Five Simple Steps to Optimize Card Payment Performance

by Mark Becker 0

Most organizations have specific reasons for starting purchasing card programs. It may be to establish better control over spending, to speed up the payment process, or to cut invoice processing costs by eliminating paper.

Whatever the reason, time and resources typically pour into a program’s launch to make sure it comes off without a hitch. Once up and running, though, many programs go on auto pilot. They do what they are set up to do, nothing less, and too often, nothing more either.

Until something like the economic downturn of 2008 comes along to jolt the balance sheet. Budgets suddenly get squeezed, costs get greater scrutiny and settled questions get a fresh review. .“Good enough” isn’t good enough anymore. And we ask ourselves: is our card program giving us our money’s worth?

Here’s good news: every card program, regardless of size, holds value that hasn’t been tapped into yet. And here’s better news: tapping into that value does not have to mean wholesale change or expensive IT investment. A few simple tweaks can significantly boost rebate, cut costs and enhance operational efficiency.

Five simple steps to optimize payment program’s performance:

1. Participate in an Accounts Payable Analysis with your card provider.
2. Use the results of that exercise to expand your program within existing policies.
3. Implement ePayables programs with all accepting suppliers.
4. Measure your progress.
5. Do it again. And again.

Conducting an Accounts Payable Analysis provides a benchmark with which to compare the performance of your card program against the industry average or against the top performing companies in your industry. The result is a list of recommendations for improvement to card processes as well as opportunities to gain additional spend and transactions that can bring significant added cost savings for your card program.

Armed with these findings, the next move is to tackle opportunities that require only a simple expansion or tweaking of your existing policies. This could mean expanding transaction limits to allow for larger expenditures on the card, broadening card distribution or establishing ghost accounts to pay suppliers not included in the initial program – all small steps that can yield big savings and bigger revenue share.

One of the most overlooked optimization steps is simply making sure all suppliers who currently accept cards for payments are in fact being paid this way for all possible transactions. This can be accomplished through a program optimization report that shows all of the payment methods used with a supplier along with transaction detail for each of these methods.

After that, it’s a matter of measuring progress, identifying successes and using the benefits gained to drive additional accounts payable analyses. These additional analyses can drive changes in policies and procedures to capture additional spend and efficiency, identify other commercial card product opportunities (e.g., virtual cards, managed spend cards, etc.), and even develop a complete payment strategy that employs multiple payment methods, including electronic invoice processing and payment and employing ACH in a way that maximizes the benefit of each payment.

One of the “bonus” benefits shared by clients who undertake these Accounts Payable Analyses is the improved visibility they gain into their overall spending and payables structure. As organizations seek to optimize working capital, this A/P analysis data can be used to gain an understanding of commodities, supplier relationships, payment terms and automation opportunities. With these insights, companies are developing comprehensive payables strategies that maximize working capital by providing the most beneficial payment method with each supplier disbursement.

Optimizing a card program by following these five steps costs little beyond the investment of time, but it pays off in lower costs, higher rebates and improved efficiency. It’s just a matter of taking the first step — contacting a card provider for an AP analysis.

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