How to fix hidden inefficiencies in mature commercial card programs

One of the most common challenges as an enterprise scales up is managing costs. But it’s about more than just cash flow; it’s about keeping tight control over how you spend. Across a growing workforce, developing more products, and launching in new markets, a company’s commercial card program should be a strategic advantage – but all too often, inefficiencies creep in that may be driving up costs and increasing burden on the finance team.

That can happen even if you have a ‘mature’ card program. You may have expense policies, preferred vendors and a spend management system. Yet in high-growth companies, I’ve seen problems arise around commercial card usage that often gets overlooked – including leakage, underutilization, and misaligned policies. Here we’ll look at how these issues happen, and how you can fix them.

Resolving ‘leakage’ in your commercial card program

Leakage refers to commercial card spending that occurs outside of approved processes, which can result in higher costs and less visibility. It can occur in many ways, such as employees choosing their own suppliers, independently signing up for SaaS subscriptions, or using their company card for personal use.

Another form of leakage is the missed opportunities of paying suppliers via check, ACH or wire instead of leveraging your corporate card. I see this a lot in Supplier Enablement campaigns.

Why leakage happens can have many reasons. For example, staff don’t always know which vendors are approved, and if they’re in a rush for supplies or making travel plans, they go with what’s convenient over what’s compliant. If your card program does not automatically restrict certain purchases and budgets, auto-enforce policies, and have custom expense coding, spending can become haphazard. That can be costly and make reconciliation and month-end close much more complicated.

Checklist to fix leakage

Assess your commercial card program to make sure you have:

• Clear policies and automated restrictions so employees easily understand what qualifies as an allowable business expense.
• Real-time visibility and alerts so finance can identify and resolve issues as they occur.
• Custom MCC codes and auto-categorization to simplify reconciliation and help ensure expenses go to the right place in your ledger.
• Virtual cards to control spending with pre-set budgets, categories, expense coding, timeframes and more.
• Spend analysis of your suppliers to identify vendors paid by ACH, check, or wire that could or should be part of your commercial card utilization.
• Benchmarks for card-eligible spend that compare your current card usage vs. industry peers. (SVB can provide these analytics)

Mitigating the impact of underutilization

In mature companies, many employees or department heads may have access to company cards but bypass using them. While not using your commercial card may not seem like a problem, your business could be missing opportunities to save money, increase efficiency, and better manage cash flow.

What causes underutilization? Often busy teams just stick with existing payment processes like paying vendor invoices by check. Or maybe it takes too long to get a company card, so people default to using personal cards for business travel and urgent needs, then seek reimbursement. Some companies even issue corporate cards as part of onboarding new hires. But many folks may rarely need to spend, so that’s a lot of plastic sitting idle (and potentially adding risk).

Often the root of underutilization is that your workforce may not be aware of how they and the company overall can benefit from using your commercial card program. For example, with SVB, your card program is optimized for efficiency, so employees can get virtual cards instantly, make faster payments, and automate expense reporting through a mobile app. In turn, the finance team gains centralized control over how and how much spending can occur, real-time visibility, and streamlined reconciliation. On top of all that, the enterprise earns cash back rewards or revenue share on all that spend to put back into the business.

Checklist to boost commercial card utilization

Here are some areas you might target for improvements:

• Gain more robust expense management controls using virtual cards for policy-controlled spending and automated workflows that help everyone save time.
• Align card issuance based on roles or purpose, so only people with more spend responsibility or frequent need have cards, and then issue ad-hoc as other things spring up.
• Help teams engage vendors about the benefits of paying by card instead of checks.
• Identify inactive or low-use cards, and then cancel, modify or reallocate employee access.

Correcting misaligned commercial card policies

One last problem we’ll tackle here is what happens when companies have misaligned policies for card usage. Even with a mature commercial card program, I’ve seen clients realize that the controls they put in place are hindering day-to-day productivity. And that’s the opposite of what you want in a fast-growth innovation economy business.

It’s understandable that the finance team wants to keep tight reins on spending and avoid card misuse. But often what happens is that expense policies are rigid and one-size-fits-all, or they haven’t been updated in years to reflect how the company operates now, such as hybrid work and global R&D. It’s also common that employees don’t know or remember card usage guidelines, especially if the information only exists in a document stored somewhere.

Checklist to optimize spend policies

Consider the following in your assessment:

• Re-evaluate spend policies to make sure they align with your company’s current complexities that you didn’t have in earlier stages. Get tips on what to include.
• Re-align policies to your spend management capabilities so you proactively set rules that can be automated to reduce friction, manual exceptions and risk.
• Control card usage based on roles and responsibilities, to give senior leaders or procurement managers more leeway than the rest of your workforce.
• Enforce policies automatically as part of the transaction workflow, with alerts and AI-powered rules that allow only purchases and vendors that are policy-approved.

As your enterprise evolves, it gets significantly more important to ensure commercial card usage aligns with approved processes and policies, while enabling employees to work more efficiently.

Learn how SVB can help you optimize a commercial card program for your business.