End-user Insight

ePayables: BIP vs. SIP

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Which type of electronic payables (ePayables) solution, also known as electronic accounts payable (EAP), will your organization pursue, if it has not already? At the highest level, there are:

  • Virtual Cards, which require a supplier to process a charge transaction, so they are sometimes referred to as supplier-initiated payments (SIP)
  • Buyer-initiated payments (BIP), also known as straight-through payments, which result in a direct payment to a supplier; the supplier does not process a charge transaction

Learn more about how suppliers are paid with these solutions.

Industry veteran and Certified Purchasing Card Professional (CPCP) Larry Coffey has experience with both types from an end-user perspective, working for different global industrial/manufacturing companies. Recharged Education’s Lynn Larson spoke with Larry in 2015 to glean insights that could help other end-users. (See related blog post, which provides a summary.) However, as always, each buying organization is unique. Your organization should select the option that will best support internal goals and systems, as well as suppliers’ requirements.

SIP Experience

Larry has found that it is common for the person who agrees to SIP at a supplier organization is not the one who uses the related SIP system. For suppliers, training on system usage—specifically, how to retrieve the Virtual Card number and process a transaction—tends to be lacking. Most suppliers do not find the technology intuitive. This ultimately causes delays in getting payments into suppliers’ hands and creates more work for the buyer. Suppliers can get frustrated and they resist having to allocate resources toward the SIP process. 

Interestingly, some suppliers decide to give the buyer an early-pay discount, even with Virtual Card payments, to enhance the business relationship. If the buyer has established a certain leeway that allows suppliers to process less than the approved amount, then the charged amount might reflect such a discount (e.g., 1%) and cause reconciliation issues for the buyer. Larry recommends that buyers only allow suppliers to charge the full amount as a single payment. The buyer can separately negotiate discounts for the supplier to reflect in the bottom line of the invoice.


  • Discuss with your Virtual Card provider the training element for suppliers.
  • Do not stop at selling suppliers on the benefits of Virtual Cards. Ensure the ones who agree to SIP are comfortable with the related technology.
  • Think carefully about whether to allow suppliers to process less than the approved amount.

BIP Experience

Because BIP is based on direct payments to suppliers, suppliers must notify the BIP provider if they change bank accounts; otherwise, payments are rejected. Larry notes that this happens more often than you might think. The problem grows when suppliers put the buyer on a credit hold because they are not receiving the payments.


Larry has noticed a supplier preference for the simplicity of BIP, but some like SIP for control reasonsseeing the buyer’s approved invoice amount(s) prior to processing a charge transaction. Either way, he definitely sees a future for ePayables, but growth requires more education. Many suppliers still do not understand what these solutions are, especially when there are different versions/options. Further, when suppliers struggle with the fee for card acceptance, the buying organizations often cannot answer their questions or adequately respond.

The evolution of ACH payments might also put ePayables growth at risk. Larry commented that ePayables solutions currently generate better remittance information, providing invoice detail—unlike the one line of information associated with ACH payments. If this changes, Virtual Cards and BIP will be harder to sell.

Best Practice

To entice suppliers to accept Virtual Cards and BIP, your organization must initiate the payments more quickly than checks and ACH. This does not mean moving the other payment methods to 45 or more days and making ePayables 30-day payment terms. While some suppliers might give in to this, 30 days is not ideal given the acceptance fee. Your organization will experience far more ePayables growth by shortening the payment window to, say, 15 days or “upon invoice approval.” Larry has seen firsthand the positive impact shortening payment terms have had on an ePayables program.

To also access provider views on SIP versus BIP, visit the ePayables webpage for related resources.