Card Options: Clearing the Confusion to Drive Greater Usage

When I invited Shanda Goodwin, CPCP, to share her insights about why Commercial Card programs may fall short of expectations, I had no idea that both of us would become more educated in the process. Our discussion led right to the obstacles she addresses in her article below, beginning with the problem of industry terminology. A key takeaway is the importance of end-users and providers communicating and developing a strong relationship, but there is much more. Keep reading to see three common issues and her related advice.

Why Card Programs Often Fall Short of Expectations

by Shanda Goodwin, CPCP, Heartland Financial USA, Inc.

As an account manager for existing commercial card programs across a diverse portfolio with clients of various size and industry, I continue to come across common themes surrounding why some card programs fall short of expectations. I’m referring to “card programs” in the broadest sense, encompassing traditional card types as well as electronic accounts payable (EAP) solutions. Fortunately, these issues can be overcome.

Common Issues

1. Confusion over industry terms and products 

Different providers and their respective processors might use different terminology for the various commercial card options. In turn, end-users and providers alike often end up confused. One notable example is the term “virtual card.” For some, this might just mean no physical plastic card is involved; in this sense, a virtual card could be:

  • a traditional ghost card/account that functions like a regular P-Card (e.g., it has a monthly/cycle limit and MCC restrictions), but is typically issued to a supplier versus individual employee; this might also be called a static card account

  • within the realm of EAP solutions, such as a single-use account that is generated after the end-user approves one or more invoices from a particular supplier and the supplier receives an email notification to charge the designated account number, which subsequently expires afterward (a new number is generated for the next payment)

For others, “virtual card” is specific to EAP solutions, but it could still come in different forms:

  • single-use account, as noted above

  • dynamic ghost account/lodged account number (or, again, to make matters more confusing, a static card account), which is held by a supplier, but does not have any available limit until the end-user approves one or more invoices and the supplier receives an email notification to charge the account; afterward, the limit returns to zero until another payment needs to occur

Flushing out what products are offered by your provider and the key differences among them is highly important. Since the payment and reconciliation processes differ, the team charged with implementing one (or more) of them need to understand what these differences look like and how to manage them for growth to be realized.

As indicated above, virtual cards within the EAP realm involve an electronic payment file (sent by you to your provider) and email notification to the supplier when the account number can be charged. Your accounts payable department would follow a front-end reconciliation process like that of a check. General ledger (GL) coding is accounted for ahead of the payment going out.

A virtual card/static card account number akin to a traditional ghost account that functions like a P-Card and can be charged by the supplier at any point—usually when the order is filled—follows a back-end reconciliation process. Someone would reconcile the transactions, similar to individual cardholders reconciling their P-Card transactions, like that of an employee corporate credit card. GL coding occurs after the transaction has taken place.

Many times, both types of “virtual cards” have a place in a card program. Everyone needs to understand your organization’s end goal, why it’s important, and what needs to be considered for success. 

2. Uncertainty about how to decide which payment method is best

Once the products are thoroughly defined, uncovering your existing payables landscape and partnering with a provider that will assist you in developing a true payment strategy is key to ongoing success.

Taking advantage of a payables analysis with your provider, based on the prior year’s payables information, allows for a holistic discussion. Ideally, the analysis goes beyond just the high level “vendor match” for card acceptance and considers how you are currently paying the vendor, how often (number of payments), if you have terms and available discounts (and, if so, whether you leverage them), etc. From there, you can segment different types of purchases and determine which procure-to-pay process would be best for each supplier.

Keep in mind that if your organization has recently pushed vendors to ACH, it is difficult to then convert them to card, but don’t be afraid to ask. Know that there will be vendors who say no to cards, however, there will also be vendors who say yes. Some suppliers will accept regular types of card payments, including a traditional ghost card/static card account, but resist the EAP options that require them to receive an email to start the charge process. I firmly believe in exploring a variety of options with end-user clients, including some “hybrid” processes, to help them achieve their goals. In an ever-changing landscape of technology and electronic payment methods, suppliers are also looking for ways to improve and streamline their accounts receivable (AR) processes. A supplier that says no today may say yes later.

In addition to engaging and training those tasked with running the program, it is beneficial to create a payment matrix to use as a guide that shows what method of payment is preferred, along with payment discounts, and the speed of pay. Card payments should be the fastest, followed by ACH. Check payments should be used the least and the slowest (e.g., net 60).

To successfully navigate the maze of Commercial Card options and the related best practices, develop a strong partnership with your provider.

To successfully navigate the maze of Commercial Card options and the related best practices, develop a strong partnership with your provider.

3. Trying to do it all alone

With virtual cards in particular, find out all the services offered by your provider surrounding program implementation. Often, assisting you with overall payment strategy, calling campaigns, and setting up newly identified vendors within the virtual card platform are all things that are available to you. It doesn’t have to fall on you and your staff alone. A team approach can help you begin paying more vendors via card more quickly. 

Your role:

  • Identify payment strategy and goals

  • Actively participate in providing payment and vendor/supplier data needed for a full analysis

  • Identify action items needed to plan and implement change

  • Ongoing management of the card program

What your provider can offer:

  • Assist with payment strategy development

  • Provide best practices and card industry standards

  • Identify opportunities for improvement in processes

  • Facilitate action items needed for implementation

  • Vendor file analysis and vendor enrollment

  • Samples of policies and procedures

  • Ongoing support for identifying areas of improvement and growth

Summary of End-user Best Practices

  • Involve everyone who has a stake or key role in procure-to-pay activities.

  • Ask the provider for a quick reference product guide that includes a list of products, key differences/definitions of those products, and the technology platforms that support them.

  • Ask about the statement cycle and reconciliation process for each as they could differ.

  • Be prepared to share internally and with the provider what the current process is today and what the end goal would look like. What are you hoping to achieve?

  • During the implementation of the new virtual product(s), track your spend progress, such as at 30-day intervals. Is it tracking toward the vendor acceptance that was initially anticipated? If not, check in with those charged with converting the payments. Ask if there are any unforeseen barriers taking place (e.g., any manual entry or manipulation of files causing hardship for coding or reconciliation).

About the Author

Shanda Goodwin, CPCP and CPS Account Manager for Commercial Card Payment Solutions, a division of Heartland Financial USA Inc., has more than 20 years in the community banking industry with experience in product development including retail, commercial and treasury management products, now specializing in implementation and ongoing optimization of commercial card programs. 

If you are interested in more insights by Shanda Goodwin, check out her 2017 article on middle market program challenges.

About Heartland Financial USA, Inc.

Heartland Financial USA, Inc. is a diversified financial services company with assets exceeding $8 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 108 banking locations serving 85 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at

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Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all.