Technological advances that are increasingly sophisticated especially in payment processing have made a tremendous leap in payment processing which eliminates checks and shifts to adopting electronics.
This change is mainly in terms of payments to the supply chain, supplier payments, invoices and other transfers. One of the electronic payments considered is payment using an electronic credit card.
most of the company’s payments flow through debt, but few A/P departments currently use credit cards significantly and to the fullest.
Historically, companies used credit cards as a way to manage expenses. In this case the company can make a guardrail for spending on credit card use.
Companies can add controls to restrict employees or only allow them to shop at certain places. In addition, there is also a mechanism for conducting post-transaction transactions and supporting repairs for inappropriate matches.
Because it’s based on convenience and control, finance departments often regard credit cards as a tool for employee productivity, with customizable expense controls. But this only touches on one aspect of the company’s contest.
Basically credit cards provide easy access to working capital and offer benefits or advantages such as cash back or points. Many companies find credit cards a better electronic payment option for this benefit.
The question then is how do you build a successful credit card program on debt? Generally, businesses make credit card processes work within a pre-existing AP infrastructure, which usually includes the interaction of components and technical components that traditional players (banking institutions) cannot fully handle.
The benefits of credit cards to ease payment process
The bank’s business model typically focuses on building and maintaining a broad merchant acceptance network. Just like if you can walk to a place or location where they have a Mastercard or Visa logo, you can use your credit card there.
But in terms of payment for suppliers, not all providers of payment by card, or only accept it from certain customers depending on the speed of payment, margins and the type of product they sell. Due to these factors, payment by credit card issued by a particular bank requires a vendor-involved process to enter and locate providers who have accepted certain types of cards and ensure they accept these types of payments from other customers.
That’s where fintech really shines, as their business model is built to include a supplier interaction process to get more credit card purchases. Basically, they build a B2B acceptance network on a credit card or credit card acceptance network.
In two years, a 20 percent pool of business providers continued to reach out to maintain acceptance of certain payments. While banks don’t always have the capacity to offer supplier acceptance maintenance, fintechs thrive when they incorporate such services into their models.
There are several benefits for example in terms of paying more suppliers electronically, generating more working capital for the business, and potentially higher discounted prices.
In addition, fintechs naturally focus on technologies that build their systems with a holistic perspective and prefer to create software that doesn’t sacrifice the operation of one business for another.
Such as the emergence of virtual cards that are equipped with security and controls that plastic cards usually do not have, including numbers associated with providers and payment amounts. This could open up more providers to accept electronic forms of payment.