Here's How a Commercial Card Program Can Benefit Your Business

Jerry Brodnax, March 2, 2021

For years now, companies have been migrating from paper to electronic payments, looking to reduce costs, increase cash flow and create efficiencies. In addition to increasing their use of the Automated Clearing House (ACH) network, many businesses have been pursuing these goals — and improving their purchasing and accounts payable processes — by adopting commercial card programs. For most, that’s meant empowering employees by giving them plastic purchasing cards to pay for day-to-day business purchases. More recently, for many others it’s also included instituting electronic payables (“ePayables”) using virtual cards. 

The pandemic and the growing migration of many employees to working remotely has made card programs even more attractive and led to even greater adoption.

Has your business remained on the sidelines in the midst of this trend? If so, now is the time to revisit how a commercial card program can benefit your business.

 

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A More Efficient, Secure Alternative

Commercial cards offer an alternative to issuing paper check payments for everything from everyday office purchases and business travel transactions to fleet expenses and vendor payments. As such, they greatly reduce the need for petty cash and personal card reimbursements, and put convenient spending power in the hands of employees who need it.

Cards streamline the entire procure-to-pay process, automating many of the steps associated with using paper purchase orders to authorize payments and paper checks to distribute them. As a result, employees can save time and companies can redeploy Accounts Payable (A/P) staff to more value-added work. Furthermore, businesses reduce payment cycle time on average by a week and save up to $70 per transaction in administrative expenses by using a purchasing card instead of purchase orders and checks, according to RPMG Research.*

In the midst of the pandemic, card programs have gained value because they reduce the need for employees working at home to go into the office to print checks, seek signature authorizations and stuff envelopes.

Card programs also help control spending and protect against theft and fraud. Daily, weekly and monthly transaction limits help reduce unsanctioned card usage, while purchases from unauthorized merchant categories can be blocked. Card program administrators can review purchases online, making it easy to flag violations of spending policy.

Visa® card offerings through Hancock Whitney also provide auto rental coverage, travel accident and baggage delay coverage, as well as a Visa Liability waiver for employee fraud. 

ePayables Volume Multiplies the Benefits

ePayables refers to a fully automated accounts payable solution that employs a number associated with a card account — called a “virtual card” number — but no physical plastic card. Many businesses are expanding their commercial card programs to support larger-dollar ePayables transactions. 

Hancock Whitney’s ePayables solution enables your business to leverage a more efficient payment channel and maximize card program benefits as the volume of card spend grows.

Card payments can be an effective working capital management tool, and that benefit is compounded through ePayables. Cards enable buyers to pay their suppliers almost immediately — eliminating much of the float associated with check payments — while improving their own days payable outstanding (DPO) performance. A business on 30-day terms that pays with a card on day 30 doesn’t have to release funds on its card payments for up to another 30 to 55 days, due to the card’s 30-day monthly statement cycle and the standard 25-day grace period. 

Cards also provide rich transaction-level data, and supplier management reports help identify spending patterns with particular vendors. This added insight into transactions positions companies to negotiate better discounts on purchases.

In addition, businesses can earn rebates or rewards on card transactions based on spend. By leveraging a rebate or reward program in conjunction with higher card spend driven by ePayables, some companies have converted their A/P units into profit centers.

Evaluate Your Card Opportunities

Commercial card programs are paying off in a big way during the pandemic, and they will continue to produce dividends when COVID-19 recedes and many employees return to their workplaces. 

If you are wondering if either a traditional plastic card program or an ePayables program would be appropriate for your business, a Hancock Whitney banker can help you assess your needs, including analyzing your payables file and identifying all of your suppliers that accept card payments. Simply complete the form below and a banker will contact you.

 

*As reflected in RPMG's 2017 Purchasing Card Benchmark Survey.