B2B Virtual Cards: Flexibility Fuels Earnings Growth

A Seamless Global Ecosystem: How Collaboration Drives Efficiency

The recent partnership between financial operations firm Fyorin and Discover Global Network is a significant leap forward in simplifying global card payments for businesses. This collaboration combines Fyorin’s network of financial institutions with Discover’s global reach, streamlining international transactions and allowing businesses to enjoy benefits like reduced payment expenses and simplified reconciliation.

As PYMNTS reported, this partnership is part of a growing trend towards virtual cards in the corporate world, where businesses seek new forms of working capital. Research by PYMNTS Intelligence found that 42% of companies characterized as “growth corporates” point to unplanned expenses as the chief reason for leveraging working capital solutions.

Virtual cards, with their ability to issue temporary, single-use numbers tied to specific expenses, are particularly well-suited to address these unpredictable costs. For companies that use virtual cards, 56% said the ability to meet demand and opportunity was the most important benefit, higher than the share of users who report similar advantages from other credit tools.

This makes virtual cards an ideal tool for CFOs who need to maintain flexibility while controlling expenditures, especially when facing unexpected financial needs or opportunities. Yet, the market is virtually untapped, as the data shows that just 3.3% of North American Growth Corporates use virtual cards.

Small Business Strategies in a Turbulent Landscape

Small businesses are adapting to economic uncertainty by prioritizing cash flow management, leveraging bundled financial services, and building resilience through technology and strategic partnerships.

Managing Cash Flow Amidst Uncertainty

Small businesses need a range of credit and payment options to keep supplier relationships strong. Construction firms, for example, have multiple projects going at any one time, yet 60% of these companies have fewer than five employees. Restaurants must juggle several suppliers and distributors to keep inventory on hand and customers fed.

Cash flow is king, especially if inflation remains lofty. Priority CEO Tom Priore told Karen Webster that no matter the economic environment, small- to medium-sized businesses (SMBs) that power the GDP navigate seas of complexity. “Where the rubber’s going to meet the road is what the consumer decisions are,” he said, adding that “if consumer spending does slow, it’s going to affect all businesses.”

Bundled Financial Services as a Solution

Many small businesses rely on the personal credit cards of their owners (which may already be stretched as they’ve had to use those cards to manage their own essential expenses). “What we’re seeing, not just on the small business front but also with larger companies, is the utilization of credit products to extend working capital,” Priore said.

Bundled financial services, including access to credit, payment solutions, and cash flow visibility tools, are empowering SMBs. These solutions can also include bill payment offerings that allow expenses to be satisfied with card payments to help regulate cash flow.

Building Resilience

Small businesses are leveraging technology and strategic partnerships to navigate economic challenges and build resilience. Bundled financial offerings give SMBs the tools they need to manage their business in a personalized way, “a choose your own adventure” approach to managing cash.

“You can use our products for accounts receivable, which is merchant acquiring, or card or ACH, and it’s all in one place,” Priore said. “Even if you need to do a lockbox, you can do that, getting all your money into a bank ‘container’ that’s FDIC insured. Or [a firm] could use an embedded card that’s attached to a bank account to pay bills… All of this is embedded into the experience, and it’s a unified commerce experience.”

The Bigger Picture: Recession Fears and Bank Hiring Freezes

Recessionary Winds

Concerns about a possible recession are at top of mind for the world’s CEOs, as they expect this year to offer little economic growth. The Conference Board survey found that recession concerns were the main external worry for chief executive officers and other C-suite executives.

The survey also found that most executives don’t think stronger economic growth will return anytime soon, with 51% of CEOs worldwide – and 60% of U.S. CEOs – expecting a tepid year ahead, with their economies only picking back up by late 2023 or mid-2024.

Bank Hiring Freezes as a Precaution

Bank of America is reportedly freezing most hiring as it prepares for a possible recession, according to a report by Bloomberg News. The bank will take a break from hiring until at least the middle of the year or the economy picks up again.

Some jobs will continue to be filled in parts of the business where revenue has grown, such as business banking, wealth management, and trading, as well as tech positions. Last year, the bank said it would boost its tech spending after seeing a record number of consumers logging into digital channels during the month of July and its second quarter.

Navigating Uncertainty

Businesses need to be predictive and proactive about how to manage their businesses, especially in times of economic uncertainty. Key signs to watch for the health of small businesses include whether they are retaining employees or letting them go, and monitoring the levels of card delinquencies, which indicate a stretch in cash flow.

By leveraging bundled financial services, technology, and strategic partnerships, small businesses can build resilience and navigate the challenges of a turbulent landscape. As Priority CEO Tom Priore said, “Where the rubber’s going to meet the road is what the consumer decisions are.”