Client Story: EDENS

A virtual card payment solution

One very successful innovation within A/P has been EDENS’ adoption of the U.S. Bank Virtual Pay virtual card payment solution. Virtual cards are credit card account numbers coded for a specific supplier, payment amount and date range. Once processed, the account number deactivates and cannot be used again.

Some commercial real estate (CRE) firms have shied away from adopting traditional card and virtual card payments, due to the industry’s accounting complexities and the fact that some categories of CRE vendors don’t accept cards. However, EDENS has embraced this comprehensive system. With U.S. Bank advising the company on industry-specific operational elements, EDENS has successfully leveraged virtual accounts to reduce inefficient check payment processing and earn higher levels of rebates each year.

Steady growth on the virtual card payment journey

Today, EDENS makes more than half of its payments through virtual accounts. Issued checks represent 48 percent of EDENS’ payments and show a continued decline. Rather than issue checks, EDENS can pay suppliers securely using unique virtual card account numbers. This ensures EDENS’ payments are made only when approved and exclusively for the authorized amount.

EDENS has driven annual virtual card spend up to $26 million from less than $3 million at the program’s inception in 2010. “Some 2,000 EDENS vendors – about 40 percent of them – are accepting payments in the program,” reports Traci Adams, director of corporate segment operations, who manages EDENS’ A/P and has overseen the virtual card program from day one.

A contribution to revenue and value

Since 2010, EDENS has earned nearly $2.5 million in rebates on its commercial card spend, according to Maria Smith, EDENS senior vice president of treasury and corporate operations.

“When we are able to report numbers like this, it’s a positive reflection of how our accounting team continues to evolve and think innovatively,” Smith says. “We are directly contributing revenue, and ultimately value, to the company, while helping to fulfill our purpose of enriching the community.”

Direct and friendly supplier enablement

Some of the highest payables expenses in the CRE industry are within non-traditional card acceptance categories, such as real estate taxes, utilities and mortgage payments, and payments to mom-and-pop vendors like the ones EDENS uses for services including lawn care and maintenance. Despite this challenge, the company has succeeded in building a robust virtual card program.

EDENS finance executives attribute the program’s growth to the company’s direct and friendly supplier enablement efforts. From the beginning, EDENS’ approach to signing up vendors for virtual card payment has reflected its philosophy of fostering true supplier partnerships, where the goal is always to strengthen business relationships and deliver value for both parties. At the center of these ongoing outreach efforts is the company’s A/P processing team, which manages all vendor communications and virtual card payments.

Identifying promising supplier candidates

U.S. Bank supported the effort by matching EDENS’ vendor database against Visa’s database of card-accepting vendors to identify promising candidates for the program. There is a high probability that vendors accepting traditional credit card payments will also accept virtual card payments. In addition, since the two types of card payments are processed the same way, these vendors are already familiar with card acceptance fees.

U.S. Bank has also helped EDENS expand its program by adapting the Access Online payment management system to accommodate industry-specific needs. A good example is how U.S. Bank worked with EDENS to pave the way for virtual cards for its joint venture (JV) properties.

The JV funds and payment information could not be commingled with EDENS’ other payments and data. In order to resolve this challenge, U.S. Bank helped EDENS develop a unique four-digit ID number for each of the company’s 16 JV properties to represent the JV property vendors with Access Online. Use of the unique ID has enabled a substantial increase in virtual card payments. “Prior to this successful implementation, all JV related payments were made by check,” Adams reports.

An open dialogue and partnership

Adams requests that her A/P team regularly funnel any Access Online issues to her, which she relays to EDENS’ U.S. Bank account manager for client and program support. “The opportunity to share feedback and improve our process is part of our ethos at EDENS, so we take pride in our open dialogue and partnership with U.S. Bank as we continue to grow,” Adams says.

While some in the CRE industry have yet to embrace virtual credit cards, EDENS has forged ahead enthusiastically, thanks in part to its banking partner’s understanding of the industry and ability to effectively support solutions for CRE clients. “Every industry is unique,” Smith explains, “and U.S. Bank has shown it understands EDENS’ approach and the overall retail real estate landscape.”

Keys to EDENS’ successful supplier enablement effort

EDENS’ virtual card enablement calling effort is persistent but always mindful not to alienate suppliers. The company says the keys to building the program include, but are not limited to:

• A friendly, inclusive tone and approach: The A/P team takes the lead to contact vendors that are not accepting card payments from EDENS. Callers educate vendors about virtual account benefits – such as faster, more secure payments and less administrative work – but never present a mandate.
• A new-vendor setup form that facilitates virtual card enrollmen: It’s important to get new vendors to adopt virtual card payments from day one. With EDENS’ new-vendor setup form, all new vendors check a box indicating whether they accept card payments. Both “yes” and “no” responses receive appropriate follow-ups.
• Closely tracking promotional effort with each vendor: Adams uses a field in the vendor setup record of EDENS’ accounting system to keep current notes about each vendor’s stance on virtual payments, including reasons cited for not accepting them. The A/P team performs regular follow-up to re-engage with vendors that decline the program.
• Rewards for the A/P team tied to supplier enrollment: The A/P team is rewarded for accomplishing key milestones, including increased vendor card spend, with monetary bonuses and other perks.