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Need to pay suppliers with credit card? How to get a “yes”

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From the perspective of a small business owner, there are many attractive reasons to pay suppliers with credit card. 

Paying invoices with a credit card gives businesses at least 21 days to build up the necessary funds or as much as 60 days. Some cards offer considerable rewards and double points for supply categories. And using one card for purchases allows you to track expenses with fewer headaches. 

But from the vendor perspective, B2B credit card payments aren’t as advantageous. Some vendors and manufacturers hesitate to add payment processing fees to their own list of expenses. 

In this article, we’ll walk you through a few methods for paying suppliers with a credit card. You’ll learn what to do if your suppliers don’t currently accept card payments and which business credit card to use.

3 ways to pay suppliers with credit card

There are three main ways a business can pay a supplier invoice with a credit card. Consider each method below and then review our suggestions for negotiating with vendors who don’t take credit card. 

1. Pay your suppliers and vendors directly

If your supplier includes credit cards in their payment terms, you’re set. They’ll likely use standalone invoicing software or a tool like QuickBooks to send you an e-invoice. Use the payment link, enter your card number, and confirm the transaction. 

Generally, you can use a physical card or a virtual card, a convenient choice if you have multiple employees and teams making purchases. (Make sure you have a clear corporate credit card policy in place.) 

A vendor’s policy may only mention traditional payment methods, such as checks or bank transfers. That doesn’t mean they don’t accept credit card — you may just need to reach out. In the next section, we’ll give you some ways to build a strong case for why your vendor should allow card payments. 

2. See if your credit card company has payment partners

Some credit card companies lend a hand to small businesses that need to pay suppliers with credit card. For example, the company may partner with a third-party company to facilitate these transactions. 

Generally, the cardholder manually activates this feature for their card, depending on the card membership. The partner handles the rest, assigning your business a virtual account number to pay your vendors. 

After you initiate a transaction, the payment partner is able to send out a paper check or other payment method on behalf of your business. As part of this partnership, your credit card provider may award points that are normally reserved for direct card payments. 

Ask your card company if they have any accounts payable partnerships or other solutions available.

3. Use a reliable third-party company 

Companies like Plastiq let you use a credit card to pay vendors — even if they don’t accept credit card. These services are available to cardholders using most major card networks. The process is fairly similar across these vendor payers. 

You’ll enter in the transaction and recipient information and your payment will be sent via check, ACH payment, or wire transfer. For each card transaction, you’re charged a 2.5% processing fee to offset the cost for the vendor payer. That may seem like bad news if your goal is to rack up rewards by using a card, as this extra charge could outstrip the points you’d earn. 

Fortunately, this fee is tax-deductible, and there are other meaningful benefits to using a card. One Plastiq customer said they were able to buy 25% more inventory thanks to the increased cash flow. 

In addition, you can initiate payments manually or schedule them ahead of time. Remember to leave time for payment processing and mailing any checks so your payments are punctual. Your business is still ultimately responsible for late payments to suppliers.

What if my supplier doesn’t accept credit cards?

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If your suppliers don’t accept credit cards, you can use a third-party company to make card payments for a fee. But you can avoid these charges altogether by getting your suppliers to make the switch. 

You’ll have to communicate the vendor-specific benefits of accepting credit cards to win their buy-in. Your case will be more effective if you have a positive track record of on-time payments and regular orders. Below, we’ve rounded up some points you can use during that conversation. 

  • Credit card payments are quick: Like every business, suppliers depend on cash flowing steadily in and out. The less time they spend waiting on available funds, the better. Card payments can be processed in as few as 24-72 hours, a faster turnaround than checks and ACH payments. 
  • Your business can pay earlier: Credit card processing fees eat into your suppliers’ revenue, making it a less attractive option. Offering to pay invoices early might make it worthwhile for them. When 13% of invoice payments are paid late, vendors are looking to receive funds on time wherever possible. You could suggest paying on shorter net payment terms, such as paying within 10 days by card. You may even be able to get an early payment discount. 
  • Electronic payment is more secure than a check: Even in this digital era, checks continue to be the payment method most targeted by fraudsters. In addition, ACH payment attacks increase year over year at companies struggling with fraud. Accepting credit cards can protect your suppliers from unnecessary risk. If your vendors are looking for a more secure payment, this could be a strong choice.
  • Vendors can streamline their accounts receivable: Accepting credit cards allows vendors to automate more of their accounts receivable collections process. Payments are cleared faster and often include more transaction details than other payment methods. When more businesses pay on time, vendors can spend less time chasing down delayed payments and reconciling their books. 

Which business credit card should I use to pay suppliers? 

The hallmarks of a superior business credit card include an excellent rewards program and a credit limit that grows with your business. But when it comes to buying supplies, ordering raw materials, and covering business expenses, some cards are better than others. Here’s what you should look for in a credit card used to pay suppliers. 

  • Industry-leading rewards: Make sure your business credit card earns ample points, specifically for supplies spending categories. Most cards offer at least 2x points for supply purchases. Points should be redeemable for the rewards you need, such as travel, transportation, conferences, and more. 
  • Growing credit limit: You can’t bump up against a credit limit while trying to pay invoices and bills on time. Look for a credit card company that regularly assesses your credit limit based on the revenue and funding you're bringing in. The right card lets you maximize your cash flow, extend your working capital, and accommodate the variety of costs that come with running a business. 
  • Expense management tools: One of the reasons founders want to pay suppliers with credit card is to streamline their expenses. Keeping your books accurate and up to date starts at the transaction level. Choose a credit card that includes easy expense tracking tools. This includes a built-in receipt scanning app and note-taking features for each transaction. That way, you can actively monitor your spending for supplies and other business-specific categories

For growth-oriented startups and businesses in ecommerce and life sciences, the Brex corporate card includes all these requirements in a neat package. Find out if the Brex card makes sense for your business.

From cost center to profit center

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Paying suppliers with a credit card helps small business owners make payments earlier, stay organized, and earn perks they may not otherwise. Card rewards and early payment discounts can even reduce a business’ cost of goods sold overall. 

On the supplier side, accepting credit cards can lead to faster funds and streamline their accounts receivable. It can even incentivize more sales and higher order volumes. 

Work with your suppliers one-on-one to negotiate a mutually beneficial card payment deal. Or, take advantage of third-party services to start using a credit card for your vendor payments.

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©2020 Brex Inc. “Brex” and the Brex logo are registered trademarks.The Brex Mastercard® Corporate Credit Card is issued by Emigrant Bank, Member FDIC. Terms and conditions apply. See the Brex Platform Agreement for details.Brex Inc. provides a corporate card. Brex Treasury LLC is an affiliated SEC-registered broker-dealer and member of FINRA and SIPC that provides Brex Cash, a program that allows customers to sweep uninvested cash balances into certain money market mutual funds. Investing in securities products involves risk, including possible loss of principal. Neither Brex Inc. nor any of its affiliates is a bank. Please see brex.com/cash for important legal disclosures.