Harnessing Untapped Benefits with Commercial Cards
Cards are rarely a go-to option when it comes to accounts payable, but advances in card solution design, rapid digitalisation globally and pressure on corporate treasury departments to improve cashflow are creating fresh momentum for the practice. In this article, part of a collaborative series between HSBC and Visa, two experts consider common misconceptions associated with the use of cards for supplier payments and outline how their deployment can support working capital strength for both buyers and sellers.
The use of corporate cards as an accounts payable (AP) tool has lagged significantly behind their application in streamlining employee expenses, notably business travel, where they have long been a standard solution. But economic turmoil, digital transformation, and increasing pressure on AP teams to cut costs and help boost cashflow are changing attitudes towards leveraging cards for making supplier payments.
Erwan Le Grand, European Head of Commercialisation & Account Management, Corporate Cards, Global Payments Solutions, HSBC, says there are several reasons why corporates have historically been reluctant to deploy card solutions for AP. First and foremost, the misconception of cards being ‘just for travel and entertainment’ (T&E) has been hard to dispel. Many corporates also have concerns that card deployment in the already complex world of supplier payments would be too massive an undertaking to merit the benefits.
But Le Grand believes it is time for corporates to reconsider this mindset. He says: “Cards are currently not the immediate go-to solution when considering, for example, extending payment terms and facilitating access to financing for suppliers. But we truly believe cards can be a viable supplier financing solution.”