CFOs Want Virtual Cards in Their Toolkits

Virtual credit cards are fast becoming an important part of CFOs’ working capital management toolkits. They offer financial flexibility and ready-to-tap external working capital, just like more traditional credit cards or bank lines of credit. Unlike these traditional options, however, virtual cards have easier spend-tracking features, spend control capabilities and buyer-supplier payment integrations that streamline invoice approvals and reconciliation. PYMNTS Intelligence finds that middle-market companies in North America will ramp up their use of virtual cards in the next year.

Our latest study polled 276 CFOs and treasurers at companies in North America generating between $50 million and $1 billion in annual revenue across eight sectors.¹ We call firms in this revenue bracket “Growth Corporates.” These companies fall into a tricky middle ground in terms of working capital solutions. They are too large for small business solutions, yet often not ready for full-scale enterprise solutions. Virtual cards can play a role in filling this gap.

• Middle-Market Companies Say ‘Yes’ to Virtual Cards
• Virtual Cards: The Right Tool for Unplanned Expenses
• Bracing for Impact
• Read More

Middle-Market Companies Say ‘Yes’ to Virtual Cards

Virtual card solutions are relatively new to the corporate finance scene. Just 3.3% of Growth Corporates in North America use virtual cards. This is less than half as many as those using traditional corporate credit cards, at 7.6%. Both types of cards fall short of the most popular working capital solutions: working capital loans, at 32%, and bank lines of credit, at 31%. In many use cases, however, loans are not as flexible as credit cards. This suggests that both traditional and virtual cards are underused solutions and have room to grow.

While relatively few Growth Corporates in North America use virtual cards today, the data shows that this may soon change. Fourteen percent of respondents expect to be using these cards within the next 12 months. This represents a 322% increase in the share using the cards. Interest is particularly keen in the media and technology sector, at 28%, and the fleet and mobility sector, at 26%.

Virtual Cards: The Right Tool for Unplanned Expenses

Optimized working capital management differentiates average CFOs from excellent ones — but it is easier said than done. CFOs must minimize financing costs while ensuring commercial and financial flexibility. Overall, 42% of Growth Corporates cited unplanned expenses as the most important reason for using working capital solutions.

Growth Corporates appear to view virtual cards as particularly well-suited for flexible financing needs. Among current users, 56% said that meeting demand and opportunity is the most important benefit of virtual cards. This is a higher share than seen with other working capital solutions. Roughly one-quarter of respondents who use other credit tools, including lines of credit and traditional credit cards, said the same. The last point of comparison underscores that virtual cards can fill a different need than traditional cards.

Bracing for Impact

Today’s heightened economic uncertainty multiplies the importance of flexible working capital solutions. As a result, CFOs want to have credit tools ready to withstand operational and financial shocks. Thirty-four percent of North American Growth Corporates said they believe a global recession is highly likely in the next year. This concern is especially high among the agriculture, media and technology, and retail and marketplace segments. Worries about supply chain disruptions are also common. These and other existential risks underscore the value proposition of virtual cards and other working capital solutions.

Read More

For more insights, dig into PYMNTS Intelligence’s studies and Trackers®. Continue reading to discover how CFOs envision the role of generative AI in finance and how CFOs fight uncertainty using instant payments.

^{1. [The sectors in the study are healthcare, agriculture, commercial travel, fleet and mobility, marketplaces/retail, manufacturing/construction and professional/facility services.]↩}