Six Strategies to Expand Commercial Card Programs

Posted by Andrew Bartolini & Phil Bartolini on May 8th, 2017
Stored in Articles, Lists, Process, Procure-to-Pay, Solution Providers, Strategy, Technology

Leading organizations know that in order to maintain market share and market relevance, they must find strong trading partners with shared or aligned interests and develop a coalition of willing forces who can leverage their collective strengths for mutual benefit. Strong communication, collaboration, and agility will be the defining characteristics of Best-in-Class supply chains in the years ahead. This makes the successful execution of commercial card and other P2P programs more important than ever.

Supplier enablement is a critical element of any successful virtual card program. The higher transaction volume a program supports, the greater amount of benefits accrue to the organization. Recent card innovations like those delivered by Bank of America Merrill Lynch to expand the global coverage and servicing levels of its card programs were designed specifically for that purpose. As such, supplier acceptance, retention, and expansion should be a primary and ongoing focus of any card program. This can be achieved through the application of these six best practices in supplier enablement discussed below.

  1. Deliver Clear and Consistent Communication – One powerful approach to expanding any commercial card program is through supplier enablement communication and outreach programs. It important to consider the suppliers as project stakeholders in whatever approach is taken. Listening to their suggestions and feedback and addressing their concerns about the program is critical to overall success. Clear and open lines of communication are necessary to increase supplier acceptance and ensuring retention. Buying organizations should leverage their card provider’s expertise when creating a communication program. With much more familiarity on the value of virtual cards, it is incumbent on the card team to communicate their program’s specifics (including program materials and incentives) to the suppliers.
  2. Perform a Detailed Spend Analysis – Performing an analysis of enterprise spend will help the team identify the largest opportunities for value creation and any “low-hanging fruit” opportunities by identifying the transactions (as well as the underlying categories of spend, suppliers, and buyers associated with them) most appropriate to target for the card program.
  3. Identify and Engage Suppliers Who Already Accept Cards – Card programs represent an element of change management that many suppliers would show a level of resistance to. One surefire way to jump start a card enablement campaign is to work with the card issuer to identify and approach suppliers who already accept cards as part of their current business practices. Card issuers have access to the full roster of organizations that accept virtual and other commercial cards and can run a match against a vendor (or supplier) master file or other listing of current suppliers. This seemingly logical strategy is at times overlooked by organizations as they begin to launch a new card program and it is something that should be revisited regularly.
  4. Leverage Recent Card Innovations – The expanded usage of cards to manage the full P2P process or simply the supplier payment process has been driven, in part, by recent innovations which enable greater flexibility, visibility, and control in how cards are used. These innovations include:
    • Flexible transaction initiation capabilities enable buying organizations to initiate the payment of invoices via a card. These are known as “push pay” transactions and they enable suppliers to receive payments and streamline the AR process without the need for any manual tasks or activities.
    • Alternative (i.e., lower) supplier pricing for card interchange rates is now available from different card networks and their issuers based upon a variety of factors including transaction volumes that meet certain thresholds and drive down rates, types of transactions, types of spend categories, and strategic supplier pricing models.
    • Expanded reporting, data, and integration capabilities have improved the ability of buyers and suppliers alike to track orders and payments and reconcile them in a more efficient, precise, and automated way.
  5. Expand the Program by Targeting Global Suppliers – With ongoing globalization, it is important to consider suppliers located in other regions of the world for inclusion in a card program. The modern card network is changing fast, and some international suppliers prefer receiving card payment because of its portability across borders.
  6. Leverage Financial Incentives to Drive Adoption – One of the most effective methods to drive commercial card adoption involves offering commercial cards as part of a larger program to maximize a supplier’s financial value. This can take the form of extending standard payment terms to non-participating suppliers while also offering commercial card acceptance as a method to receive payment faster. Rewarding participating suppliers with more business is also a win-win proposition. Organizations can use card acceptance as a criterion to be named a preferred supplier and encourage internal buyers to place more spend with preferred suppliers in the future.

Providing advanced data can not only simplify card acceptance and ensure process efficiency on both the buyer and supplier side of the trading relationship, but also save suppliers money. Note that Amazon Business shares the view that spend data is important and recently announced that it would start offering enhanced data to Visa card holders working with Bank of America Merrill Lynch, Citi, and PNC.  In some card programs, participating suppliers that provide Level 3 card data can see lower interchange fees and a smoother reconciliation process.

Finally, buyers should also emphasize that accepting cards can eliminate the need to submit invoices for certain purchases, which can reduce the amount of paper suppliers handle. These and other incentives are worthwhile to consider when working to increase supplier acceptance.

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