What Your Bank Won’t Tell you About P-Card Rebate Programs

Spend Matters welcomes this guest post from Sue Ellen Hodnot, vice president for Nvoicepay

Paying suppliers by card holds the promise of rebates that could turn accounts payable (A/P) from cost center to revenue center. But most businesses aren’t realizing anywhere near the rebate revenue they could be, or running their card programs quite as efficiently as they could. The key to maximizing card rebates is paying as many suppliers as possible by card. Cloud technology solutions can help you maximize rebates while also streamlining your card payments operation.

You Never Asked Us

Not every supplier will want to accept cards, but you won’t know until you ask. That sounds simple enough, but as everyone in A/P knows, supplier enablement and information management is time consuming and never ending.

Most card programs say they’ll enroll your suppliers for you, but they don’t do a thorough job. What they do is reach out to only the top 10% or 20% of suppliers you spend the most money with. Larger suppliers are less likely to have cash flow difficulties and more likely to have the infrastructure in place to process other payment types that are more advantageous to them.

Smaller suppliers are often more motivated to pay a fee in exchange for not to having to wait for a check in the mail and then have to take it to the bank. They’ll gladly take cards, but few A/P departments have the resources to fill the gap left by their card program provider and approach these suppliers and collect their information.

Even if they did, a lot of it would already be out of date as soon as they finished the exercise. Payment and banking information is changing all the time, and that’s true for both small and large suppliers. To maximize your rebates, you need to ask everyone and you need to keep asking to see if anything has changed. Most card programs are not equipped to do this.

That’s why even if you’re getting rebates from card payments, you could get more if you had more suppliers enrolled.

No Rebates for You!

But there’s also a chance you’re getting no rebates at all. It’s common for card programs to offer a tiered rebate structure and advertise the highest rate as a teaser. Not only is it difficult to get to the highest tier without a proactive ongoing enablement program, there’s usually a minimum annual spend threshold you have to meet to get any rebates at all. If you don’t spend enough, no rebates for you!

Given the way most programs handle enablement, that’s a distinct possibility. Most companies struggle to make 10% of their payments by card. It’s a pretty rude shock at the end of the year to find out you didn’t hit the threshold and you aren’t getting any rebates whatsoever.

The Card Silo

It’s especially frustrating because paying by card is not easy. Card payments are typically not integrated with the rest of your payments; they have their own workflow that’s not particularly convenient for the payer or the payee. The payee typically receives a partial card number, and for security purposes they have to call the payer to get the rest of it so they can run the card. Payers have to field these phone calls.

Payers may also have to do a lot of follow up. There’s no guarantee the supplier will run the card right away, so the payer can’t be sure payment was made until they get their statement. If it’s not on their statement, they have to reach out, find out what happened and resolve it. There’s also a security risk: As a workaround for having to call the payer every time, payees often store these cards numbers.

Cloud + Network + People

Cloud technology combined with supplier networks and live human service representatives is the solution.

With cloud technology, supplier information is updated continuously and available in real time on the supplier’s profile in the network. So, if a supplier starts suddenly starts accepting credit cards from one buyer, all the buyers doing business with them now have the opportunity to see if they will do the same for them.

Dedicated service representatives reach out to the supplier on behalf of all clients doing business with that supplier. With this kind of proactive management, it’s possible to pay 20%–25% of your suppliers by card, thereby maximizing your rebates.

Using cloud technology, payment by virtual encrypted one-time use card is integrated into a single workflow along with other payment types. Payers no longer have to run a card program, an ACH program and write checks. They just indicate who they want to pay and how much, and the software makes payment via the most advantageous type available. Both parties have total visibility into payment status at all time. Rebates accrue from dollar one so you can project exactly what your rebate will be, and it’s paid out monthly.

Getting the maximum number of suppliers on board through continuous supplier enrollment, and keeping them on board with a frictionless card payment experience is the key to maximizing your rebates. If you’ve got 10% of your suppliers on board and you’re getting rebates, you could still be doing better. And if you’re not getting any rebates at all, you could have a lot more coming.

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