By Niall Mackin, Vice President Commercial Card Sales UK, American Express
This article offers advice on how small and medium enterprises (SMEs) can save both time and money through a Corporate Card Programme
With even the most bullish economists in the UK referring to the economic outlook as offering ‘modest’ growth opportunities, companies of all sizes are looking at ways to improve their profitability and free up revenues that they can use to invest in growing their business.
A key challenge is to drive costs down without negatively impacting the day-to-day operation and long-term growth of the business. Many small companies see travel as vital to growing their business, yet are faced with the undeniable truth that T&E (Travel and Expenses) costs make up a sizeable chunk of their indirect costs. The juggling act involved in funding critical business trips versus cutting indirect, and controllable, costs places business leaders in a difficult position.
With this in mind, we advise our SME clients to focus on the adoption of ‘smart economies’ - cost saving strategies that streamline processes, and cut out costs that are unnecessary. The implementation of tactics such as introducing a Corporate Card programme, can save a company a significant amount of time and money on their T&E budgets which typically represent a company’s third largest controllable cost, after salaries and technology.
Companies that do not operate a Card programme are likely spending hundreds of hours checking costs, and making and recording payments. More importantly, they will have a fragmented picture of their total costs, which can affect their forecasting, and the ability to negotiate effectively with suppliers.
A corporate card is much more than just a piece of plastic. It is a powerful tool to gain detailed visibility of expenses allowing rationalisation of the supply chain, control of employee spend and peace of mind for company travellers that wherever they travel to in the world, they have the backing of a global brand behind them.
More than just Travel Expenses
In fact, a corporate card programme can be utilised not only for traditional travel expenses, but for other business costs too. It extends to capturing costs that include amongst others; expenses incurred in the day-to-day running of the business such as couriers, and conferencing services, mobile telecommunications, as well as corporate hospitality.
A corporate card programme also promotes compliance amongst employees and streamlines the expense claims process. It therefore helps increase productivity; enabling employees to focus on their core areas of business, reduces costly mistakes that inevitably occur in manual applications, and enables the organisation to drive down processing costs.
Visibility & Savings
One of the most valuable benefits of a corporate card programme is the management information that is generated. Management information gives business leaders insight and visibility of spend. This in turn enables them to address rogue spending or ‘leakage’ and identify areas for costs savings. For example, it can encourage questions around the use of suppliers; are we using the cheapest supplier? Or can we negotiate a better rate if we consolidate our buying from one preferred supplier?
In this current economic environment, companies of all sizes need to remain competitive and grow, they must be quick, flexible, and cost-effective in all areas of their operations. Corporate card programmes put decision makers in control of expenditure which in turn maximises a company’s competitive edge.
A Successful Programme
Implementing a corporate card programme is a first step to reaping the rewards. In order for a business leader to really maximise the benefits and drive optimum cost savings across the business, he or she needs to ensure all employees are utilising the corporate card programme effectively. This can be achieved by raising employee awareness of the importance of expense management, ensuring a policy is in place to guide employee behaviour and provide a framework for enforcement as well as the setting of best practice examples by senior management.
Whilst the current economy is challenging, savvy business leaders will take the opportunity to re-evaluate operations and focus on cost savings through process efficiencies. It is critical that SME business leaders identify ‘smart economies’ and opportunities for productivity improvement in order to survive the downturn and come out of the recession on an even stronger footing.
For more information on any of American Express products or services go to americanexpress.co.uk/corporate
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