CONTROLLING COSTS THROUGH IMPROVED POLICY COMPLIANCE AND BUDGET MONITORING
Control through pro-active enforcement – for example, varying limits for each cardholder or blocking use of specific merchant categories.
Control through reporting – detailed management information on who spends what where and when.
Control at cost-centre level – ability to assign each payment to the correct cost centre.
Control at company level – tracking budgets at departmental and company level through aggregated spend reporting.
IMPROVED PURCHASE SAVINGS THROUGH IMPROVED SUPPLIER NEGOTIATIONS
published white paper, MasterCard Worldwide identified as the reasons to deploy a corporate card (see box, right). Of those five objectives, it is also the one considered the most important by every card expert interviewed for this article.
MISSION CONTROL Travel managers seem to agree too. An AT Kearney study of 162 European companies carried out on behalf of American Express earlier this year found 84 per cent of respondents believe the economic downturn has led their organisation to be more focused on cost control. MasterCard Europe’s head of
large market commercial products, Rene Stynen, sees things the same way. “For the last couple of years, control of spend has been on top,” he says. “That has not always been the case in times of economic prosperity, when travel is seen more as a facilitator for the business. Now companies really want to know what they have spent.” “When faced with profitability
challenges, corporations turn to cutting costs,” says Tom Edgerton, executive vice-president for Diners Club International. “In these situations it becomes extremely important to have a robust corporate travel management programme, including a corporate card that
In association with
enables effective tracking, monitoring and controlling of spend.” There are contributory reasons other than economics, according to American Express’s vice-president of global product marketing, Andrew Buckley. He points to tighter regulatory controls driving a quest for greater cost transparency, the most recent example being the UK Bribery Act, which came into effect in 2011. With ignorance that bribery has been committed on a company’s behalf no longer an adequate defence, the Act has intensified the pressure on companies to ensure they know exactly how employees are spending company money. Cards can be used to control spend before a trip by placing strict spending limits on cardholders and even blocking them from using certain merchant categories – electrical retailers, for example. They can also be used for post-trip control by providing detailed management information for travel managers, and Martin Cannings, head of product for Citi Commercial Cards EMEA, discerns another trend in a shift of emphasis from pre-trip to post- trip interventions. “We are seeing a relaxation in policies around credit limits,” he says. “Cardholders tend not to misbehave. We see very low levels of claims on liability waiver insurance for misuse of the card.
Better supplier information – buyers with corporate card data obtain better discounts because suppliers can understand the client’s spend clearly and gain confidence the client can both measure and manage.
Tracking contracted spend – buyers can monitor progress towards volume targets.
Savings through card rebates – card issuers usually pay spend-based rebates to larger clients.
IMPROVED PROCESS EFFICIENCIES
Pre-populated feed from card into traveller’s expense management system – reduces expense report processing times by 54 per cent and processing costs by more than 50 per cent.
Automated financial management – spend-data flows seamlessly from cards into general ledger of enterprise resource planning system.
Lower payment costs – cheaper than payment by cheque or wire transfer.
Efficient payment – one monthly settlement pays numerous suppliers.
Eliminates cash advances – reduced need to spend money on buying foreign currency.
TRAVELLER CONVENIENCE
No need for travellers to pay expenses out of their own pocket. Avoids bureaucratic burden of obtaining cash advances. Considerably speeds up expense reclamation process. Avoids security risk of carrying cash. Provides insurance and assistance services.
IMPROVING TRAVEL-RELATED PROCESSES FOR OTHER CORPORATE STAKEHOLDERS