Virtual bank accounts help office properties giant earn rebates and build efficiencies
Client Story: BXP Boston Properties
Commercial card program and virtual accounts reduce manual payment processing and generate rebate revenue.
The accounts payable (AP) staff at Boston Properties has remained essentially the same size since 2007, when it began focusing on creating efficiencies within the department, says Amy Gindel, senior vice president of finance and planning. In 2010, that effort gained momentum when the company began partnering with U.S. Bank on a variety of commercial card programs
Over the course of this long-term partnership, Boston Properties has been able to dramatically reduce manual payment processing by replacing checks with credit card payments — accomplishing the efficiency needed to avoid increasing AP staffing levels as the company grew — and at the same time realized millions of dollars in related rebate revenue.
About Boston Properties
Boston Properties is the largest publicly traded developer, owner and manager of Class A office properties in the United States. Including properties owned by joint ventures, Boston Properties’ complete portfolio totals 53.1 million square feet with 201 properties concentrated in six markets: Boston, Los Angeles, New York, San Francisco, Seattle and Washington, D.C. The public company is known for developing premium Central Business District (CBD) office buildings, successful mixed-use complexes, suburban office centers and build-to-suit projects. Its roster includes 182 office properties, 12 retail properties, six residential properties and one hotel.
- The challenge: Reduce manual payment processing and generate rebate revenue.
- The solution: U.S. Bank commercial card programs, including Virtual Pay virtual accounts.
Three commercial card programs
Initially, Boston Properties partnered with U.S. Bank to launch a purchasing card program for the many low-dollar transactions that had been handled through the purchase order process. “The p-card was a real game changer as far as limiting and consolidating transactions that previously were handled through invoices and required manual processing,” Gindel says.
Later the company added a Corporate Card program through U.S. Bank that Boston Properties uses to make payments related to travel and entertainment. “Our focus is always trying to reduce the number of checks we issue,” notes Teresa Sines, accounting operations project manager.
The partnership’s biggest successes have come since 2016. That’s when Boston Properties implemented the U.S. Bank virtual payment accounts management solution, Virtual Pay.
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Switching to Virtual Pay
At the time, Boston Properties had been using a card-on-file virtual account solution offered by another bank. However, that program wasn’t user friendly, the reconciliation process was time consuming, and the program didn’t offer a single-use account solution that was required by many suppliers. To gain efficiencies, reduce the risks and costs associated with checks, and boost the rebate it could earn, Boston Properties turned to U.S. Bank for a more comprehensive virtual payment solution.
Virtual payments replace checks and paper-based processes with account numbers that are coded for a specific supplier and a precise payment amount. Depending on the account type, the credit limit automatically resets to zero or the account number permanently deactivates once the payment has been processed. In addition, each payment account is “live” for a set period to protect against fraud and encourage timely processing by the supplier. These features decrease processing costs, simplify reconciliation, and increase control and security.
A team to support supplier enrollment
To ease the transition for suppliers, U.S. Bank provided a dedicated supplier enrollment team. This was a key differentiator. Boston Properties wanted to mitigate the risk that suppliers would drop their program while switching providers.
U.S. Bank helped Boston Properties communicate with suppliers about the upcoming change in payment providers and sent them new payment account information in advance of the transition date. They also worked to ensure that suppliers understood the new process.
Thanks to U.S. Bank strategic supplier enablement plan, Boston Properties successfully transitioned all suppliers from the old program to the new. U.S. Bank analyzed Boston Properties’ remaining supplier base and identified additional suppliers that were a good fit for virtual payments. This proactive step helped Boston Properties enroll more suppliers, expand program spending and gain more benefits from it.
“Employee education plus a strong banking relationship with U.S. Bank contribute to growing the program.”
- Teresa Sines, accounting operations project manager, Boston Properties
How the virtual account management solution works for Boston Properties
Boston Properties flags each supplier within its ERP address book that’s on the program. It sends payment instructions to U.S. Bank, which follows these to code and activate virtual account numbers. Then the bank securely transmits payment notification to each supplier, including remittance information that simplifies reconciliation.
Once the supplier processes the payment, the transaction posts to the U.S. Bank payment management system and is automatically matched to the Boston Properties payment request. U.S. Bank worked with Boston Properties to create a reconciliation file of payments posted that can be reviewed online or using a file extract.
Regular campaigns build program
Boston Properties typically works with U.S. Bank once or twice a year on campaigns to increase supplier acceptance. The bank’s supplier enablement team helps to educate suppliers about program issues and respond to any concerns they may have about the program. However, Boston Properties offers virtual payments as an option for suppliers rather than a requirement, in keeping with the company’s culture.
Gindel and her colleagues also champion virtual accounts internally. Employees need to know how they can use the program, and how it can make their jobs easier, she says.
“Employee education plus a strong banking relationship with U.S. Bank contribute to growing the program,” Sines adds.
A ‘pretty impressive story'
Moving from manual to electronic accounts payable processing saves time, increases accuracy and reduces costs. Doing it with Virtual Pay also allows Boston Properties to hold on to funds longer to boost days payable outstanding (DPO) performance and working capital.
In addition, in what Gindel describes as “a pretty impressive story,” commercial card programs through U.S. Bank have generated a cumulative $5.8 million in rebate revenue for Boston Properties, the vast majority of that being earned since the 2016 adoption of Virtual Pay.
“The annual rebate earned since Virtual Pay’s adoption covers all of our A/P staffing and overhead costs,” Gindel reports.
Let’s talk about increasing your accounts payable efficiency.
From purchasing cards to corporate cards to virtual payments and more, U.S. Bank is the payment service provider that can make AP better and simpler for your organization.
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