Despite a lack of experience with digital payments, the company was able to implement a successful virtual card platform—and reap the benefits of faster payments and improved cash flow.
Both buyers and suppliers can face challenges when it comes to managing their payment platforms. For Ricon, a full-service construction company specializing in civil engineering, the test was moving from paper checks to electronic payments. Driven by one of their customers, Ricon sought a solution for exchanging payments easier. Despite a lack of experience with digital payments, Ricon embraced a virtual card platform with educational guidance and support every step of the way.
Historically, Ricon focused on ACH and check payments before learning about the time and cost savings of virtual cards. An integrated payment solution that meets the needs of both buyers and suppliers, virtual cards deliver ACH efficiencies while integrating with existing payment systems. With virtual cards, invoices are paid using a unique 16-digit virtual account number with a preset dollar amount and customizable expiration terms. Upon learning about virtual cards, Ricon started thinking beyond just their piece of the supply chain to consider ways their customers could better supply payments to them.
Ricon’s virtual card transition started with an introduction to the Supplier Experience team. Offering a full suite of capabilities, the team’s overarching goal is to prepare businesses for card acceptance and help them maximize their return on B2B payments. Shawn Ratner, B2B Supplier Experience, says, “To us, the supplier is just as important as the buyer. Our supplier survey results have shown that 98 percent of suppliers are ‘extremely satisfied’ or ‘satisfied’ with the quality of service received.”
With eyes on the buyer-supplier relationship, Business Development Specialist Kim Lewandowski saw an opportunity to engage Ricon in discussion on process improvements. At the time, Lewandowski was supporting a buyer who wanted to pay all of their suppliers, including Ricon, with an established virtual card. The goal was to create a win-win value scenario for the buyer and supplier that would help both of their bottom lines.
"Ricon was able to get paid in two business days as opposed to net 90 days. Once Ricon accepted virtual cards from one of their customers, they were open to accepting virtual payment from others—not just the ones we set them up with."
While Ricon was on board with the idea of faster virtual payments, they were unfamiliar with interchange fees and how the cost might affect their business. Recognizing the knowledge gap, Lewandowski helped Ricon better understand the end-to-end payment experience with virtual cards and what payment efficiencies could look like for Ricon and their customers. Ongoing education and support eased this transition for Ricon.
Ratner echoes the need for supplier education, specifically when it comes to large ticket interchange (LTI) fees and how rates can be improved.
“When businesses consider opting out of a commercial card program because of fees, our team educates them on LTI and how to qualify the transactions to achieve lower fees. We’re here to provide support every step of the way, so buyers and suppliers can feel comfortable with their payments decisions.”
With additional insight on interchange rates and how they can vary according to different factors, Ricon decided to accept card and virtual card payments. Lewandowski worked closely with Ricon to ensure their Virtual Card platform was executed seamlessly and they received their desired interchange rate to optimize receivables. She also assisted Ricon in processing their first five transactions and is still supporting them today as needed.
In the end, the results speak for themselves. Ricon is a strategic supplier now accepting around $2.7 million in virtual card payments (annual spend) from a large commercial card client. They came out ahead with a lower than expected interchange rate and are reaping the benefits of faster payments and improved cash flow. Additionally, their days sales outstanding is down from 90 days to less than a week with Virtual Cards.
"We now prefer virtual cards over early pay discounts. We would like more of our clients to make payments using virtual cards." - Mecheal Mashburn, Ricon
Our J.P. Morgan Supplier team, specializing in B2B payables and virtual card solutions, is available to consult with you on your business challenges. Whether it’s education you’re looking for or one-to-one supplier support, we recognize that it takes a team to produce a win on both sides.