, credit card payments are faster and more convenient than traditional methods such as checks — this leads to prompt payments. 

Use only trusted third-party sources when providing your credit card details to a vendor. Review your credit card statements regularly to track expenses and identify discrepancies or unauthorized charges.

Paying Vendors with ACH

Automated Clearing House (ACH) payments offer a secure, cost-effective and convenient method for paying vendors, allowing for the seamless transfer of funds from one bank account to another electronically. Here are the steps for paying your vendors online using ACH: 

• Set up ACH authorization: Before you make ACH payments to vendors, you’ll need their authorization. This usually involves your vendor providing their bank account information and granting permission for ACH debit or ACH credit. 
• Choose an ACH processor: Select a reputable ACH service provider and ensure that the chosen provider supports vendor payments via ACH. 
• Collect vendor bank information: Gather the necessary bank details from your vendors. This includes their bank account number, routing number and the account holder’s name. Ensure the information is accurate to prevent payment errors. 
• Input payment information: Enter the payment details using your ACH processor’s software. This includes the vendor’s bank information, payment amount and date. Review the information carefully before confirming. 
• Initiate the payment: Once you’ve confirmed the payment details, you are ready to initiate the payment. 

Out of all the payment types, ACH is a convenient choice for several reasons. While credit cards and other electronic payment methods certainly have their merits, ACH payments offer a compelling combination of cost-effectiveness, cash flow management, reliability and flexibility. 

Paying Vendors with a Digital Wallet

A digital wallet is a software-based system that securely stores payment information, also known as a mobile wallet or e-wallet. Digital wallets enable users to make payments online and in stores without needing a physical card. Here are the steps to consider if you’re looking to pay your vendor with a digital wallet:

• Choose the right digital wallet:  Choose the digital wallet that best fits your business needs. Some of the most popular digital wallets are Cash App, PayPal, Venmo, Apple Pay® and Google Pay™. You will need to communicate with your vendors to see which digital wallets they accept. 
• Fund your digital wallet: To send money, you need to add money to your digital wallet and connect it to your preferred payment method. This can be your bank account. 
• Collect and verify vendor information: Ensure you have all the vendor information you need before sending payments. 
• Enter the vendor’s details: Include the vendor details once you’ve completed verifying their accuracy.
• Authorize the payment: You can authorize your payment through your chosen authentication method such as your PIN or biometric confirmation. 

Payments utilizing digital wallets are often quick and include encryption for enhanced security. However, many vendors do not currently accept digital wallet payments, so it is recommended to confirm with them first.

Paying Vendors with Wires

Wire transfers have long been a trusted method for international and domestic transactions; they electronically transfer funds directly from one bank account to another. To prepare for a wire transfer, here are the steps you can take: 

• Gather vendor details: To send wire transfers, gather necessary information like their name, address, bank account, contact info and transfer amount. You may also need the bank BIC (Business Identifier Code) or SWIFT code if applicable. 
• Verify vendor details: Once you have the vendor’s banking details, take the time to verify them. Mistakes in these details can lead to delays in payment. 

Once the information is ready, you can visit your local bank and speak with a representative to initiate the wire transfer. They may ask you for additional details such as the reason for the money transfer. 

Wire transfers are suitable for transferring large sums of money, which makes them the ideal avenue for real estate transactions, business acquisitions and more. However, initiating a wire transfer can be complex and requires knowing hard-to-identify information such as SWIFT or BIC codes. 

Wire transfers are often created at a local bank, which may not be the most convenient option for some. Depending on the bank, you may have to verify that wire transfers are part of their financial services.

At REPAY, we offer virtual card, credit card and ACH capabilities, while also automating these payments to vendors and suppliers. Integrating our AP automation solution digitizes your outbound payments to drive efficiency, reduce costs and increase vendor satisfaction, while freeing up your accounting teams to focus on more strategic initiatives.

Contact us to learn more about how our AP automation software can help your business.