The Value in Payments: Forces Driving Commercial Card Adoption
. The report was written by Patricia Hines, a Senior Analyst with Celent's Banking practice.
Eighty years ago a group of major airlines implemented the first commercial cards. Since then, cards have evolved from addressing expenses for travelling employees to eliminating friction across the business-to-business (B2B) financial supply chain. This report discusses the value of commercial card programmes and the forces driving commercial card adoption.
The benefits of commercial cards differ according to business need: enhance expense management, digitise the procure-to-pay process, streamline payables, and improve cash flow. Where companies once used corporate cards exclusively for employee travel expenses, those firms now rely on cards primarily for purchasing goods and services, as evidenced by purchasing card spending growing over 900% since the 1990s. To reap the benefits arising from commercial card programmes, stakeholders must understand the forces driving their adoption: the need for working capital optimisation, improving safeguards and standards, increasing security and control, and the introduction of new technology and innovation into their organisational strategy.
As a critical tool in the payments mix, incorporating cards into an overall working capital and payments strategy ensures an integrated approach across payment types and digital channels. Further integration arises from detailed transaction reporting and analytics flowing into treasury, procurement, and other financial management systems. To optimise card programmes, companies need to involve stakeholders, actively manage and monitor expenditures, engage suppliers, and collaborate with banking partners.
“Cards-based payments can help corporate treasurers reduce procure-to-pay friction and maximize processing improvements,” commented Hines.
“Banking partners can deliver a full suite of payment options across a firm’s geographic footprint, incorporating commercial cards into an overall working capital and payables strategy,” she added.