Commercial cards - Citibank

1 Commercial Manish Kohli Business Manager cards : Wholesale cards EMEA. Global Transaction Services In the current economic environment, companies are looking to reduce the amount their staff spend on business expenses, from travel and entertainment through to other procurement spend. Implementing a Commercial card programme represents an opportunity for companies to help to deliver that objective. get with the programme Now that we are truly at a low point An important weapon in the a credit card means that the in the economic cycle, companies armoury of companies intent balance must be paid in full within everywhere are looking for ways to on controlling expenditure is a a specified number of days after cut costs. Travel and entertainment Commercial card programme.

2 The statement period. Payment and other procurement expenditure is Commercial cards can be viewed can be made directly either by the under particular scrutiny. in two broad categories: corporate employer or by the employee, who cards are issued to employees for will separately seek reimbursement Most major corporations are travel, hotels, meals, entertainment from the employer. increasingly focused on controlling and other business expenditures staff expenditure in this area, with varying degrees of success. to cover an individual's needs Benefits to the company when out of the office on company The benefits of a Commercial card Corporate travel managers are business; and the procurement card , fall into two main categories: control employing a variety of measures for non-strategic purchasing, such and process efficiency, both of which to achieve savings, including as stationery, laptops, IT equipment save money.

3 The benefits are: total travel freezes and cutbacks, and other materials. placing additional controls on travel Corporate spending on cards can be spending (see box on travel spending The suite of Commercial card more closely monitored, analysed survey) and encouraging on staff to products has truly come into its and controlled. Compliance with think twice before travelling. own during the economic downturn, spending rules and limits can be delivering visibility and efficiency assessed, and new rules and limits How important is it to make that within the expense-management imposed if necessary. foreign trip? If you have to travel, fly process. For high-profile expenditure economy instead of business class, The card issuer provides categories such as T&E, card take a restricted ticket rather than management information on programmes offer transparency the more expensive fully flexible spending patterns, which can be and an ideal mechanism to exercise option.

4 Hotel and restaurant spending analysed and used by the company changes in travel policy. Before is also under scrutiny. The more to amend spending policies or expanding on the benefits, it is exclusive hotels are disappearing negotiate discounts with airlines, useful to define more precisely what from some corporation's preferred hotels and other organisations a corporate card is. lists, and travel policies are tightening that receive high levels of business guidelines on the use of restaurants from the company. and entertainment in general. The product Citi issues Commercial cards to Electronic card payment and These are the some of the measures employees of many of its corporate settlement fully automates the being taken by companies within the clients for the purpose of T&E or company's invoicing processes, current environment.

5 The individual procurement cards . Citi issues which is more efficient and savings made may be modest, but these charge cards under either cheaper than manual processes.. totalled up across a multinational, the Visa or MasterCard networks. they can be significant. Being a charge card rather than Commercial card payment data Cardholders using Commercial cards to the evening meal allowance, can interface with sophisticated for other procurement categories but the benefits of such a change expense-management systems can expect a reduced purchase cycle are undermined if the card is not that are more efficient and cheaper time with post-transaction monitoring accepted for the transaction: the than manual or spreadsheet-based providing the control rather than the employee may need to use their methods of claiming expenses.

6 Onerous purchase-order process. own cash or personal card or to withdraw cash, and the transaction A small, but useful, side benefit is that the company gets a short Acceptance: the key would need to be manually keyed to a flexible policy? into the system. period of credit. The time taken from the employee using the card , The single biggest advantage of Citi is established as a dual issuer, to the balance being due can be solutions under the Visa and providing Commercial card up to two months. MasterCard networks is unrivalled programmes on both the Visa and global acceptance. The benefits of MasterCard networks. Importantly high acceptance extend beyond Citi has invested in a variety of cardholder convenience: transactions proprietary, global tools that can be The benefits of processed electronically through to used under either network.

7 In this way expense-management systems are a Commercial more efficient, less prone to error Citi remain uniquely placed to offer the optimum solution to the client. card fall into two and less susceptible to fraud. main categories: Clearly there is a growing Demand is growing requirement among corporates Despite a host of expense control and process to control expenditure through spend restrictions in place at companies efficiency, both of restrictions and changes to policy. across the region, the news is not Firstly, organisations with consolidated entirely gloomy for Commercial which save money. corporate card programmes are card issuers. The issuance of better placed to implement travel and Citi corporate T&E cards in the expense restrictions and controls, EMEA region (Europe, the Middle and many use their programmes to East and Africa) continues to For cardholders there are benefits, monitor compliance and track the grow significantly.

8 The spend too. For travellers, the acceptance success of such measures. on each card may decrease with of the card increases cardholder spend restrictions in the current convenience, and where card Secondly, corporates are environment, but tellingly the transactions are pre-populated into increasingly finding that changes to number of cards being issued is the corporate's expense-management policy are best supported through increasing as corporations realise system, the time required to file a high-acceptance Commercial the control, efficiency and cost an expense claim and receive card solution. For example, an benefits of Commercial cards . reimbursement is much reduced. organisation may apply a restriction Carried out by Business Travel Coalition and published last October, a survey of nearly 200.

9 Corporate travel managers in 17 countries found that 26% had implemented emergency travel cutbacks as a direct result of the financial crisis. What's more, one third of that number said the cutbacks had taken the form of total travel freezes. Even among the corporations that had not implemented emergency travel cutbacks, 46% had at least placed additional controls on travel. Of those 200 surveyed, 66 spend more than USD20MM a year on air travel, and 24 more than USD75MM. Another prevalent factor worthy of comment is that organisations In summary, the economic downturn is prompting corporations to Citi's local language embarking on Commercial card restrict spending on travel and and currency programmes increasingly tend other procurement expenses.

10 Those to look beyond single countries organisations, historically without capability in Europe and apply a unified programme structured programmes in place, are covers 15 countries . to a group of countries. The more now looking to Commercial cards ambitious implement a global to help control these costs. Those soon to be extended programme. Citi's local language with established card programmes to 20. and currency capability in Europe are using the cards to implement covers 15 countries soon to be and track spend restrictions. extended to 20. Although the local Corporations are also adapting market may have different practices current expense policies and relying and processes for payment card upon their programmes to continue transactions, Citi can provide a to provide high acceptance.