Before I heard about the B2B payments partnership between American Express and SAP Ariba, I thought that old refrain, “The check’s in the mail,” was long obsolete. Not so — but not for long if these two market leaders have their way.
The multi-year partnership that will fully embed American Express payment capabilities into Ariba Network was one of the biggest announcements at the recent SAP Ariba Live event. During the keynote, E-Bai Koo, executive vice president of Global Commercial Services at American Express, outlined the benefits of the virtual card payment solution for buyers and sellers that rely on Ariba Network to purchase goods and services with their American Express cards.
“Our joint customers will be able to manage all of their payments within one single platform […] that will help […] save money and time with reconciliations between their payment and ERP systems,” he said. “With one single account, buyers can use their existing corporate or purchasing card […] and we will automatically generate that virtual token-based access… For suppliers [it] will improve speed of payment, reduce collection risk, and improve reconciliation.”
Combining Cards and Automation = Winning Formula
I’d already seen a sneak preview of the announcement the day before in a session with Monika Saksena, vice president of B2B Networks and Automation Team for Global Commercial Services at American Express Company. She said virtual payment cards were a logical extension of her company’s relationships between buyers and suppliers.
“Service and trust is our brand,” said Saksena. “When you think about B2B card payments, American Express rises to top. We have relationships with about 63 percent of Fortune 500 companies. American Express is the only company on the planet that can actually issue proprietary cards and runs its own merchant network. We sit on gold mine of spend data that allows us to service you when you’re stranded…conduct merchant investigations into buyer conflict […] and provide that single point of resolution.”
Here’s how it works. When the buyer initiates payment within SAP Ariba, American Express produces a virtual card number, generating payment to the supplier, and automatically reconciling the data back into SAP Ariba.
“Companies can see, analyze and monitor spend for both the buyer and supplier to review payments, see what’s outstanding…all of that makes it more secure and easier to manage spend, and reduce fraud and processing times,” said Saksena. “The benefits in reconciliation are seen on both the buyer and supplier side. Buyers have operational efficiencies, and greater control and security from using a…card…Suppliers wait less for invoice approvals so will see improvements in payment speed.”
Virtual Payment Cards Emerge
Saksena acknowledged that while electronic payments promise to bring cost-savings and efficiency to companies, widespread use is far below expectations. Part of the problem is siloed financial and ERP systems from mergers and acquisitions. Also, there can be resistance to cloud-based computing fueled by security fears. Even so, every company is on its own transformation journey exploring how payments are made, improvements in cash flow, and automating card payments to save time. She and Koo saw virtual, secure payment cards uniting buyers and suppliers for process efficiencies.
“When the buyer can execute payment directly within SAP Ariba, that makes the process a lot more seamless,” said Koo. “They can make sure they’re paying their suppliers on time, if not early, reducing collections risk…with checks, you could get insufficient funds or not receive the check. Once the buyer executes the payment within SAP Ariba, we pay the supplier next day. That shifts the burden from SAP Ariba to American Express.”
This payment card is also aimed at streamlining purchase order and invoice reconciliations that cost business time and money. “With virtual card payments, a buyer can add up to 20 customized fields along with the payment. For an aggregate payment for multiple invoices, the buyer can add invoice numbers and amount for each individual invoice… they can add quantities if it’s a partial payment for a partial order. When the supplier gets that information, they’ll know exactly what they’re being paid for.”
