Can a Commercial Card Program Bring Greater Savings and Efficiency to Your Payables Process?

Can a Commercial Card Program Bring Greater Savings and Efficiency to Your Payables Process?

As an increasingly digital world engulfs everyday processes, surprisingly, paper checks remain a significant part of many business transactions. Issuing checks for payables is an Achilles heel for Treasury, creating inefficiencies, higher costs and a greater risk of fraud. Exploring solutions that mitigate these challenges is a priority in an efficiency-driven environment. Today’s commercial card solutions are highly effective tools for managing business travel and the purchase of goods and services. Cards are fast becoming a preferred means for eliminating paper, deploying more efficient, automated electronic capabilities and supporting fraud mitigation efforts.

Improving the Process: A Win-Win for Buyers and Suppliers
Today’s commercial card solutions streamline both ends of the purchasing process, delivering a win-win proposition that meets the needs of both buyers and suppliers. The right solution facilitates greater levels of control and visibility to low-dollar, high-volume expense categories.

Businesses of all sizes can benefit from a commercial card strategy. By implementing a card program, putting the optimum types of payments on cards, buyers can achieve essential goals, such as dramatically extending Days Payable Outstanding (DPO), which improves access to working capital. As a result, Commercial cards afford buyers and suppliers an effective way to manage cash flow and add liquidity into their supply chain.

Suppliers are attracted to card solutions because they potentially enable faster receipt of funds, and do away with some of the most onerous manual processes, such as check processing. The streamlined nature of a card program also reduces exceptions and errors by making access to improved remittance information readily available.

Cards Offer Invaluable Reporting Insights: Monitor and Control Spending
One of the shortcomings of paper-based payment processes is the inability to gather in-depth transaction level information that is vital to monitoring spend and vendor management. Commercial cards solve this problem by automatically capturing transaction data at the point of sale. Treasury is able to conveniently gain access to detailed reporting, which facilitates better vendor management. Armed with critical information, Treasury professionals can determine if card-holders are deviating from corporate procurement policy and can then limit spend to preferred vendors. The controls offered by commercial cards are worth their weight in gold.

Getting a Leg Up on Fraud
Beyond the control and visibility offered by commercial cards, these solutions also bring a critically important level of improved security. Virtual Card Numbers, which may act as a one-time use only card, can be issued to suppliers for a specific purchase. Such a card solution can essentially eliminate the possibility of a card number being compromised. Fraud rates on commercial cards are significantly lower than those of checks or any other kind of commercial type payments, making cards an increasingly popular choice for business procurement transactions.

Let Curiosity Be the Mother of Invention: Partnering for Success
Treasury professionals would be well advised to employ a good measure of intellectual curiosity when exploring opportunities to improve payments processes. Taking a fresh look at the way business is being done, with an eye toward questioning how things can be done better, is key to uncovering fertile ground for improvement. This is an ideal scenario for working with your banking partner to explore how the latest innovative card solutions will fit within the scope of your overall treasury operation. The right partner can help you evaluate your existing payment processes and determine how commercial cards can enable you to achieve critical Treasury goals.

At Fifth Third Bank, we work with you to analyze your payables data, revealing opportunities that are ideally suited for conversion to electronic payments. Furthermore, we provide a customized strategic approach to optimize conversion efforts and results. This tool is part of a significant investment we've made to enhance our card platform. Based on the insights gained through our tool, we work with you to develop an overall strategy that meets your specific needs. For instance, if your business is expanding globally, Fifth Third offers chip and PIN card technology, which allows cardholders to use their cards internationally. With this technology, payments are processed quickly, eliminating delays.

Equally important to Treasury is the ability to gain a single view of all payment activity anywhere in the world. Our commercial card solution offers robust reporting and reconciliation information, enabling streamlined processing and posting to back-end systems. Fifth Third can help you put together a holistic card payables plan that will take you from strategy to execution to day-to-day operations.

The views expressed by the author are not necessarily those of Fifth Third Bank and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever. Deposit and credit products provided by Fifth Third Bank.