Advancements in technology are redefining business processes, and accounting, specifically AP and AR, are changing dramatically. Online and mobile payments, the merging of fintech and banking, and the rise of applications and analytics have all changed the way that traditional accounting processes are structured.
Virtual card numbers are one of the latest advancements in payments technology.
A virtual card number, or single-use account (SUA), is a randomly-generated number that is not intended to be issued as a physical card. It is generally set up to conduct a single transaction at a specified amount, and when that transaction is concluded, the card expires.
Virtual card numbers are growing in popularity for regular consumers making online purchases, as they represent a secure transaction that is immune to ongoing charges. However, virtual card numbers are expected to have a significant impact on business-to-business operations as well.
Implementing virtual card numbers for business transactions can provide a company many benefits. Companies can send a single-use card number to a business partner as an email link, which they use to complete a transaction and expire immediately after. This type of transaction provides the enterprise with increased visibility and control, while an entirely electronic process can significantly improve cycle time and cash flow.
Companies reduce the risk of fraud or theft since virtual card numbers are created with a specific transactional limit and a set expiration.
Virtual card numbers offer the opportunity for improved process efficiency, in the form of fully-electronic invoicing and remittance programs, shorter cycle times, and automatic reconciliation of accounts which further reduce the time, money, and errors associated with manual processing.
However, to take advantage of these benefits, a virtual card program must include a comprehensive disbursement platform that can be used to oversee and control virtual card number issuance, AP and AR functions, invoices and remittances. A large company may elect to use a full electronic invoice presentment and payment platform (EIPP), but smaller companies are better served with a more affordable disbursement platform solution.
A comprehensive payments platform can help ensure that virtual card numbers are generated automatically and that the AP/AR processes are integrated and streamlined, eliminating the need for manual card retrieval, remittance, and data entry to a non-integrated ERP system.
A disbursement platform can also help an enterprise to set up an automated reconciliation process, reducing the resources and errors associated with manual reconciliations.
However, introducing a virtual card number system without a comprehensive payments platform may have the opposite effect – increasing the need for data entry and reconciliation rather than reducing it.
Additionally, a company that receives funds paid to a credit card account must be compliant with the Payment Card Industry (PCI) data security standards. These standards ensure that credit card data is managed to a high standard of security with a hosting provider. In this case, the payments platform itself can be assessed for PCI compliance, removing the need for further testing from the enterprise itself.
Virtual card numbers are one of the ways that technology is changing business processes and payments for modern enterprises. Using technology to streamline operations, shorten business cycles and improve cash flow and controls are one way that a company can remain competitive.
Virtual card numbers, implemented correctly, may allow an enterprise to generate, distribute, secure, and monitor business transactions while maintaining transactional security.