The forces driving commercial card adoption | BankNXT

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80 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. Banks are collaborating with B2B fintech firms to deliver innovative procure-to-pay solutions, bringing consumer digital experiences into traditional procurement, finance and treasury processes.

Contributing to the adoption of commercial cards are four forces: working capital optimisation, regulatory and compliance, fraud and control, and technology and innovation.

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 spend growing over 900% since the 1990s. However, purchasing cards only represent a sliver of all global commercial flows and have the potential to become even more of an indispensable tool in the treasury/procurement toolbox.

As corporate treasurers prioritise working capital management during challenging economic times, commercial cards can defer payments while offering early payment to suppliers. Card programmes help to standardise processes and controls, improving safeguards and standards. Cards offer a range of controls and other protections to increase security and control. Administrative dashboards and analytics technology support detailed transaction data with merchant category codes, unlock opportunities for supplier negotiation, and promote processing cost savings.

As discussed in the new Celent report – The Value in Payments: Forces Driving Commercial Card Adoption – incorporating cards into your 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. Corporates need tailored, customised card solutions, developed in collaboration with their banking partners. The right bank can deliver a full suite of payment options across a firm’s geographic footprint, adapting and customising the programme in line with your company’s objectives.

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– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo by HYS_NP, Shutterstock.com