Home | Business News | Browse by Publication | B | Business Travel News

Selecting a corporate payment system.

Article Excerpt
As companies strive for more transparency in expense reporting to meet Sarbanes-Oxley requirements, a corporate payment system that gives a clear picture of travel spend has become more important than ever. Many companies are moving toward card consolidation to a single travel and entertainment card. This includes multinational consolidation, which has its own set of challenges such as acceptance and lower card incentives outside of the United States. Companies with smaller and midsize travel spend also are looking at consolidation as they look to get a better handle on their travel and entertainment spend. Credit card companies and other travel suppliers are catering more to this desire for transparency. American Express recently reengineered its online reports for businesses with travel spend of $10 million or less, and both American Express and AirPlus have been working on helping to integrate booked travel data with spending data. Hotels increasingly are providing detailed folio information, although several major chains have yet to provide such data.

Of course, data is not the only consideration when choosing a payment system. Service, acceptability, privacy and user-friendliness are all other factors to consider.

Interchange fees, the primary source for corporate card rebates, have come under fire from merchants in the form of lawsuits. However, a recent congressional subcommittee hearing indicated that members of Congress have little interest in subjecting the fees to regulations.

At the same time, the growth of these fees mean that travel managers should not be afraid to look outside traditional offerings when it comes to choosing a vendor. Airlines in particular offer rewards for those who use payment alternatives that reduce or eliminate card fees.

Corporate card contracts generally last at least three years. The following steps can help ensure card program success:

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. Without clear goals and senior executive support, your program cannot succeed. Below are some attainable goals:

A. Improving the financial and administrative process

1. Improving the processes of paying and accounting for travel, fleet and/or small-dollar-value goods and services

2. Improving cash management, extending float and eliminating or reducing cash advances

3. Improving the expense accounting process

4. Improving 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. Improving compliance with corporate policy

C. Increasing productivity and 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

D. Enhancing management information

1. Commercial card programs provide actual expense data, electronically

2. Data is captured and available in a central database for compliance monitoring, vendor management, budget review and development and some levels of tax reporting

3. If automated expense reporting is implemented, card files can pre-populate these systems and eliminate manual input, comply with tax and Sarbanes-Oxley regulations and offer convenience to the travelers.

E. Implementing a global program, if applicable

1. Issue cards in all countries with significant traveling employee population

2. Understand the acceptance in all areas, as they vary

3. Consolidate information on the global level

4. Consider alternatives to a global program, which may offer similar benefit with less complexity

II. THE EVALUATION AND SELECTION PROCESS

A. Establish the team: With the agreement of the senior management sponsor, establish a cross-functional team to manage the process. This is typically comprised of: travel (may be part of another functional area below), finance (usually A/P plus others), HR, legal, procurement, internal audit, IT and treasury.

B. Develop requirements: Based on the goals for the program, develop the requirements of the program and include:

1. Number of travelers

2. Volumes by category type, i.e. air, hotel, car, restaurant

3. Policy for usage

4. Location of travelers

5. Geographical scope

6. Interfaces with other front-end and back-end systems

7. Data consolidation specs

8. Reporting requirements

9. Options for payment and liability

C. Establish the process

1. Identification of issuers

2. Use of RFI or RFP

3. Bidders conference, if practical

4. Timing for issuance of documents, proposal development and review

5. Schedule presentation dates in advance

6. Incorporate technology demonstrations

7. Provide overall RFP schedule, including final decision

D. Develop and distribute RFP or RFI

1. Describe the company and culture

2. Outline goals and criteria for success

3. Describe requirements in detail

E. Technology

1. Evaluate tools

2. Support demonstrations with references

F. Criteria for selection

1. Establish criteria for success

2. Identify elements for review

3. Develop scoring systems to promote objective decisions

G. There are many options available with respect to corporate card programs and the card and issuer selected. The following provides a discussion of those options.

1. Vendor options

a. An exclusive agreement with one primary corporate payment vendor

b. An agreement with one primary vendor and an account with a separate card provider for a...

View this article FREE - Now for a Limited Time, try Goliath Business News
Free for 3 Days!