A growing number of businesses today are tackling the “middle ground” of payments – or the spending that falls between very low- and very high-ticket items, and that is done with suppliers that may not be high-volume, but that still invoice regularly, according to a recent report by J.P. Morgan. After all, the ends of the payment spectrum already have been taken care of, at least at many companies. Purchasing cards usually work well for low-dollar, frequent purchases, while ACH capably handles high-dollar transactions.
To target this group of payments, which so far, has largely been paper-based, companies are turning to single-use accounts. They’re also expanding their use of p-cards.
Single-use accounts, according to the report, can be a viable alternative to checks. With a single-use account, each transaction is given a unique 16-digit account number that’s active only for a set period of time and that can have purchasing parameters – say, a limit on the invoice amount – embedded within it. That cuts the opportunity for fraud or misuse. Because the transaction is conducted electronically, suppliers can be paid up to 20 days earlier, the paper states.
Companies also are making greater use of purchasing cards. Of course, p-cards have been around for a while. Now, however, companies are adding new categories of spend and more suppliers, such as consulting firms and temporary workers. Organizations also are expanding their p-card programs across the globe. As a result, they’re better able to take advantage of early-pay discounts and to reduce the paper shuffling that accompanies traditional payment processing. Most also gain more detailed reporting, which can aid in negotiating with suppliers.
While the middle ground has long been overlooked, accounts payable departments are realizing several benefits from targeting this group of payments: increased float, higher rebates, tighter controls and more efficient processes.