Treasurers looking to optimize their working capital are exploring adding corporate cards to their arsenal, thanks to the extended payment terms and increased efficiencies they offer.
When clients are looking to start a card programme, Steve Robson, head of commercial cards EMEA, at Citi, explains that the bank wants to be clear about what it is they are trying to achieve. Clients now also have the choice between physical cards or virtual cards.
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Steve Robson, Citi |
Robson says: “When speaking to clients about cards, we ask what their aim is. Is it to optimize their P2P [procure to pay] process and improve the efficiency of payment and procurement? Or is it simply to replace payment mechanisms and improve working capital? Or is it both?”
The spend on corporate cards is significant. Citi found the average transaction value on its virtual cards to be $4,727. It also found that 9% of payments are paid immediately when cards are used, and 37% paid within 10 days of receiving the invoice.
Robson explains that having the flexibility to pay the bank at a later date can expedite the payment of suppliers.