Embedded Payments and Virtual Cards Shift B2B Payment Dynamics to Supplier

The rise of business-to-business (B2B) eCommerce platforms is having a big impact on payments as well as buyer-supplier relationships. These online platforms have shifted transactions from paper-based processes and checks to the digital realm, enabling embedded payments to accelerate transactions and facilitate terms for buyers and dynamic discounting for suppliers.

As Dean M. Leavitt, founder and CEO of Boost Payment Solutions, told Karen Webster recently, this shift is part of a broader trend in which technology is redefining traditional business processes, making them more efficient and transparent.

Leavitt pointed out that one of those technologies — virtual cards — is poised for broader adoption in commercial payments, allowing buyers to extend their payment periods while enabling suppliers to receive payments more swiftly.

“The leverage that exists on both sides of the [buyer and supplier] equation often dictates the payment type,” he told Webster. He added that in transactions between large enterprises, there’s typically balanced leverage, influencing the choice of payment methods. This balance ensures that both parties have equal power in negotiations, leading to fairer and more efficient payment agreements.

In scenarios where suppliers hold the leverage, Leavitt stressed the importance of finding some balance.

“You have to make sure that the supplier is getting something for agreeing to take cards,” he said during the “What’s Next in Payments: Halftime” series.

Suppliers with more leverage can demand better terms, he said, but businesses must ensure that the benefits of using virtual cards, such as faster payments and automation, are clearly communicated to encourage adoption.

Embedded Options

Embedded payment options, including virtual cards, are becoming more prominent. Leavitt noted that embedded payments are not new, drawing a parallel to vehicle financing options offered at dealerships. The common practice has been to load a card into a site, enabling enterprises to use it for payments. With embedded payments, companies can now choose from various payment options as buyers and suppliers interact online. This flexibility allows businesses to tailor their payment strategies to meet specific needs, enhancing overall efficiency.

“The way that corporations make payment decisions is almost entirely embedded in the procurement process,” Leavitt said.

Virtual commercial cards provide working capital in B2B interactions, extending days payable outstanding (DPO) for buyers while accelerating payments and reducing days sales outstanding (DSO) for suppliers — a true win-win. This alignment of interests ensures that both buyers and suppliers can optimize their cash flow, improving financial stability across the supply chain.

For wider adoption of virtual cards, Leavitt emphasized the need for greater issuer education and a push for corporate customers to consider card products as a viable alternative to traditional payment methods. Boost focuses on larger enterprises, particularly on the buyer side. Key concerns for these companies include the speed of payments and the ease of managing thousands of invoices. By addressing these concerns, Leavitt believes Boost is helping to drive the adoption of more efficient payment methods.

Suppliers are increasingly utilizing straight-through processing for accepting virtual cards, not out of necessity but because of the automation and early payments they offer.

“It’s a passive experience where the technology ensures systems are automated. And we’re seeing a significant growth trend,” Leavitt noted.

This growth extends to mid-sized enterprises as Boost helps large eCommerce sites accept virtual cards and other payment sources, converting standard transactions into straight-through processing. Automation, he said, reduces the administrative burden on businesses, allowing them to focus on strategic growth initiatives.

Virtual cards also positively impact inventory management, according to Leavitt. B2B payments are initially triggered by consumer payments, and increased consumer spending drives corporate spending across all verticals in which Boost operates.

“That ranges from retailers buying inventory to industrial manufacturers purchasing raw materials,” Leavitt said.

Sharing the Benefits

Automating these expenditures improves vendor payments and cash flow while freeing staff for strategic tasks. With shared benefits, Leavitt observed a shift in who bears the transaction costs.

“Each side is willing to pay something based on the perceived value proposition,” he said, noting that suppliers are increasingly willing to pay for cash flow certainty.

The downstream effects of virtual card adoption are significant. Efficient payment processes can lead to better inventory management, as businesses can respond more quickly to changes in demand. This responsiveness is crucial in industries where inventory turnover is rapid and timing is critical. Furthermore, the ability to automate payments reduces errors and enhances accuracy, contributing to smoother operations.

Leavitt also highlighted the role of technology in enhancing the transparency and traceability of payments. With digital payment methods, businesses can easily track the status of payments, reconcile accounts and generate detailed reports. This level of visibility is invaluable for financial planning and auditing purposes, providing a clear picture of the company’s financial health.

“You’re seeing more players — buyers and suppliers — adopt, understand and want to be involved with these commercial card transactions,” Leavitt said, adding that the trend toward digitalization in B2B payments is not just a passing phase but a fundamental shift in how businesses operate.

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