Treasury’s role in card programs is often limited to guidance for RFPs/bank relationship considerations but that role is growing, according to a card program survey by Citi. That’s mainly because of treasury’s experience in cash management globally and due to its need to be engaged in the specific details of the program to ensure appropriate bank pricing and wallet allocation.
In its survey, Citi revealed that 76% of companies said their treasury departments were involved in the decision-making process. “Treasurers will naturally have a keen eye on the potential benefits of managing expenses and cash flow globally on companies’ liquidity and bottom lines,” Citi said in its survey. According to NeuGroup studies, that growth may be a reflection of many programs remaining sub-optimal due to weak enforcement, low user acceptance, or lack of commitment on the part of the company.
But programs are getting more attention. Citing statistics from consultancy CapGemini, Citi said global commercial card purchases are estimated to have reached $1.8 trillion in 2015, up from US$1.4 trillion in 2013. “This is indicative of the continuous growth in the industry and is driving a demand for card providers to deliver globally consistent programs,” Citi said in its report.
Card programs are coveted business for most banks and for treasurers, awarding it strategically can be as important as the operational success they bring. But the programs must hit a lot of marks to be a value to treasury. For instance, there is “no doubt” that commercial card programs going forward must all be “truly global and consistent,” Citi said. And in its survey, Citi said MNCs now more than ever are seeking card providers that can offer “global card acceptance, global reporting tools and a global proprietary footprint.” According to the survey 90% of MNCs that have multiple providers are now seeking a single provider across all markets.
However, according to NeuGroup meeting takeaways, the hope of a single global provider isn’t really realistic. Global card platforms fall short in many instances, as card program industry has gone through a bit of a shakeup over the past several years. As a result, many companies have concluded that a single global provider is not the optimal solution.
Instead, many MNCs have determined that a best-in-class product in specific markets is the better approach. Alternatively, they may have one for the US and one for the rest of world; or they may use one financial institution for T&E and one for purchasing. The reality is that there are market and regional differences from country to country so going with a local bank’s program can result in much higher usage in that country. The caveat here is that providers should be able to interface with the MNC’s expense management system, which would allow the company to build audit reports that complement the reconciliation function.
The growing maturation of card programs over the years has been welcome. However, even robust programs can always find opportunities to expand usage and effectiveness. Ensuring commitment to the program combined with effective measures for monitoring effectiveness and improvement will likely produce positive results worth boasting about.