Virtual Card Supplier Acceptance

By Raj Dutt 

This article originally appeared in Payments Journal

February 3, 2017

It’s called a soft skill, but the hard truth is that the success of any virtual card implementation depends on the communications required for effective supplier acceptance. This includes communication between the bank and the buying organization, between the bank and buyer and the supplier, and, equally critically, within the buying organization itself.

But one-way communications is not enough; if supplier acceptance campaign is to work, bank and buyer must do more than issue periodic edicts to external and internal audiences. They must be prepared to listen and respond to the concerns of these audiences. Finally, banks and buying organizations must approach communications strategically. They must develop a communications plan and revisit and refine that communications plan periodically.

Selecting and Segmenting Strategic Suppliers

Supplier acceptance planning begins with a conversation, when buyers and sellers come together to select those suppliers whom the buyer will contact personally about conversion to virtual card. These are the suppliers with whom the buyers have the strongest relationships—most often their largest suppliers. To develop this list, buyers should come to the table only after polling procurement and other internal customers to identify these strong relationships. 

For their part, banks should prepare for the conversation by determining as best they can those suppliers who are currently accepting virtual card or, at the very least, credit card, making them most likely to convert from check. This information can help buyers segment and prioritize the list of strategic suppliers. 

How wide to cast the net when defining strategic suppliers depends on the resources the buyer can devote to making personal contacts. Buyers can delegate responsibility to their banking colleagues for reaching out to the bulk of the suppliers, but there is no substitute, in terms of acceptance, for a one-to-one conversation with a supplier.

Developing a Script as the Starting Point for a Conversation 

Once a buying organization selects its strategic suppliers, the next step is to define a consistent set of messages. Everyone in the buying organization assigned to reach out to his or her supplier counterpart should be armed with the same set of talking points. They should have the freedom to tailor the way they emphasize the benefits of accepting virtual card based on their knowledge of a particular supplier. However, suggesting new benefits is off limits, since the buyer may not be in a position to honor them. Buyers should turn to banks to help them develop their pitch. 

These scripts typically are divided into three parts:

1. The buying organization begins by couching the discussion broadly in terms of what it is trying to achieve; for example, automating its accounts payable processes or changing its payment processes. Buyers might ask suppliers to consider helping them meet these objectives. 

2. Buyers then introduce virtual card as a means to that end, asking suppliers to accept them going forward and stressing such benefits as elimination of delayed or lost checks and reduced check-processing costs. One of the most compelling benefits for suppliers is quicker access to funds. To emphasize this benefit, buyers should take advantage of the grace period built into the virtual card billing cycle to issue virtual card payments even sooner after receipt of invoice than they would normally issue checks. 

3. Finally, buyers describe how the virtual card system works, emphasizing that accepting virtual card payments is quick, easy, and secure. If the supplier already accepts card, there is no need to discuss merchant fees. 

But the script is just the starting point for a conversation. It can sometimes take several calls and a fair amount of discussion for suppliers to agree. To help with these follow-up calls, it is useful to have FAQs prepared with responses to issues that suppliers are likely to bring up. These questions can include the following: 

  • We already accept cards, but the fees are killing us. Can you do better? Offer to contact the bank’s merchant service group and ask them to step in.
  • We just don’t want to get involved in card cards in any shape or form. Offer to provide payments via ACH. For most buyers, the goal of their virtual card program is to reduce costs associated with check payments. While virtual card is the optimal solution because it produces rebates, ACH acceptance does mean fewer checks to write.
  • We’ve never accepted card payments before but we are ready to accept virtual card payments from you. What do we have to do? Review the process and contact the bank’s merchant service group to enroll the supplier.

Communicating with Nonstrategic Suppliers 

Banks will follow the same script and FAQs when contacting the suppliers on the nonstrategic list. This effort, however, requires an extra layer of communication—an email blast from the buyer to its suppliers, introducing the bank and asking them to expect a follow-up call. 

Accordingly, the first goal of the blast is to establish trust. If possible, it should come from the buyer’s domain, include the buyer’s logo, conform to the buyer’s design standards, and be signed by an executive from the buyer’s organization. It should also have a phone number as well as email address of a contact in the buyer’s organization to field questions. 

The email blast is also an opportunity to introduce the supplier to the virtual card program. The phone script already in hand simplifies the task. Your bank can simply adapt the phone script for the email blast. 

No matter how carefully buyers prepare the ground for bank calls, suppliers sometimes call their buyer contacts to find out more about the program. This is a natural and understandable response. For this reason, all potential contacts in your organization must be aware of the program and understand the organizational imperative behind it, to avoid sending a conflicting message about the importance of virtual card acceptance. 

As a result, before buyers launch supplier acceptance programs, they should make sure that everyone internally is on board. This means communicating the goals of the program broadly, distributing copies of the script and FAQs, and even conducting a short training program on virtual card. The goal is to prepare all those employees likely to be contacted by suppliers to reinforce the supplier acceptance message. 

Keeping the Conversation Going 

Each supplier acceptance program unfolds in its own way. Rather than trying to reach all its suppliers in the least amount of time, buyers and their bank counterparts should take a measured approach. This gives them the opportunity to reconvene periodically and make mid-course corrections—for instance, by sharpening the script as they gain insight into their suppliers’ priorities. 

Of course, these meetings should be repeated periodically because the supplier acceptance process is never quite done. Once banks and buyers complete their first round of conversations, they might consider recalibrating goals, elevating the next group of suppliers to strategic status, and targeting them for personal appeals. And of course, there will always be new suppliers coming on board—and with them the opportunity to have a yet another conversation about virtual card.