This article was contributed to VENTUREAPP by Robert O’Connor, Senior Advisor, Global Treasury and Payments – Commercial Cards, at Silicon Valley Bank, a bank known for helping startups, enterprises and investors move forward, fast, with financial solutions for starting up, managing growth, expanding globally and more.
Without a commercial credit card program, you’re barely tapping the benefits that make migration to a comprehensive e-payments program worthwhile. Take a look at the top benefits a business at any growth stage can expect after integrating a commercial credit card program into its e-payments strategy.
Improve your cash flow
Paying suppliers by card enables you to more strategically and flexibly manage accounts payable and receivable. It allows you to pay suppliers in a timely manner while optimizing the management of working capital. For example, it could lengthen days payable outstanding (DPO) to 40 days.
Support your overall financial strategy
With rich transaction data (as detailed as item description and quantity) generated by card payments, you can gain more comprehensive insight into where your money is going and can use that information to support various strategic initiatives—essentially integrating procurement and accounts payable with your broader financial strategy. Your accounts payable can also become a revenue generator by making discounts, rewards and rebates boost your bottom line.
Strengthen your fraud protection
Check fraud remains the biggest vulnerability for startups, with 82% of companies stating that checks were targeted for fraud at their companies. In contrast, leading purchasing card (p-card) users surveyed by Aberdeen Group reported 82% fewer incidents of fraud with usage of p-cards. Although financial professionals reported an uptick in fraudulent card payments in 2013, the U.S. should soon see, when looking solely at card payments, a decrease in card fraud thanks to the approaching implementation of the more secure microchip/PIN security (i.e., EMV or Europay/MasterCard/Visa) technology. For example, with EMV and other measures, the UK saw card fraud losses drop 26% from 2008 to 2013.
Streamline your operations
The Aberdeen Group reports a 60% efficiency gain when companies remove manual processes by instituting a p-card program. That’s because a p-card enables automated payments and reconciliation that eliminates the time-consuming purchase order process, freeing up employee resources to focus more on strategic versus tactical activities, and enabling companies to redeploy or reduce staff. Furthermore, it’s estimated that p-cards reduce procurement cycle time by about nine days. And, T&E card programs can cut expense report processing time and costs by approximately 44%.
Improve your compliance
Commercial card programs capture the data you need for Sarbanes-Oxley compliance, which requires companies to publish “the scope and adequacy of the internal control structure and procedures for financial reporting.” Access to data, regular reporting, standardization of purchasing and payment processes, and the ability to detect fraud, minimize risk and monitor employee compliance are all critical, basic functions that are expected of companies today.