Manish Kohli
Commercial
cards:
Business Manager
Wholesale Cards EMEA
Global Transaction Services
In the current economic environment, companies are looking to
reduce the amount their staff spend on business expenses, from
travel and entertainment through to other procurement spend.
Implementing a commercial card programme represents an
opportunity for companies to help to deliver that objective.
get with
the programme
Now that we are truly at a low point
An important weapon in the
a credit card means that the
in the economic cycle, companies
armoury of companies intent
balance must be paid in full within
everywhere are looking for ways to
on controlling expenditure is a
a specified number of days after
cut costs. Travel and entertainment
commercial card programme.
the statement period. Payment
and other procurement expenditure is
Commercial cards can be viewed
can be made directly either by the
under particular scrutiny.
in two broad categories: corporate
employer or by the employee, who
cards are issued to employees for
will separately seek reimbursement
travel, hotels, meals, entertainment
from the employer.
Most major corporations are
increasingly focused on controlling
staff expenditure in this area,
with varying degrees of success.
Corporate travel managers are
employing a variety of measures
to achieve savings, including
total travel freezes and cutbacks,
placing additional controls on travel
and other business expenditures
to cover an individual’s needs
Benefits to the company
when out of the office on company
The benefits of a commercial card
business; and the procurement card,
fall into two main categories: control
for non-strategic purchasing, such
and process efficiency, both of which
as stationery, laptops, IT equipment
save money. The benefits are:
and other materials.
• Corporate spending on cards can be
spending (see box on travel spending
The suite of commercial card
more closely monitored, analysed
survey) and encouraging on staff to
products has truly come into its
and controlled. Compliance with
think twice before travelling.
own during the economic downturn,
spending rules and limits can be
delivering visibility and efficiency
assessed, and new rules and limits
within the expense-management
imposed if necessary.
How important is it to make that
foreign trip? If you have to travel, fly
economy instead of business class,
take a restricted ticket rather than
the more expensive fully flexible
option. Hotel and restaurant spending
is also under scrutiny. The more
exclusive hotels are disappearing
from some corporation’s preferred
lists, and travel policies are tightening
guidelines on the use of restaurants
and entertainment in general.
process. For high-profile expenditure
categories such as T&E, card
• The card issuer provides
programmes offer transparency
management information on
and an ideal mechanism to exercise
spending patterns, which can be
changes in travel policy. Before
analysed and used by the company
expanding on the benefits, it is
to amend spending policies or
useful to define more precisely what
negotiate discounts with airlines,
a corporate card is.
hotels and other organisations
that receive high levels of business
The product
Citi issues commercial cards to
from the company.
• Electronic card payment and
These are the some of the measures
employees of many of its corporate
settlement fully automates the
being taken by companies within the
clients for the purpose of T&E or
company’s invoicing processes,
current environment. The individual
procurement cards. Citi issues
which is more efficient and
savings made may be modest, but
these charge cards under either
cheaper than manual processes. »
totalled up across a multinational,
the Visa® or MasterCard® networks.
they can be significant.
Being a charge card rather than
• Commercial card payment data
Cardholders using commercial cards
to the evening meal allowance,
can interface with sophisticated
for other procurement categories
but the benefits of such a change
expense-management systems
can expect a reduced purchase cycle
are undermined if the card is not
that are more efficient and cheaper
time with post-transaction monitoring
accepted for the transaction: the
than manual or spreadsheet-based
providing the control rather than the
employee may need to use their
methods of claiming expenses.
onerous purchase-order process.
own cash or personal card or to
• A small, but useful, side benefit
is that the company gets a short
period of credit. The time taken
from the employee using the card,
to the balance being due can be
up to two months.
withdraw cash, and the transaction
Acceptance: the key
to a flexible policy?
would need to be manually keyed
The single biggest advantage of
Citi is established as a dual issuer,
solutions under the Visa® and
MasterCard® networks is unrivalled
global acceptance. The benefits of
high acceptance extend beyond
The benefits of
a commercial
card fall into two
main categories:
control and process
efficiency, both of
which save money.
cardholder convenience: transactions
processed electronically through to
expense-management systems are
more efficient, less prone to error
and less susceptible to fraud.
into the system.
providing commercial card
programmes on both the Visa and
MasterCard networks. Importantly
Citi has invested in a variety of
proprietary, global tools that can be
used under either network. In this way
Citi remain uniquely placed to offer the
optimum solution to the client.
Clearly there is a growing
Demand is growing
requirement among corporates
Despite a host of expense
to control expenditure through spend
restrictions in place at companies
restrictions and changes to policy.
across the region, the news is not
Firstly, organisations with consolidated
entirely gloomy for commercial
corporate card programmes are
card issuers. The issuance of
better placed to implement travel and
Citi corporate T&E cards in the
expense restrictions and controls,
EMEA region (Europe, the Middle
and many use their programmes to
East and Africa) continues to
monitor compliance and track the
grow significantly. The spend
of the card increases cardholder
success of such measures.
on each card may decrease with
convenience, and where card
Secondly, corporates are
environment, but tellingly the
increasingly finding that changes to
number of cards being issued is
policy are best supported through
increasing as corporations realise
a high-acceptance commercial
the control, efficiency and cost
card solution. For example, an
benefits of commercial cards.
For cardholders there are benefits,
too. For travellers, the acceptance
transactions are pre-populated into
the corporate’s expense-management
system, the time required to file
an expense claim and receive
reimbursement is much reduced.
spend restrictions in the current
organisation may apply a restriction
Carried out by Business Travel Coalition and
published last October, a survey of nearly 200
corporate travel managers in 17 countries found that
26% had implemented emergency travel cutbacks
as a direct result of the financial crisis. What’s more,
one third of that number said the cutbacks had
taken the form of total travel freezes.
Even among the corporations that had not
implemented emergency travel cutbacks, 46% had
at least placed additional controls on travel. Of those
200 surveyed, 66 spend more than USD20MM a
year on air travel, and 24 more than USD75MM.
Another prevalent factor worthy
In summary, the economic downturn
of comment is that organisations
is prompting corporations to
embarking on commercial card
restrict spending on travel and
programmes increasingly tend
other procurement expenses. Those
to look beyond single countries
organisations, historically without
and apply a unified programme
structured programmes in place, are
to a group of countries. The more
now looking to commercial cards
ambitious implement a global
to help control these costs. Those
programme. Citi’s local language
with established card programmes
and currency capability in Europe
are using the cards to implement
covers 15 countries — soon to be
and track spend restrictions.
extended to 20. Although the local
Corporations are also adapting
market may have different practices
current expense policies and relying
and processes for payment card
upon their programmes to continue
transactions, Citi can provide a
to provide high acceptance.
single experience to the corporate
customer. This includes, for instance,
providing the cardholder with a
common website wherever they are
based, and a single telephone call
centre in Barcelona, Spain.
The sensible thing to do, as they say,
is to get with the programme! You will
reap the benefits now, and will do even
more when the economy recovers.
■
Citi’s local language
and currency
capability in Europe
covers 15 countries —
soon to be extended
to 20.