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Friday, 23 November 2012

Why Single Use Accounts are revolutionising Accounts Payable

For businesses seeking to reduce costs and improve operational efficiencies (i.e. all businesses), one of the simplest routes is to move away from cheques and cash towards electronic payments. Progressive organisations attracted by additional rebates have sought to further extend their electronic payments program by using Lodge (ghost) cards and PCards.  For these businesses there is now another tool in the box – Single Use Accounts (SUAs), otherwise known as Virtual Card Accounts.
Single Use Accounts are the latest advancements in payables technology; they enable organisations to migrate traditional Travel and B2B payments, even those to strategic suppliers, onto virtual cards. Using SUAs, organisations get closer to the promised land of accounts payable departments operating as revenue generators, as opposed to cost centres.
While PCards and Lodge cards have driven benefits, they have not been without their challenges. First and foremost is consistency and acceptance, or rather lack thereof. Getting all suppliers to participate in a PCard program or feed aggregated data back to a lodge card has proven difficult. Some suppliers embrace the program. Some don’t. Furthermore, anxieties surrounding spend controls and reconciliation accuracy have resulted in these initiatives not delivering the widespread adoption that all parties had been promised.
Conferma’s SUA solutions have overcome the challenges that have proven intractable for Lodge cards and PCard programs.
Acceptance.  This is one of the real strengths for SUA programmes; essentially there is no change in acceptance processes for suppliers.  For the supplier the SUA is just a credit card number like any other. They treat it as a card holder not present transaction – business as usual! Not to mention ideal for online procurement.
Control. SUA technology allows you to apply controls to the virtual card, including a fixed credit limit, merchant category code restrictions and even the payment card validity dates. In stark contrast to physical Lodge or PCards, SUAs provide complete control over how, where, when and in what quantities your employees are using company expenditure in line with corporate policy.
Flexibility. Despite offering control, SUAs can also provide flexibility through approval processes. SUA numbers are generated ‘on the fly’ and can therefore be tailor made to the required purchase. For example, if an employee wishes to purchase a product that is over their credit limit, yet is deemed to be of benefit to the company, they can request approval from a line manager to exceed their spend limit. The virtual card then captures the reason for approval (or rejection), providing accounts departments with complete visibility of the surplus spend.
Security. Lodge cards and PCards are susceptible to fraudulent transactions through loss or theft, by virtue of their physicality. SUAs, whose unique PANs are applicable to one time only transactions, are virtually (pun not intended) impervious to fraud or employee misuse.
Reconciliation. The Conferma SUA process will not generate the virtual card until the procurement data, in the form of a booking or purchase reference, has been received and quality controlled; therefore reconciliation is entirely automated upfront, as opposed to post transaction like Lodge cards.
Card-holder not present. Controls. Security. Time and cost efficiency. Data accuracy. These are just some of the reasons why paying suppliers with Single Use Accounts is revolutionising the accounts payable process.

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