Making the (Very Strong) Case for Corporate Card Programs
by Fred GebhartCompanies that fail to use corporate cards for travel and entertainment spending are losing out in almost every way that matters. They’re losing negotiating clout, travel policy compliance, back office efficiency, traveler satisfaction and potential card rebates.
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Unfortunately, too many smaller companies make that mistake, according to Ed O’Connor, vice president of the business travel consulting firm Management Alternatives. And by smaller companies, O’Connor means those that spend anywhere from just a few hundred thousand dollars on T&E to those that spend $100 million.
Regardless of how much a company spends on travel and entertainment, a card program will create huge benefits, O’Connor told Travel Market Report.
“Size doesn’t matter when it comes to card programs. A card is going to help you track, control and reduce your travel costs, period.”
15% savings
How much in savings will a card program yield? The typical company can cut 15% from spending on contract commodities like air, hotel and car, according to Martin Cannings, product director for Citi commercial cards in Europe, the Middle East and Africa.
Increasing card use also cuts internal costs by making T&E processes more efficient, he said.
Cannings moderated a corporate card webinar produced recently by the Association of Corporate Travel Executives.
The key advantage to using a corporate card is more complete data capture, said Melanie Coutin, head of corporate card sales for Citi in France, Belgium, and Netherlands.
More complete data provides more opportunities to:
• analyze and improve traveler compliance,
• create a more robust data set for more effective vendor negotiations,
• automate data capture,
• reduce costs associated with erroneous and incomplete data entered by travelers, and
• lower costs from decreased fraud, misuse, and out-of-policy spending.
One firm’s experience
Those advantages all played into the 2009 decision by Salesforce.com to launch a global card program, said Anjela Evangelista, global program administrator, global card. The 6,500-employee company has more than 5,000 active travelers who spend $54 million annually.
Evangelista said the card program captures about 85% of all T&E spending.
Another benefit is that a mandatory use policy has served to remind and educate employees about the personal as well as corporate benefits of using the corporate card.
Good for employees too
“We showcase the financial impact on employees, things like direct pay from corporate and employees keeping all of the reward points associated with their spending.
“And when employees use the corporate card, we can do a better job of locating them in case of an emergency. It’s hard to argue from a personal perspective that the corporate card shouldn’t be used,” Evangelista said.
Managing the change
That’s not to say that Salesforce.com’s transition from individual to corporate card use has been painless. Evangelista said her biggest headache has been managing the change.
“There was a sense of entitlement among employees who have been around for a while,” she explained.
“You need to let people know the advantages that happen in the background as well as the personal advantages. A card program is really for the betterment of the company. Just getting people to realize that is a big part of our effort.”
Dealing with non-compliance
The higher the corporate card use, the easier it is to run reports on non-card spending and identify individual travelers who aren’t using the card.
Evangelista said the first step is a friendly reminder. Most employees want to do the right thing and don’t need much prodding.
She gets tougher with repeat offenders and escalates the reminder to the employee’s manager and to HR if needed.
Escalate the warnings
That’s the kind of considered escalation that O’Connor recommends. He calls it a three strikes program. It begins with a note to the employee and manager, then a stern warning. The final step is delaying or denying reimbursement.
“Just making reimbursement inconvenient tends to get the idea across that you’re serious about compliance,” he said.
Single or multiple cards
The ideal card program uses a single card and card vendor across all geographic and business segments. But that isn’t always possible, said Dina Lahav, global travel manager for Amdocs, Ltd., a business solutions firm.
With 19,000 employees around the globe, Lahav has found that no one card is universally accepted. A single card works well in North America and Europe, she said, but other regions still have local providers with significant market share.
Amdocs is moving to multiple card programs using the most widely accepted card in different geographic regions. A single card will probably cover 75% of Amdoc’s T&E spend, with the rest split between local cards.
But that doesn’t mean she is at the mercy of local providers.
Amdoc’s preferred hotel program is based in part on corporate card acceptance. If a hotel won’t add her preferred card provider, she finds another hotel. She also selects local banking partners based on their willingness to accept the corporate card.
Resources
“Corporate Cards: Global Travel and Entertainment Card Programs Profile and Best Practices,” a white paper by Citi and ACTE
