Financial Supply Chain

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Creating Synergies through Commercial Cards and Payments Innovation The use of commercial card programmes can make a major contribution to achieving the objectives of both procurement and treasury, enhancing payments efficiency and working capital whilst supporting rich information on supplier payments and facilitating strategic supplier relationships.

Creating Synergies through Commercial Cards and Payments Innovation

by Catherine Moore, Head of International Cards, J.P. Morgan Treasury Services, EMEA

As this Guide has illustrated, there are numerous reasons for procurement and treasury to work together more collaboratively, and the opportunities for doing so are increasing. As we have discussed, there remain some challenges, not least the fact that the two business functions typically have different objectives and performance metrics. The use of commercial card programmes can make a major contribution to achieving the objectives of both procurement and treasury, enhancing payments efficiency and working capital whilst supporting rich information on supplier payments and facilitating strategic supplier relationships.

Benefits of commercial cards

Commercial card programmes will be familiar to many multinational corporations, from travel & entertainment (T&E) cards to meetings and events (M&E) and purchasing cards (p-cards). The implementation of a card programme may be driven by finance, such as treasury, or by procurement, with benefits extending across both business functions:

Benefits to procurement

  • Business expenditure can be restricted or blocked according to type, amount or specific merchant category, enabling employee expenses or procurement spend to be controlled and monitored;
  • The invoice and approval process for payments is straightforward, with a high level of auditability;
  • Card payments are supported with high quality reporting, enabling procurement to negotiate better terms with key suppliers.

Benefits to treasury

  • Suppliers are paid immediately, while the company benefits from the ‘float’ period between the transaction date and the card balance payment;
  • Individual supplier payments are replaced with a single payment for the card balance, reducing the number and cost of payments;
  • Improved invoice and approval steps increase the integrity of financial processes;
  • Card payments are supported with reference data to facilitate automated posting and accounts reconciliation.

Other benefits

  • Employees benefit from convenient management of expenses or company purchasing, without the need to use personal cards or cash.

Consequently, implementation of a commercial cards programme can be a valuable means of achieving both business functions’ objectives and facilitating the flow of information. These in turn enhance financial processes, such as reconciliation and account posting, as well as purchasing decisions and can be seamlessly integrated into an existing financial infrastructure. Many companies have become increasingly focused on streamlining end-to-end processing. Card programmes support these data integration objectives across systems and business functions, together with the ability to deliver a common front-end across regions and different types of user. 

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