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Top Ways to Improve Cash Flow and Grow with Commercial Cards

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Commercial Cards Improve Cash Flow

Without a commercial 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 card program into its e-payments strategy.

1Improves cash flow

Paying suppliers by card enables businesses to more strategically and flexibly manage accounts payable and receivable. It allows businesses 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.

2Supports the overall financial strategy

With rich transaction data (as detailed as item description and quantity) generated by card payments, a company gains more comprehensive insight into where its money is going and can use that information to support various strategic initiatives—essentially integrating procurement and accounts payable with a company's broader financial strategy. Your accounts payable can also become a revenue generator by making discounts, rewards and rebates boost your bottom line.

3Strengthens fraud protection

Check fraud remains the biggest vulnerability, with 82% of companies stating that checks were targeted for fraud at their companies. In contrast, "leading 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.

4Streamlines 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%.

5Improves compliance

Commercial card programs capture the data needed 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, ability to detect fraud, minimize risk and monitor employee compliance are all critical, basic functions that are expected of companies today.

This is part one of our three-part blog series about e-payments and commercial cards:

  1. The 5 Components of a Comprehensive E-payments Strategy  
  2. Top Ways to Improve Cash Flow and Grow with Commercial Cards
  3. 5 Keys to Successfully Implementing Your Commercial Card Program  

 

Let Silicon Valley Bank help you realize the full potential of your card solutions.
Call 408 654-7400 or visit svb.com/commercial-cards.

 

 

The views expressed in this column are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. You should obtain relevant and specific professional advice before making any investment or other decision. Silicon Valley Bank is not responsible for any cost, claim or loss associated with your use of this material.

About the Author

Robert O’Connor is a Senior Advisor with Silicon Valley Bank’s Global Cash Management team. In this role, he focuses on developing credit card and payments solutions for clients.

Prior to joining Silicon Valley Bank, Robert was Vice President of U.S. Commercial Product Sales at MasterCard Worldwide. During his seven years with MasterCard, Robert worked with many U.S. commercial card issuers on developing their commercial card strategies. Robert’s previous experience includes various business development roles with U.S. Bank’s Corporate Payment Solutions and Merrill Lynch.
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