New payment solutions are enabling
companies to trim costs while improving efficiencies. Designed as an alternative to checks and petty cash, the commercial card is a payment solution that streamlines the payment process for all types of
business expenses. Workplace card solutions
are stored value (similar to prepaid) cards
that can be used to pay employees or customers on an ongoing or temporary basis.
Companies that utilize such offerings can
improve their control and reporting of
expenses while taking advantage of the flexibility that the cards provide.
“During uncertain economic times, work-place and commercial card solutions give
companies the ultimate in flexibility,” says
Paul Lewis, vice president of Treasury
Management at Comerica Bank. “You can
extend payment terms if you need to, or if
you’re cash rich, you can take advantage of
discounts by paying early.”
Smart Business spoke with Lewis about
some of the advantages of workplace and
commercial card solutions.
What is the commercial card?
The commerical card is used by business
customers to pay for a variety of goods and
services. The most common categories are
business travel, maintenance, repair and
operation (MRO) expenses, low-value procurement expenses, and vehicle expenses.
One way to configure a commercial card
offering is that on one card a company can
customize the permissions or controls
according to its various employees’ job
responsibilities. For example, the card could
be controlled for just travel expenses, just
purchasing expenses, just vehicle expenses
or any combination of those categories.
How does this payment solution help streamline business expenses?
The two big features on a commercial card
program are the control — you can customize it to fit the specific needs of an
employee or department — and the reporting, as you get a tremendous amount of data
on the back end. In addition to managing
expenses, customers can use this data to
track supplier expense and negotiate better payment terms and better discounts. For
example, you can use the data associated
with a travel card program to aggregate your
company’s expenditures at a specific hotel
chain and then try to negotiate better rates
based on your volume.
For virtually all transactions, the commercial card allows you to extend payment
terms, which can increase cash flow. Based
on the settlement you have with your bank,
you can enjoy terms up to 30 to 45 days. Also,
you can enjoy discounts from your suppliers
associated with faster payments because
they receive their money within two days
after the transaction is approved.
What type of online management and reporting tools are available?
In terms of reporting, there is a product
called Smart Data, which allows a company
to manage all of its card transactions and
associate a transaction down to a specific
merchant. It also automates the posting and
the reconciliation of those transactions
directly into a general ledger system. A program administrator, which is the individual at
a company that is responsible for managing
the company’s card program, can use an
online account maintenance (OLAM) solution. OLAM allows the program administrator to provision cards, approve authorizations and essentially manage all of the transactions that cardholders perform. Card-holders themselves can use an online statement to review pending and posted transactions. All of these are online Web-based tools.
What are some of the challenges associated
with payroll exceptions?
Challenges of payroll exceptions include
disbursing the first pay to a new hire or the
last pay to an employee who is leaving, disbursing pay when a check is lost or was not
issued and disbursing pay or per diems
between normal payroll cycles.
How can workplace card solutions address
these issues?
Using a payroll exception card helps businesses comply with local laws and union
issues. For example, with production shoots,
which are so prevalent in the entertainment
industry here in California, production companies have to follow very specific rules in
relation to payroll. Of course, it’s not just the
entertainment industry; the rules are in place
to protect the rank and file across all sectors.
If you are an hourly employee, on your last
day, your employer has to provide your compensation before you leave. Sometimes, cutting a check and finding somebody to sign it
can be difficult. By replacing the traditional
paper process with a workplace card, a company can alleviate a lot of concerns.
What types of companies stand to benefit the
most from these card solutions?
Any company that spends money on anything can benefit. Whether a company is paying suppliers, paying employees, paying contractors or paying customers, there is a card
solution that meets its needs. Each card solution offers the benefits of ease of use, greater
access to data and improved processing efficiencies. There really isn’t a company out
there that can’t benefit. We work with entities
of all sizes, in all business segments, with all
types of expenditure requirements.
PAUL LEWIS is vice president of Treasury Management at Comerica Bank. Reach him at [email protected].