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Article Excerpt
Perhaps the most fundamental building block of successful corporate travel programs, travel and entertainment payment cards show travel managers the big picture of how much and with whom travelers are spending. While travel managers thrive on card data for both monitoring compliance and negotiating with vendors, they also know their payment selection must provide cardholders with acceptability, ease of use, data privacy and robust service.
At a time when businesses are continually conscious of costs in every segment of corporate travel spending, payment vendors still are willing to negotiate. In a market that has long been mature, card issuers and payment networks aggressively have been working to maintain and boost market share. In addition to bolstering acceptance, updating card functionality, enhancing reporting and enabling new levels of data--with the emergence of more robust hotel folio data--payment vendors have become more competitive on pricing.
As American Express last year opened up its network to bank issuers, Visa and MasterCard raised the rates at which they pay their own issuers, giving buyers the opportunity to share the increased revenue stream through higher rebates.
In addition to enhancing cash-back incentives and functionality via their travel and entertainment expense programs, payment vendors have bolstered use and functionality of purchasing cards.
Another still-emerging offering is a solution that combines T&E, materials purchasing, telephone calling cards and fleet functionality into a single card. Still limited in implementation, the one-card approach still is being examined by companies that want a single database for all indirect-spend transactions and companies that want a common process for approval, reconciliation, payment and reporting.
Corporate travel buyers who are revisiting their card vendor relationships today are well advised to look beyond traditional offerings, particularly when it comes to the purchase of airfares. As major U.S. airlines struggle with costs, industry watchers predict the next area of reduction will be payment. As such, airlines and charge card alternatives are offering rebates and discounted tickets for users of preferred payment tools.
A strategic rethinking of the ways new competition and more consolidation could change the entire payment process would be a good foundation on which to build a program that best serves company needs by lowering transaction costs and improving service.
Lasting on average between three and five years, corporate card contracts live longer than those with many other travel suppliers. As the impact of such decisions linger longer, travel buyers must have foresight when ironing out the details with vendors.
The following are steps travel buyers should take to create a corporate card program and select a payment system:
I. ESTABLISH OBJECTIVES
Understand what values and objectives are most important to your senior executives. When corporate goals are clear, they determine the form and details of a card program. If you don't have clear goals and senior executive support, your program cannot succeed. Below are goals such a program can help corporations attain:
A. Financial and administrative process improvement
1. Improving the processes of paying and accounting for travel, fleet and/or small-dollar-value goods and services. A payment system can be crucial in building compliance with corporate policy. Determine if there is an advantage in combining travel and entertainment expenses, purchasing and/or fleet functionality on one card.
2. Improving cash management, extending float and eliminating or reducing cash advances
3. Improving the expense accounting process
4. Foreign currency exchange management
5. Evaluating and facilitating value-added tax refund filing
6. Reengineering the travel and expense reimbursement process, relying on automation to eliminate the cost of manually performing policy audits and issuing checks
B. Productivity and personal support for travelers
1. Facilitating traveler reimbursement
2. Providing en route services to travelers, including travel accident insurance
3. Giving travelers an easy and safe form of payment for en route services and access to cash via automated teller machines
4. Allowing travelers to separate business expenses from personal expenses
C. Information management
1. Obtaining management information on travel and entertainment spending for prepopulation of automated expense reporting systems, budgeting, forecasting, vendor negotiations, internal benchmarking, policy development and compliance measurement
2. Capturing detailed data for tax reporting and documentation purposes
3. Ability to do custom querying: Pulling up cardholder business phone numbers, for instance. How often are reports provided? Are reports delivered via paper, online, in a standard format or with query functions? For multinational programs, what are the country-specific limitations? Can value-added tax reports be produced in countries where applicable?
II. SETTING STRATEGY AND SPECIFICATIONS
Once your objectives are clear, and before you go into the marketplace, there are several decisions to make about the parameters of your corporate card program. To start, get as much input as possible from colleagues who will be affected by the program. Establish a cross-functional task force representing all stakeholders in the process--accounts payable, auditors, cardholders, department managers, expense report fliers and processors, HR, IT staff, legal, travel managers and even frequent travelers--to help evaluate proposals and select a vendor. Also consider holding focus groups of travelers and top executives, including people from divisions and branch offices to determine the pros and cons of the existing process. Prior to asking vendors for proposals, define the following points:
A. Contract strategy
Decisions about vendor exclusivity and billing plans depend on company culture and whether the primary goal is to reduce central administrative activity, benefit employees, increase control of and/or improve management information.
1. Vendor options
a. An exclusive agreement with...
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