Suppliers are increasingly grappling with payment delays, onboarding hurdles, and outdated systems, prompting a closer look at digital solutions like virtual cards to address these persistent challenges.
For suppliers, efficient and predictable payment processes are essential to keeping operations running smoothly. Yet, a recent survey of over 1,000 suppliers highlights several areas where payment systems could improve.
From onboarding complexities to delays in receiving payments, these challenges are prompting suppliers and buyers alike to explore new tools and technologies. Among them, virtual cards are gaining attention as a potential way to streamline processes and reduce friction in B2B transactions.
For suppliers, late payments are a universal obstacle, with 50.4% of payments from first-time buyers arriving late. Surprisingly, this issue is consistent across businesses of all sizes. Mid-tier suppliers employing 101-500 staff report the highest levels of delays, with 41% identifying this as a recurring issue.
Onboarding new buyers also presents significant hurdles. Over half of respondents identified registering on new supplier portals as the most challenging aspect of establishing new business relationships. This process, often slowed by technical complexities and system integration issues, creates inefficiencies that ripple across supply chains.
Cross-border payments add another layer of difficulty. The survey found that 33% of suppliers struggle with cost uncertainty from exchange rates and banking fees, while others cite variability in transfer speeds and a lack of visibility.
Challenges with cross-border payments
These challenges, compounded by the complexity of operating across multiple jurisdictions, further strain supplier cash flow.
Traditional systems like checks exacerbate these issues. While checks account for 27.5% of payments in the US, their usage is declining globally. Suppliers report challenges such as lost or delayed checks, fraud risks, and manual processing requirements, making them an increasingly untenable solution.
Virtual cards are gaining traction as a digital payment alternative capable of addressing many of these challenges. They offer instant or near-instant transfer speeds, a feature highlighted as critical by suppliers in the survey. In addition, they integrate seamlessly with existing ERP systems, automating processes such as reconciliation and payment tracking.
Fraud prevention is another key benefit. Each virtual card transaction generates a unique number, significantly reducing the risk of unauthorised use. This capability is particularly relevant in light of rising cybersecurity threats, which add to the cost and complexity of managing traditional payment methods.
For cross-border payments, virtual cards bring transparency and efficiency. By attaching detailed remittance data to transactions, they simplify reconciliation and reduce uncertainties tied to exchange rates and fees. These features allow suppliers to forecast cash flow more accurately and minimise administrative overhead.
Rebecca Meeker, Senior Vice President of B2B Partnerships at Mastercard, noted, “Suppliers primarily want to know when they will be paid and have a transparent way to track the process. Virtual cards deliver these capabilities while addressing long-standing inefficiencies.”
The survey data underscores the increasing demand for payment systems that prioritise supplier needs. Suppliers would accelerate nearly 60% of payments if given the option, underscoring the importance of liquidity in maintaining operations. Additionally, over two-thirds of respondents said late payments make it “difficult” or “very difficult” to run their businesses effectively.
In the US, the reliance on checks appears to be shifting. While 65% of suppliers accommodate checks due to customer preference, fewer than 12% prefer this method themselves. Globally, the trend towards digitalisation is clear, with virtual cards positioned as a key enabler of more efficient and secure payment practices.