As the threat of economic recession looms
businesses have become more conscious than ever of the need to
control operating costs. Against this background, the launch by
Visa of its Visa Accounts Payable Automation (VAPA)
business-to-business (B2B) service could hardly have been better
timed.
businesses have become more conscious than ever of the need to
control operating costs. Against this background, the launch by
Visa of its Visa Accounts Payable Automation (VAPA)
business-to-business (B2B) service could hardly have been better
timed.
Already the subject of a pilot programme in
conjunction with the US’ sixth largest commercial bank, US Bank,
VAPA is designed to assist large and mid-sized businesses reduce
costs associated with accounts payable processes, expense
management and purchasing.
conjunction with the US’ sixth largest commercial bank, US Bank,
VAPA is designed to assist large and mid-sized businesses reduce
costs associated with accounts payable processes, expense
management and purchasing.
VAPA, an enhancement to Visa’s commercial card
programme, integrates directly with companies’ enterprise resource
planning (ERP) systems or accounts payable system to automatically
convert existing paper-based payments and invoices into files for
processing.
programme, integrates directly with companies’ enterprise resource
planning (ERP) systems or accounts payable system to automatically
convert existing paper-based payments and invoices into files for
processing.
When a company opts for the VAPA service, Visa
assigns a card account to each of their strategic suppliers,
enabling them to receive payment and reconcile receivables without
altering existing business practices.
assigns a card account to each of their strategic suppliers,
enabling them to receive payment and reconcile receivables without
altering existing business practices.
The VAPA service involves six steps:
• Company sends approved accounts payable files
to Visa or its bank;
to Visa or its bank;
• Visa or bank processes the files;
• Visa adjusts card limits to match approved
invoice amounts;
invoice amounts;
• Visa sends remittance notices to company’s
suppliers;
suppliers;
• Company’s supplier charges the commercial
card with the approved amount; and
card with the approved amount; and
• Visa creates a reconciliation file for
company’s record tracking.
company’s record tracking.
To assist companies with accounts payable file
generation and enable access to its VAPA service, Visa has formed
alliances with US ERP software developer Lawson and US
business-to-business integration specialist Hubspan.
As part of the solution Hubspan’s on-demand
integration platform is combined Visa’s VAPA service.
integration platform is combined Visa’s VAPA service.
“Hubspan’s on-demand platform makes for faster
and easier implementation of Visa’s commercial card offerings to
issuers and corporate customers,” commented Robert Mahowald,
director of consulting and research firm IDC as well as head of
IDC’s software as a service research programme.
and easier implementation of Visa’s commercial card offerings to
issuers and corporate customers,” commented Robert Mahowald,
director of consulting and research firm IDC as well as head of
IDC’s software as a service research programme.
“By integrating with Hubspan’s platform, Visa
and its financial institution clients have an easily-executed
accounts payable file integration solution for improved transaction
speed and business agility.”
and its financial institution clients have an easily-executed
accounts payable file integration solution for improved transaction
speed and business agility.”
Illustrating some of the benefits the VAPA
service can bring, Visa cited research from consultancy Aberdeen
which estimates that companies with fully automated electronic B2B
payments systems can save $10.87 per B2B payment.
service can bring, Visa cited research from consultancy Aberdeen
which estimates that companies with fully automated electronic B2B
payments systems can save $10.87 per B2B payment.
For good reason many corporates are planning to
reduce reliance on paper-based payments, a development highlighted
by Visa’s 2008 Global Cash Management survey of 800 corporate
financial executives from 11 countries.
reduce reliance on paper-based payments, a development highlighted
by Visa’s 2008 Global Cash Management survey of 800 corporate
financial executives from 11 countries.
Among key findings of the survey was that the
majority of respondents still use paper-based payment methods and,
unsurprisingly, fewer than 25 percent of survey respondents rated
their cash management function as “very efficient.”
majority of respondents still use paper-based payment methods and,
unsurprisingly, fewer than 25 percent of survey respondents rated
their cash management function as “very efficient.”
However, 52 percent of respondents said they
plan to reduce their company’s reliance on cheques and 45 percent
plan to increase their use of commercial payment cards over the
next 12 to 18 months.
plan to reduce their company’s reliance on cheques and 45 percent
plan to increase their use of commercial payment cards over the
next 12 to 18 months.
Notably, as top drivers of commercial payment
card adoption 70 percent of respondents identified cost and process
efficiency and 62 percent identified the elimination of paper-based
payment methods.
card adoption 70 percent of respondents identified cost and process
efficiency and 62 percent identified the elimination of paper-based
payment methods.
At present Visa found that 50 percent of
respondents use commercial cards for payments. Those that do
reported a 74 percent satisfaction level.
respondents use commercial cards for payments. Those that do
reported a 74 percent satisfaction level.
A far lower 30 percent of respondents receive
payments via commercial cards. Those that do reported a 75 percent
satisfaction level.
payments via commercial cards. Those that do reported a 75 percent
satisfaction level.
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