Commercial card payments have failed to take off, despite significant potential benefits for suppliers, buyers, and card providers. Today, only some 2% of global business spend is captured on card.
We believe that next generation virtual payments platforms will transform commercial card payments if they support three winning strategies to counter today’s barriers to growth. In this third of a series of three blogs, we look at how de-coupling card payments from credit lines will allow payments from credit lines and cash balances to be supported dynamically on one platform – breaking apart credit availability limitations, and widening the volume of payments addressed by virtual payment solutions.
Credit availability limits growth
Virtual payment solutions in the commercial cards space have primarily been based on payments from bank provided credit lines. These options have delivered a highly desirable working capital benefit to buyers, but restricted other potential payables that can be addressed because of credit availability limitations.
Both buying organisations and lenders have created these limitations. Buying organisations do not want to consume significant parts of their potential credit line on payables spend, and the banks’ appetite to extend credit may be limited.
And yet, by far the biggest part of most corporate organisations’ payables spend is from cash balances paid on invoice maturity. So in order to widen the volume of payables addressed by virtual payments solutions, different funding options must be made available. Working capital should of course continue to be provided where needed, but the options should also allow for payment from cash balances in a seamless fashion via a single channel.
Open approach to de-coupling credit lines
The Ixaris Supplier Payments solution enables a much more flexible use of credit lines, and cash balances for payments by de-coupling the payments process from credit lines. The Ixaris platform deploys technology that can easily integrate into multiple back-end platforms to serve payment instruments to buyers. These can be charge or credit-based card processors, or prefunded account platforms.
Our open, flexible architecture means that payments can be optimised to the most appropriate mechanism and underlying funding model for the transaction. Buying organisations can therefore increase the share of payables they can route through an efficient virtual payment solution without impacting their credit position. They can then take advantage of the proven benefits of virtual cards, and increase the volume and value of the payables spend that can be addressed.
Want to learn more? Request a copy of our most recent whitepaper: Is virtualisation 2.0 the answer to capturing the 98% of business spend not made on commercial cards?