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Corporate Cards

 May 16, 2007
Survey Reveals Corporate & Purchasing Card Practices Vary By Region

 A global survey titled, "Global Commercial Payment Cards: Cutting Costs and Boosting Control on a Global Stage," finds that companies worldwide primarily implement corporate card programs for enhanced visibility into spend (nearly 70 percent), and that the number one priority for companies around the world for implementing purchasing card (P-card) programs is reducing administrative costs for transaction processing (86 percent), but the goals and growth drivers for the programs differ by region .

Global highlights from the Commercial Payment Cards Survey include:

• Annual spending on corporate cards for travel and entertainment (T&E) expenses has increased among respondents worldwide by more than 20 percent from 2005 to 2006.

• The majority of organizations surveyed worldwide (66 percent) indicate that mandating the use of corporate cards is the top factor for driving growth of the card programs.

• Companies worldwide value the reporting capabilities of P-cards to capture detailed transaction data, but the business functions facilitated by the reports differ by region.

"Corporate and purchasing payment programs have long been recognized by companies worldwide for their ability to effectively increase the bottom-line by improving overall processing efficiencies and cash flow management by providing enhanced visibility into expenditures," said Aliza Knox, senior vice president, Visa Commercial, Visa International. "The global Aberdeen survey results reveal that while companies worldwide benefit from the implementation of commercial payment cards, the reasons why companies implement and expand the programs vary from cost-savings to improved visibility of payments."

The Global Commercial Payment Cards Survey, underwritten by Visa and ACTE Global, the association of corporate travel executives, and conducted by analyst firm Aberdeen Group, explores the practices and strategies around the use of commercial payment programs, specifically around corporate cards and P-cards for organizations in four major regions, including Asia Pacific, Europe, Latin America, and North America. Corporate cards are used primarily for T&E expenses, while P-cards are primarily used by companies for expenses related to maintenance, repair, operations, and office supplies.

"We're happy to bring this valuable body of global research to our members to help them better understand the commercial payment card practices and strategies that are effectively implemented by companies around the world," said Susan Gurley, Global Executive Director, ACTE Global. "Key survey findings like these help our member organizations to be more efficient and successful."

"In an age where corporate spending is subject to the highest level of scrutiny and control, commercial cards, such as Visa corporate and purchasing cards, offer enterprises a means of closely tracking spending while providing a faster and more efficient payment process," said Vishal Patel, senior research analyst, Global Supply Management Research, Aberdeen Group.

Regional highlights from the Commercial Payment Cards Survey include:

Spend Increasing

Corporate Cards

Among respondents to the survey, annual spending for T&E expenses varied by region. Spending increased by 17.5 percent in Latin America and 44 percent in Asia Pacific from 2005 to 2006, compared to the overall average worldwide increase of approximately 20 percent (22 percent in North America and 24 percent in Europe).

Growth Drivers

Corporate Cards

Among the different regions, organizations have slightly differing views on the factors that will drive growth in their corporate card programs:

• In Asia Pacific, 69 percent of responding organizations require the usage of corporate cards for T&E expenses, and 78 percent of organizations are looking to expand corporate card use to non-travel-related categories as a way of driving growth. In Latin America and Europe, organizations cite the number of employees given a card (56 percent), increasing travel budgets (approximately 60 percent), and the expansion of spending to non-travel-related categories (53 percent), as factors that will drive growth.

Purchasing Cards

The categories in which purchases are made via P-cards are anticipated to expand differently across various regions:

• The top category to be addressed by companies in North America and Asia Pacific is system integration services (80 percent and 75 percent, respectively).

• In Europe, 73 percent of companies plan to use P-cards for temporary labor and 67 percent for IT services.

• Eighty-three percent of companies in Latin America plan to use P-cards for advertising and marketing services.

Reporting Benefits

Purchasing Cards

Responding organizations across the globe view P-card reporting capabilities as important, but the business functions for which the transaction reporting data is used varies.

• Most organizations regard integration with general ledger and other transactional systems as very important with the exception of those in some European companies (58 percent).

• Latin American companies cite the ability to create customized reports as the most important use for reporting data (86 percent).

• Eighty-four percent of responding North American companies believe that a significant benefit for reporting is meeting regulatory requirements.

Implementation Objectives

Corporate Cards

A large majority of responding organizations in Europe and Latin America (69 percent and 70 percent, respectively) cite eliminating cash advances as a significant objective. North American and Asia Pacific companies report policy compliance (51 percent and 67 percent, respectively) as being among their top objectives.

Purchasing Cards

According to the survey, the second highest priority worldwide is to ensure auditable procedures, controls and fraud protection (62 percent).

Respondents' goals for implementing P-card programs vary slightly by region:

• Cost reduction is of significant importance to organizations in Asia Pacific (80 percent).

• Increasing the transaction volume and dollars is important to companies in North America (65 percent).

• Improving cash management is one of the top priorities to organizations in Latin America (63 percent).

Program Longevity

Corporate Cards

Among respondents, corporate card programs have been well-established, although they vary in duration of implementation by region:

• The majority of North American organizations using corporate cards (63 percent) have had their programs in place for more than six years, including about a third that have been in place for more than 10 years.

• On average, European programs have had a shorter tenure than their North American counterparts; however, 17 percent have had card programs in operation for more than 10 years.

• Organizations in Asia Pacific (42 percent) and Latin America (40 percent) have been running programs for between three and five years.

Purchasing Cards

North American organizations have a longer history with their P-card programs than organizations in other regions. Seventy-five percent of card-using respondent companies have had a program in place for at least three years and 50 percent have had one in place for more than six years.

• Both European and Asia Pacific regions are nearing the program longevity of North American organizations since the majority of companies in both of these areas have had P-card programs in place from three to 10 years (63 percent and 51 percent, respectively).

• Latin American companies are just recently emerging as users of P-cards. Forty percent of card-using organizations in this region have only had a card program in place for less than a year.

To download the entire Global Commercial Payment Cards Survey, visit: