The Value in Payments: Forces Driving Commercial Card Adoption

by Patricia Hines, June 12, 2017
Industry Trends
Global

Abstract

Commercial card solutions help businesses to increase control over business expenditures and to manage cash flow more efficiently.

Celent has released a new report titled The Value in Payments: Forces Driving Commercial Card Adoption. The report was written by Patricia Hines, a Senior Analyst with Celent's Banking practice.

Eighty years ago a group of major airlines implemented the first commercial cards. Since then, cards have evolved from addressing expenses for travelling employees to eliminating friction across the business-to-business (B2B) financial supply chain. This report discusses the value of commercial card programmes and the forces driving commercial card adoption.

The benefits of commercial cards differ according to business need: enhance expense management, digitise the procure-to-pay process, streamline payables, and improve cash flow. Where companies once used corporate cards exclusively for employee travel expenses, those firms now rely on cards primarily for purchasing goods and services, as evidenced by purchasing card spending growing over 900% since the 1990s. To reap the benefits arising from commercial card programmes, stakeholders must understand the forces driving their adoption: the need for working capital optimisation, improving safeguards and standards, increasing security and control, and the introduction of new technology and innovation into their organisational strategy.

As a critical tool in the payments mix, incorporating cards into an overall working capital and payments strategy ensures an integrated approach across payment types and digital channels. Further integration arises from detailed transaction reporting and analytics flowing into treasury, procurement, and other financial management systems. To optimise card programmes, companies need to involve stakeholders, actively manage and monitor expenditures, engage suppliers, and collaborate with banking partners.

“Cards-based payments can help corporate treasurers reduce procure-to-pay friction and maximize processing improvements,” commented Hines.

“Banking partners can deliver a full suite of payment options across a firm’s geographic footprint, incorporating commercial cards into an overall working capital and payables strategy,” she added.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

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Michele Pace
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Europe (London)
Chris Williams
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Tel: +44 (0)782 448 3336

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Yumi Nagaoka
ynagaoka@celent.com
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Table of Contents

Executive Summary

1

 

Key Research Questions

1

Evolving Commercial Card Programmes

2

Forces Driving Commercial Card Adoption

7

 

Working Capital Optimisation

7

 

Safeguards and Standards

9

 

Security and Control

9

 

Technology and Innovation

10

How Fintech Collaboration Accelerates Supplier Enablement

11

Commercial Card Programme Best Practices

13

 

Involving Stakeholders

13

 

Managing and Monitoring Expenditure and Parameters

14

 

Engaging Suppliers

14

 

Collaborating with Banking Partners

14

The Path Forward

16

Glossary of Commercial Card Terms

18

About Our Research

19

 

Using Seasoned Professionals

19

 

An Unparalleled Network

19

 

Robust Research Methodology and Independence

19

Related Celent Research

20

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