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Virtual credit cards: what are the benefits?

From the Desk of the CFO

Have you recently been recommended to start using a virtual credit card, but you aren't sure if setting one up would be worth the time?

Watch as Skip D'Orazio and Alex Allen discuss the benefits of using a virtual credit card and how the technology can increase the efficiency of your business.

Alex: We are here to talk about new best practices and technologies to replace some very manual procedures you may have been using in the past.

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I’m very happy to reintroduce Skip D’Orazio, our Fractional CFO, who has an extensive background in accounting and finance. Skip is a great member of our team and he has taken a few minutes out of his day to talk with me about these new technology solutions for legacy issues that can really optimize and scale your processes.

Skip and I were recently discussing some different tech solutions for issues that have been around for a long time that haven’t yet met a high level of adoption. One example he gave is the widespread adoption of payroll services, which can either be simple or fairly complex depending on the vendor that you use. It’s pretty normal at this point that payroll services are being consumed in a subscription model, and it’s simplifying what used to be quite a tedious task. Skip pointed out in our conversation that there is a lot of opportunity for these process enhancements throughout the things we are doing in the accounting world.

Skip, could you share a little bit about why you think this topic is extremely relevant right now and what you’re seeing in the market?

Skip: Sure Alex! One example that companies are moving towards is what I’ll call modernizing the accounts payable and check writing processes. Basically what it entails is eliminating the paper processing and check writing functions to pay your vendors and service providers, and using technology to enable you to be able to do so much more efficiently with absolutely no loss in control over the check writing and cash process.

Alex: That’s a big thing, you know, checks are a very manual process. You also brought to the conversation some solutions about credit cards as well in security. Can you tell us more about that?

Skip: The automation process involves really utilizing what’s referred to as “virtual” credit cards, so that every payment that needs to be made doesn’t need to involve a physical check, just the “virtual” card. It can really be used for any vendor or service provider. One of the major tasks a company has is paying their vendors, and the automation of this process really enables it much quicker, and in some cases that I’m aware of, it can also generate cash rebates back to the company.

Alex: So, when you describe it, it sounds similar to the bill pay kind of solutions that are available from your core banking providers, right? But they still have to cut a physical check that needs to be delivered and is not necessarily a digital transaction. Is this the next step in providing a fully digital transaction?

Skip: That’s a simple way of putting it, but yes. This has become much more prevalent since the start of the pandemic last year. So in the past where people were sending invoices back and forth and producing check copies, documents had to be FedExed back and forth; there was a lot of work that had to go into this kind of thing. All of that can go away with the modernization of that function. As I said earlier, the beauty of it is that there is no loss of internal control, and it also has tax and audit support documentation. I can tell you from a CFO perspective that the documentation support is there, the ease of moving the files and the payment process back and forth is there. It’s very analogous to when companies outsource their payroll to 3rd parties. You don’t lose any control over when you make a payment, who you pay, how much you pay, it’s just now fully automated with the use of these virtual credit cards. It really makes this whole process much more efficient. I worked with a company in particular that got cash rebates back, which generated a nice little monthly return for the company.

Alex: Would you feel comfortable naming the vendor you worked with in the past?

Skip: Well the service provider is Aspire Partners, and they work in conjunction with a very large credit card company, and that’s really the technology provider of this service. Large companies who use this practice have in effect been able to absorb some of the process themselves and become more efficient. Certainly for middle-market companies who don’t have a lot of people and who have an accountant that wears multiple hats, it makes his or her job much easier. All in all it’s a win-win. This was all brought about due to the circumstances surrounding the past year where people weren’t able to go to the office and access the usual resources.

Alex: If somebody wanted to learn more about this, is there a specific resource you would direct them to? Would you be open to them reaching out to you?

Skip: I would recommend 2 things. One, reach out to me; I would ask a few questions to make sure they were not wasting their time or their consultant’s time, then I would simply put them in touch with the appropriate implementation people at Aspire Partners. There is no cost to implement this; the program in effect pays for itself. Other than the occasional check-in call between the implementation team and the company, there is very little effort involved in this process.

Alex: Thank you for sharing all that detail Skip. This reminds me that there is a further step in this service that will scan your physical mail and email it to you, and even deposit physical checks you receive. I was very surprised to learn that the service extended so far to include depositing checks into your bank account for you.

Skip: The pandemic has brought a lot of these services to the service much quicker than they would’ve come naturally. The technology has been there for some time, it’s just being highlighted more now than ever as people try to decide if they’re coming back to the office, going hybrid, all of those things. But whether you’re virtual or not, this is still a great function to utilize.

Alex: Thank you so much for taking the time to talk about this, the main purpose of this is to bring these topics to the forefront for discussion. If it is something you feel your organization may benefit from, we’re happy to chat about it. If you have specific questions please feel free to submit those to us and we will make sure to integrate them into future “Desk of the CFO” conversations. Skip, is there anything you would like to add in closing?

Skip: Yes. I would be more than happy to help anyone set this up, all they would need to do is reach out to me so we could get started. I encourage everyone to look into it!

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