Are you getting the full benefits of your business and purchasing cards?

Eric Rietschel

August 1, 2017

From greater control over spending to administrative cost savings to improved working capital management — business and purchasing card programs offer an array of benefits. And the best way to take advantage of these benefits is to simply expand your card usage.
 
Many companies that have experienced the benefits of travel and entertainment (T&E) card programs are doubling down by initiating purchasing card programs, or increasing spending in those programs by also using their cards to make vendor payments. Similarly, companies with purchasing programs are reaping even greater benefits by initiating T&E card spending.
 
What makes these strategies so simple to execute is that a number of banks — including Hancock and Whitney Bank — offer a “one card” solution that enables clients to make both T&E and payables payments using a single card program.
 
T&E card trends and benefits
Annual travel card spending in the U.S. and Canada is expected to increase to $221 billion by 2020, up from $168 billion in 2012, according to RPMG Research Corporation’s 2016 Corporate Travel Card Benchmark Survey. The growing popularity of T&E cards is due to a number of benefits they provide.
 
With a card program, companies can gain control of T&E spending by setting card level controls such as single purchase limits, daily spending limits and merchant category restrictions. When paired with an expense management solution, these controls lead to greater policy adherence, reducing the ability for cardholders to spend outside of the controlled environment.
 
Most card providers also have an online account management system that allows companies to maintain cards as well as view detailed transactional information to gain insight into exactly when and where the cards were used. The transparency afforded by a centralized T&E program helps combat duplicate or other fraudulent transactions that can occur more easily with employee out-of-pocket transactions.
 
Are you getting the full benefits from your business and purchasing cards?
 
Cards for payables
Using cards for payables can also produce significant cost savings. On average, companies can save $70 per purchase by paying for goods and services with a card rather than using traditional paper-based purchase order processes, according to RPMG’s 2014 Purchasing Card Benchmark Survey.
 
Expanding your card program to address payables can provide even greater insight into spending. Unlike other payment alternatives like checks and Automated Clearing House (ACH) transactions, cards can provide line-item detail on purchases and the remittance information comes in a variety of file formats.
Furthermore, Visa research has shown that by using a card instead of traditional payment methods, companies can reduce payment cycle time from 11.4 days on average to 3.4 days, significantly curtailing employee time spent on processing payments.
 
A boost for working capital
Card products also offer a valuable float benefit that enhances working capital management. While the vendors you pay with a card receive good funds almost immediately, your company doesn’t have to actually relinquish any funds for up to 55 days, depending on when the transaction occurs. In addition, from a working capital perspective, companies can benefit from maximizing spend on their cards through rewards or rebate programs that their issuer may provide.
 
Contact your Hancock and Whitney banker to learn more about how starting or expanding a T&E or purchasing card program can benefit your business.
 
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Topics: CFO, Small Business, Commercial Banking, Managing Credit, Business Leader

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