Tipalti has partnered with Plastiq to automate payment processes through the use of corporate credit cards. Plastiq is an intelligent payments provider that enables organisations to pay or accept a credit card for virtually any expense. Its solutions enable payments from all major credit card providers including Mastercard, Visa and American Express. The integration with Tipalti will enable organisations to pay for invoices securely using corporate credit cards. What makes this different is that the payment is made even if suppliers are unable to receive payment from credit cards.
There are several advantages to doing this. These include the ability to increase access to capital, earn card rewards and improve cash flow in the short term, typically 30-45 days. The risk, of course, is that the bills need paying on time. If they are not, then interest rates are often higher than banking facilities. While this is an additional feature for Tipalti and will benefit its clients, it is even better news for Plastiq.
Elliot Buchanan, CEO and Co-Founder of Plastiq, commented: “The Tipalti partnership opens up a unique market for us for high-velocity businesses. More businesses will be able to use their corporate cards as a funding source while both recouping their rebates and reducing risks associated with accounts payable processes while still automating workload.”
How does it work?
Customers need to sign up and download the Plastiq application. Authorised users are then able to schedule or make a payment through Plastiq. Plastiq will then charge the credit card, including an additional fee from Plastiq. The Plastiq website states that a standard credit card rate is 2.85% (though lower fees are available). Debit cards incur a charge of 1%. Though the use of debit cards does not make much sense as wire transfers are probably a better method and are available in most cases. The vendor then receives their payment from Plastiq as a check, wire or ACH payment. There is no need for the vendor to sign up to Plastiq.
Chen Amit, co-founder and CEO of Tipalti commented: “Providing Tipalti customers with a flexible, cost-effective way to fund their payables transactions with Plastiq frees up funds to reinvest back into the growth of their business.”
What isn’t clear in the press release is how the data around the transaction payment is passed back to Tipalti. However, with this simple method of payment, Tipalti customers can ease the burden of payables administration even further. The Tipalti solution already supports every step of the buying process. It includes tools to help with supplier management, tax compliance, fraud and regulatory controls, invoice processing and approvals, global payments execution and payment reconciliation.
Enterprise Times: What does this mean
Tipalti is constantly looking for ways to improve the accounts payable processes for organisations. In light of this Ardent Partners recently recognised Tipalti as a key solution provider of 2020. For Plastiq, this could be a significant partnership. With some industries under pressure, the ability to use credit cards for key purchases is useful. It can help companies to both survive and also to invest in growth with the increase in working capital. One Plastiq client confirmed the benefits. Dmitri Ivanov, CEO Metro Vein, commented: “With Plastiq, I was able to invest in a new line of business that more than doubled our revenues in ten months. Using Plastiq was simple and I consider it a must-have for any business owner.”
The approach is not without risk or cost. Companies need to consider the benefits of this approach carefully. It will be interesting to see how many companies sign up.