When you think of electronic accounts payable (EAP) solutions like Virtual Cards and buyer initiated payments, what is the first end-user benefit that comes to mind? Chances are, it is the potential to earn revenue share/rebate. We have all seen or heard phrases like “turn AP into a profit center.” There is no denying the monetary appeal, but in this fraud-gone-wild era, I think the fraud protection benefit deserves more press. Whether you are an EAP provider or end-user trying to convince management to implement an EAP solution, be sure to stress the following five points in your business case.
The Protective Side of EAP Solutions
- Suppliers cannot overcharge you, charge too soon, or process duplicate charges that require your time and energy to resolve. Because payments to suppliers are based on the amount your organization approves, transaction disputes are rare (or dare I say non-existent?).
- Checks reflect your organization’s bank account number; sensitive information is “out there.” EAP payments do not have this risk.
- Fraudsters cannot create a usable counterfeit card from a Virtual Card nor can they steal Virtual Card information to make fraudulent purchases.
- No need to pursue external controls like Positive Pay, which often come with a cost. (See definition at the end of the post.) EAP solutions are already secure.
- Unlike ACH payments to suppliers, EAP solutions eliminate the need for suppliers to provide their bank account information. Your organization does not have to store and secure this type of supplier data, which is a win for both of you.
EAP payments are not the best fit for every situation (e.g., one-time purchases/suppliers for which traditional Purchasing Cards are ideal). However, they are a good option to add to the mix. Ultimately, every organization needs to develop a payment strategy that best serves its needs; namely, one that minimizes costs and fraud risk.
Positive Pay Defined
Positive Pay is a service offered by most banks. As part of the service, companies transmit to their banks their check issuance file each time checks are written. The file contains a list of check numbers and dollar amounts. When a check is presented for payment, it is matched against the file. If there is a match, the check is honored and the check number removed from the file. If there is no match, the check is handled according to the preset instructions from the company.
Payee Name Positive Pay is an enhanced product that includes the payee’s name along with the check number and dollar amount in the file sent to the bank.