By Paul Horn, Citibank Commercial Cards

As policy makers grapple with ways to stimulate an economic recovery, companies across the globe are also seeking ways to stimulate their businesses. They are fighting for survival during this unprecedented global market crisis.

As they say, a crisis is a terrible thing to waste, and in determining how to yield the greatest results and maximize efficiencies, financial departments need to evaluate both existing and new commercial card programs. No longer is it acceptable to maintain the status quo. Companies need to look under every stone for ways they can reduce costs and ensure every aspect of their business is operat­ing efficiently. How companies spend money has become especially visible in the current state of the markets, and those that are able to successfully manage and control expenses will be rewarded for demonstrating prudent and smart management. In doing so, they will help ensure they will survive the current financial crisis and be well positioned when the market turns around.

The Treasurer’s Ultimate Challenge

As treasurers across the globe respond to the turbulent financial conditions each day, never before has the need for access to accurate and timely information been so critical. Having access to this information boosts confidence in the organization’s ability to manage its business and optimize working capital. It provides a window into how the business is run, how it spends its money and where there is opportunity to perform better and reduce costs.

Having the information is the first step, and taking a long hard look at it is the next. Dissecting every line item and every detail to understand every cost associated with each item is indeed a daunting task, but one that must be dealt with in these challenging times. Treasurers play a critical role in driving the strategic initiatives of their organization and where they can optimize processes, structures and policies.

Three Steps to Stimulating Savings

In reviewing global payment processes, commercial card programs offer companies a significant opportunity to deliver savings that will have a direct impact to the company’s bottom line. These programs provide business and cash management tools which, in addition to managing procurement, travel and entertainment expenses, provide the analytics that allow companies to efficiently manage cash flow, segregate expenses and streamline the payments process.

Faced with the dual challenge not just of the expenses themselves but also the cost of managing purchase expenses, companies are digging deeper into each expense line to determine where they can optimize their savings. Transforming the purchase process with a commercial card program not only significantly reduces costs, but delivers enhanced opportunities to gain visibility into a company’s daily business spend
— a critical measure in today’s economic environment.

One: The Right Partner

Whether it’s a new card program or an existing one, the first step to success is for organizations to ensure they have selected the best partner to help them achieve their program goals and optimize their cost reductions. With commercial card growth outpacing other payment methods, companies can expect to find attractive opportunities to help them design the best program for their business along with the day-to-day support they need to manage their program.

Two: Take on the World

Multinationals are taking their programs across borders at record speed. One of the biggest challenges facing companies operating card programs in multiple countries is that processing platforms often vary from region to region, and data is often compiled in different formats. The result is multiple inefficiencies, poor expense management and unrealized cost savings.

Companies that consolidate their programs with one global provider with platform consistency stand to gain savings over and above typical program efficiencies. As progressive organizations look beyond traditional card use and expand their commercial card programs internationally, having a partner that can provide consolidated global data and consistent, seamless functionality from country to country is imperative.

Three: Centralized Solutions

While the drive towards card globalization forges ahead, the need to standardize and centralize information has become the catalyst for helping companies drive down their global expenses and realize significant savings. The value of having access to this data centrally and in a consistent format empowers companies to achieve tremendous payment efficiencies and leverage their purchasing power with vendors to negotiate better terms and achieve better discounts globally.

A centralized global solution becomes essential for achieving the level of standardization and cost efficiencies, especially as more and more businesses are challenged by tumultuous market conditions. In selecting the right global partner, companies experience consis­tency in performance and substantial cost-savings from their businesses around the world without sacrificing control and integration — locally, regionally or globally. Few financial institutions, however, are in the position to offer the market this level of global commitment.

Market Leaders for the Future

With total corporate procurement spend expected to approach $5 trillion by 2010, we have only begun to scratch the surface in the potential for transforming traditional payment methods into commercial card transactions. While many recognize commercial cards as an attractive alternative to payments for lowering business costs and reducing manual paper-based purchase orders, the vast majority are made using other, more costly methods.

Clearly, commercial cards have the potential to make sweeping changes and cost reductions throughout the industry. Leveraging where, when and how much a company is spending delivers powerful tools for vendor negotiations, affording additional savings by reduced discounts and more favorable trade terms. Current market conditions could provide the fuel to commercial card industry growth where companies achieve not only huge expense reductions, but higher transparency over their business expenses.

The Formula for Success

While commercial card programs are an excellent opportunity to stimulate savings, they are also an excellent tool to gain better control and access over critical purchasing data and expense management information. Never before have companies come under such tight scrutiny of their expenses. A commercial card program can arm companies with enhanced data management and strong analytical tools to help them better assess and control their expenditures to ultimately make better decisions. Full integra­tion with financial and payables office systems expedites access to reports and data. This results in improved compliance with regulations and audit controls and ultimately enables parties to better understand and track global spending patterns across their business — no matter where they are located.

It is important that your partner’s client-facing tools enable you to better serve clients with faster access to more robust information about their purchases. Having access to this information enables organizations to best manage their payments process through an adverse market environment while still delivering oversight in controlling expenses.

The Road Ahead

The road to recovery will not be easy, as surely new and unforeseen challenges await the business community. However, those seeking ways to stimulate their businesses and optimize opportunities may not have to look very far. Commercial card programs are continuing to evolve during these most challenging of times.

Amidst the uncertainty, one thing remains constant: The value of commercial card programs has never been more relevant in this expense-challenged market. 

About the Author

Paul Horn is the global brand manager for Citibank Commercial Cards.