The impact of COVID-19 is forcing businesses to look for new ways to conduct daily activities. That means considering ways to streamline and automate payment processes that often require you to be present in the office. After all, manually processing invoices and paying via check, wire and Automated Clearing House (ACH) requires someone to be in the office to approve and manage those actions.
Going forward, businesses will need to operate differently than they have in the past. Many have already transitioned to either a part-time or full-time remote workforce. A commercial card program not only helps facilitate this transition; it also helps businesses avoid interruptions that might arise from hurricanes, fires or other unforeseen events.
With all these changes happening so quickly, commercial cards offer an array of benefits, from improved capital management to administrative cost savings to greater control overspending.
Capital management
Card products offer a valuable float benefit that enhances working capital management by maximizing accounts payable cycles. While the vendors you pay with a card receive good funds almost immediately, your company doesn't have to actually relinquish any funds for up to 55 days, depending on when the transaction occurs. In addition, from a working-capital perspective, companies can benefit from maximizing spend on their cards through rewards or rebate programs that may be provided by the card issuer.
Administrative costs
"Expanding your card program to address payables can provide even greater insight into spending. Unlike other payment alternatives like checks and ACH transactions, cards can provide line-item detail on purchases, and the remittance information comes in a variety of file formats," said Aaron Whitely, emerging payments manager at Hancock Whitney Bank.
According to the consulting company Accenture, overall commercial card spend is expected to grow by 73 percent from 2019 through 2024. This growth is driven by an increase in vendor payments on purchasing cards.
Using cards for payables can also produce significant cost savings. On average, companies can save $70 per purchase by paying for goods and services with a card rather than using traditional paper-based purchase order processes, according to RPMG Research Corp.'s report "2017 Purchasing Card Benchmark Survey Results."
Cards also impact employee productivity. Research by Visa has shown that by using a card instead of traditional payment methods, companies can reduce payment cycle time from seven days on average to 2.9 days, significantly curtailing employee time spent on processing payments.
Greater control overspending
Most card providers also have an online account management system, allowing companies to maintain their cards and view detailed transactional information to gain insight into exactly when and where the cards were used. The transparency afforded by a centralized travel and entertainment program helps combat duplicate or other fraudulent transactions that can occur more easily with employee out-of-pocket transactions.
For more information, visit www.hancockwhitney.com or call (866) 594-2304.
