Commercial Cards: Business Intelligence for Better Cost ... · Commercial Cards: Business...
Transcript of Commercial Cards: Business Intelligence for Better Cost ... · Commercial Cards: Business...
Commercial Cards:
Business Intelligence for
Better Cost Management
Miami, May 6–8, 2015
Emilio Fortou
Visa Inc.
LAC Regional Director
Global Expansion
Treasury and Trade Solutions
Martin Cannings
Citi Treasury and Trade Solutions
LAC Regional Director
Commercial Cards
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Notice of confidentiality
This presentation is furnished to you solely in your capacity as a customer of Visa Inc. and
a participant in the Visa payments system. By accepting this presentation, you
acknowledge that the information contained herein (the “Information”) is confidential and
subject to the confidentiality restrictions contained in Visa’s operating regulations and/or
other confidentiality agreements, which limit your use of the Information. You agree to keep
the Information confidential and not to use the Information for any purpose other than in
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The Information may only be disseminated within your organization on a need-to-know
basis to enable your participation in the Visa payments system. Please be advised that the
Information may constitute material non public information under U.S. federal securities
laws and that purchasing or selling securities of Visa Inc. while being aware of material non
public information would constitute a violation of applicable U.S. federal securities laws.
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Limitation of Liability
The information, recommendations or “best practices” contained herein are provided "AS IS" and intended for informational purposes only and should not be relied upon for business, operational, marketing, financial, legal, technical, tax or other advice. When implementing any new strategy or practice, you should consult with your legal counsel to determine what laws and regulations may apply to your specific circumstances. The actual costs, savings and benefits of any recommendations, programs or “best practices” may vary based upon your specific business needs and program requirements. By their nature, recommendations are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Assumptions were made by us in light of our experience and our perceptions of historical trends, current conditions and expected future developments and other factors that we believe are appropriate under the circumstance. Recommendations are subject to risks and uncertainties, which may cause actual and future results and trends to differ materially from the assumptions or recommendations. Visa is not responsible for your use of the information contained herein (including errors, omissions, inaccuracy or non-timeliness of any kind) or any assumptions or conclusions you might draw from its use. Visa makes no warranty, express or implied, and explicitly disclaims the warranties of merchantability and fitness for a particular purpose, any warranty of non-infringement of any third party's intellectual property rights, any warranty that the information will meet the requirements of a client, or any warranty that the information is updated and will be error free. To the extent permitted by applicable law, Visa shall not be liable to a client or any third party for any damages under any theory of law, including, without limitation, any special, consequential, incidental or punitive damages, nor any damages for loss of business profits, business interruption, loss of business information, or other monetary loss, even if advised of the possibility of such damages.
Note on Logos
All brand names and logos used in this presentation are the property of their respective owners, are used for identification purposes only, and do not imply product endorsement or affiliation with Visa.
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The Characters in Today’s Story!
Challenge :
Individual and Group Compliance
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Increasing Complexity,
Global or Organizational 1
Time and Limited Resources 3
Requirement :
Business Intelligence for Better Cost Management
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To begin at the beginning….
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The importance of Commercial Cards and Data
Leading cost effectiveness efforts throughout the corporation
Developing efficient processes for financial report production
leveraging information tools and systems
How Commercial Cards can fit into your Payments Strategy and
the added controls and compliance of Expense Management
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2
3
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Commercial Cards as a Source of Business Intelligence
Which of the following define your Top 4 Objectives?
You have 4 Votes (You can raise your hand 4 times)
Compliance Data Integration
Policy Enforcement & Control
Payment Processing Cost Reduction
Cost Savings
Process Automation
Improved Vendor Management
Cash Flow Control
None of the above
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Funding Cash flow
Data : Vendor Discounts
Data : Process Automation
Data : Compliance Management
Control : Per Transaction spend limits
Control : Category spend
limits
Control : Individual
Employee Limits
Control : Reconciliation
Payments can
add significant
value to Policy
Measurement
and fulfillment
However many
organizations
are not aware
of the relative
merits of
payment
methods
ACH / DD
Why Cards?
Why Are Cards Important? Cards can capture
corporate
transactions and
spend
This capture can help
corporations take
control and enforce
policy but more
important can provide
DATA
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The Value of capturing Transactions
Does your company have a mechanism for tracking program
leakage (expenditure not captured on the corporate card that
could be)?
Yes
No
I don’t know
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Defining Success by Spend AND Transactions management
Air, Hotel Every other type of transaction…..
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Business Case based upon the potential Value of a Compliant Transaction?
Rebate?
Expense submission,
approval, reimbursement
automation?
Increased policy control,
compliance and audit?
Improving Vendor
leverage?
Reducing Cash associated
fees?
Other? How many Transactions
could you be capturing
per annum?
A
With an Average
Transaction Value (ATV)
Of $157 this suggests that
for every $10Million in
Spend 64,000 Transactions
could be captured
What is Your number?
B
What is the potential
value of capturing each
Transaction
for Your Organization ?
C
$157
$0.5
$4
$3
$1.5
$1
$5
$15
ACH
Wire
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Compliance, Risk and Fraud
What areas of Compliance and Reduced Fraud are most
important to your Organization?
Tracking and Enforcing compliance across Business Units
Reducing and Controlling the amount of internal “Fraud” or misuse
Minimizing the $ risk/Exposure associated with potential fraud and misuse
Other
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What is the major obstacle to you meeting your Forecasts, achieving High Compliance and Control?
Organizational
Controls
Reporting
Policies
Technology
Systems
Card Products
Other payment
products
Processes
Management
Why should I
comply?
What
happens if I
don’t? High visibility Reporting & managing the behaviour of
Your Employees at all levels is essential
Spend
Spend Spend
In Theory The Reality?
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Policy
Policy Checklist
Payment Terms (DPO)
Approved Vendors (Price)
Transaction Cost (Fees)
Approved Process (Cost)
Risk Approval (Credit)
Preferred Payment Tool (?)
98% of large
companies have
policies
surrounding the
procurement,
acquisition and
payment of
suppliers
The full extent of
their policies
varies
E.g. Is there a
Payments
Policy in Your
Organization?
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Policy Fulfillment will be a problem if
there is no measurement and
consequences of non-compliance
Policy
Reality?
Control &
Compliance
98%
Companies
Have Policies
52%
Measure compliance
with Policy
26%
Deploy consequences
For non compliance
Control and Compliance
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Reality?
What % of your
Workforce are part of the
Younger (non compliant)
generation?
There are challenges
ahead in Compliance
management
Employees increasingly
respond well to any Policy
or Tools which are
The success of
your Policy in
‘reality’
depends upon
the
Compliance of
your Individual
Employees
How confident are you
that you use the best
Payment Tools to
ensure and track
Compliance with
Policy?
Reality of Compliance
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Typically around 10-20 out of every
100 employees conducts expenditure
and should have a card
In some countries and some
companies there is a culture of
suspicion about giving Cards –
perceptions of Misuse arise
Note that the spend hasn’t changed
nor the transactions….but for some
reason Cash and Personal Cards are
deemed – safer
What is the evidence? $10,000,000
Card Distribution & Correlation with Policy Fulfilment
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RPMG Study
Fraud & Misuse
Perspectives
T&E Cards
Employee
Misrepresen
tation
Internal
Fraud (not
authorized to
use the card)
External
Fraud (3rd Party
internet / Merchant)
Median $ Per Incident $500 $100 $400
Loss to Organization as % of
T&E Card Spending
0.015% 0.001% 0.059%
Example
For Every $1,000,000 spend is there is no more than $150 of Fraud and Misuse in Total
This occurs 1 in every 650 Travel cards and 1 in every 36,000 Transactions.
Internal Fraud is even lower – 1 in every 3,846 Cards and 1 in every 200,000 Transactions
Cards are safe payment payment instruments – they potentially make misuse / fraud more visible than any
other payment method
Misuse : Evidence?
RPMG 2009 & 2013 Corporate Travel Card Benchmark Survey
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The Right product, the Right Solution
Thinking about your company’s card management, policy development and execution,
would you say it occurs primarily in a single, central location, spread across several
regions or localized?
Does your company have a mandate to use a specific company-issued credit card for
purchasing, or to pay for such things as travel and entertainment?
Central
Regional
Local
Business Unit / Division
Other
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Different Card Types & Commercial Solutions
Company Type of Card
Product
P-Card
CTA / Lodge
Corporate Card
Policies
Risk
Size
The Need for a Balanced Solution
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The Visa Central Travel Account (CTA) Key Component of a balanced Solution
CTAs Help Companies To:
Centralize travel spend
Distribution of individual credit
Lines
The need of Enhanced Data
A centrally billed T&E card/account used to consolidate travel-related spend that is booked via a corporate travel management company (TMC)
VCF
Needed for Payment Processing
FINANCIAL DATA
Amount ,
Currency,
Posting Date, etc.
Needed for Reconciliation
ENHANCED DATA
Airline Routing,
Cost Centre,
Project Code
Puerto Rico – Commercial Card Solution Strengthens Working Capital
Success Story Ballester Hermanos:
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Decentralized expense
processes
Desire to increase
operational efficiency,
enhance liquidity and
strengthen working capital,
without incurring additional
costs
Company sought to extend its
Days Payable Outstanding
(DPO).
Business Card
solution with lower to
zero fees than checks,
ACH or wire.
Electronically captured
data
Payments debited in a
single transaction.
Ballester Hermanos has
extended its DPO and
strengthened its working
capital
Enhanced visibility and
control of employees’
business expenses
Program capturing $2MM of
spend/month
Gained liquidity and up to 56
days of financing at no cost.
Challenge
Solution
Result
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Commercial Cards your best source for Business Intelligence
The importance of Cards in the corporation’s ecosystem and the
cost effectiveness and efficiencies that can be gained
Data and the Value of Transaction Capture
Policies, Compliance Risk and Fraud
1
2
3
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Your Questions Go back to your Organization
Think about any questions you have around
– Payments Strategy
– Compliance, Visibility improvement opportunities
– Examples of card deployments you would like to hear about
– Particular categories you would like to use cards for but have questions about
– P2P Processes you would like to integrate using card payments
– Cards technology / functionalities
– Or anything else!!!
Please contact you Citi Account Representative or Visa with your QUESTIONS
and we can set up a Webinar to answer your Questions
Check the Visa White Paper!
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Thank You