Commercial Card Program in Action: How One Buyer Dramatically Improved Their B2B Payments

Fifth Third Bank

 

As companies look to improve the efficiency of payment processes, commercial card programs present a highly attractive option. To better understand how these programs work and how they can impact a business, we sat down with a client who has successfully implemented the Fifth Third Commercial Card solution to get some first-hand insights.

Q. - Before you put your card program in place, what was your payment strategy?

A. - Prior to the program, we exclusively used checks. But there was a lot of treasury inefficiency around the practice, not to mention the fraud risk, so we decided to implement the Fifth Third Commercial Card solution.

Q. - What were your objectives in selecting the card program?

A. - Our overall objective was to better manage our cash. The card program allows us to extend our DPO and capture rebates. From a practical standpoint, being able to pay a supplier today, but not have to pay the bank immediately frees up cash for other initiatives within the organization – making this a win/win for both us and our suppliers.

Q. - What were some of the challenges you faced in convincing your vendors and suppliers to accept your card program?

A. – As a very large player in our niche market, some of our suppliers were hesitant to move to the commercial card program because at our level of spend they would take a sizable hit on the discount fee. However, in most cases we were able to overcome this resistance by bringing down the payment terms to a few days. So instead of waiting weeks or months for a check, depending on the specific terms, the card program would make payment available nearly immediately. This was enough to convince most to switch to the card program.

Q. – Since implementing the commercial card program, how successful have you been in meeting your objectives?

A. - In general, the program has been an overwhelming success. We did have to make some systematic changes to our ERP system in order to integrate the card solution. While there were some costs associated with this effort, the overall ROI on the program was fully paid back in less than two weeks of activation. In fact, we are now able to pay a full year’s worth of salary for my entire team of 10 AP specialists simply with the rebate generated by the program. When measuring success in the eyes of our senior leaders, this alone is a game-changing metric. Beyond this, we were also able to further extend DPO by leveraging this program when negotiating with suppliers.

Q. – Where there any other metrics you can point to that validate the success of the card program?

A. - Since implementing the commercial card program, approximately 6,000 payments have been ‘electronified.’ At a cost of $2.25 saved per check, we’re realizing a reduction of about $13 thousand in check cutting, processing and mailing costs.

The key to implementing a successful commercial card program is working with a trusted banking partner who understands your business needs. Find out how Fifth Third’s Commercial Card solution can benefit your business.

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.