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Selecting a corporate payment system.

Article Excerpt
Among the most fundamental building blocks of a successful travel program, corporate travel and entertainment payment cards show travel managers the big picture of traveler spending. While travel managers thrive on card data, they know their payment selection also must provide cardholders with acceptability, ease of use, data privacy and strong customer service.

At a time when businesses are attempting to limit spending in every segment, vendors now, and perhaps more than ever, are willing to negotiate. In a market oft considered saturated, card issuers and payment networks aggressively have been working to maintain and boost marketshare. In addition to bolstering acceptance, updating card functionality, enhancing reporting and adding a slew of new online tools, vendors increasingly have become flexible over pricing, leaving the market largely in the hands of buyers.

In addition to enhancing functionality within T&E platforms, payment vendors have worked hard in recent years to grow the purchasing card, which was built on the T&E card model. Another still-emerging offering is a solution that combines some or all of the following into one card: travel and entertainment, materials purchasing, telephone calling cards and fleet functionality. Facing a slow evolution and limited 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. A strategic rethinking of the entire payment process and the way that could change through new competition and more consolidation would be a good foundation on which to build a program that best serves company needs by lowering transaction costs and improving traveler service.

Lasting on average between three and five years, corporate card contracts live longer than those with many other travel suppliers. As the decisions they make will linger beyond the immediate future, 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. The purpose of any new program should be to support such corporate goals. When the 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 whether there is an advantage in combining T&E, 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 T&E 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: For instance, can a vendor provide data on all cardholders with a balance of more than $150 who are 60 days late in payment--and pull up their business phone numbers? What reports can be provided on an ongoing basis? Are reports delivered via paper, online, in a standard format or with query functions? For multinational programs, what are the country-specific limitations? Can VAT 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, human resources, IT staff, legal, travel managers and even frequent travelers--to help evaluate proposals and select a vendor. Also consider holding focus groups of frequent travelers and top executives, including people from divisions and branch offices where applicable to determine the pros and cons of the existing process. Prior to asking vendors for proposals, define the following points:

A. Contract strategy

Your decisions about vendor exclusivity and billing plans depend on your company's culture and whether the primary goal is to reduce central administrative activity, benefit employees, increase control and/or improve the quality of management information.

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 particular service: You may find that different vendors' programs work for you for different purposes. For example, you may want a "ghost account," a master account number used by all employees but with no plastic cards, from one vendor for...

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