Using a Corporate Payment Programme to Accelerate Business in Emerging Markets

According to the International Monetary Fund’s (IMF) ‘World Economic Outlook’ in October 2012, emerging markets are forecasted to grow at 5.6% in 2013. As sales and distribution activities increase within the emerging markets, many corporations that want to expand are facing challenges in tracking global expenditures, especially in branch offices located in different countries. 

With operations spread across different territories and departments, several expense types, and a range of currencies and regional procedures for the treasury to handle, payment processes can quickly become very complicated. The use of corporate card is a valuable way to make payments faster, simpler and more trackable. 

Implementing a Corporate Payment Programme 

Adopting a corporate payment programme is more than just asking the employees to use a card for travel and entertainment (T&E) expenses. It enables the corporation to track every transaction, leverage the outflow to secure competitive pricing and increase savings. Other possible benefits include: 

Improved cash flow: one of the primary benefits of implementing a corporate card programme is better cash flow procedures. Tracking, cash management predications and vendor relationships are all strengthened over the longer term with a corporate card, besides its basic function as an expense payment tool.

Track audit trail: The ease of tracking electronic processes should ensure that errors or fraudulent payments are identified more quickly. Many systems will flag irregular items so managers can easily approve them or investigate further. 

Provide business insights: In addition to greater security, tracking payables and receivables also provides valuable corporate intelligence. Organisations are better equipped to gather business insights and spending trends, which are vital when negotiating supplier terms. 

The first step to creating a corporate payments programme is to define strategic goals. To do that, a corporation needs to consider the following: 

  • What are the key performance indicators (KPIs) and priorities for the coming year. 
  • What are the occurring problems (if any),with account policies, procedures or technology.
  • Whether cost savings are important, and if so, what is being done to drive them.
  • What are the inconvenient/pain points in the current T&E process.
  • Whether additional cash flow would be helpful. 

The Importance of Global Implementation

For corporations where operations are spread across various territories with different types of expenses, currencies and procedures, the control and reconciliation processes could get complicated. Designed to simplify recurring business-to-business (B2B) transactions across regions, corporations can successfully influence employees spend at its preferred suppliers. Implementing a corporate payment programme can result in significant process efficiency savings, sourcing effectiveness and improved compliance. 

One of the most common reasons corporations adopt a card programme is because they want greater consistency in their policies and procedures on a global scale. The global implementation of a payment solution can be a practical way to address the problems of visibility and consistency.

Customised programme with on-going support

Expertise and in-depth consultation of the programme are vital to achieve a successful global card implementation. American Express and other card scheme providers typically work with corporations to develop a tailored payment strategy based on their corporate global footprint. Using an in-depth consultative approach enables identification of the environment in which the corporation does business around the world and what they are spending, how they are using suppliers and the types of expenses they are incurring relative to those locations. Each solution is customised according to the corporation with the focus on a best practice approach. Technology solutions support the programme, including the corporation’s financial reconciliation needs.

Once it has been launched, the collaboration continues to ensure the solution is fully optimised and that any changes to financial systems, processes and strategies are taken into account. 

Best Practices for New Process Implementations

In addition to faster payment cycles, greater visibility and lower costs, a centralised payment system improves businesses’ ability to plan ahead. If a well-considered process is not implemented fully across the whole organisation, it will not achieve the maximum efficiency. Hence, following implementation best practice that is fully optimised from the start gives businesses a competitive edge in the marketplace. 

Any new company-wide process would experience some forms of internal resistance, so expect this. Resistance such as failure to comply with new processes, impacts efficiency and must be addressed. The best way to deal with it is through training and communication. Employees are more likely to adapt when they understand the reason and benefits of the new implementations. 

Seek Executive Support

Acquiring executive support is a vital key to ensure the success of an implementation process. According to Aberdeen Group’s ‘2008 Purchasing Card Implementation’ report, 71% of best-in-class companies had the support of a vice president or higher level executive for the implementation. Top-level endorsement is essential to enhance visibility of where the process is going. The executives are in the position to establish internal department or regional implementation as well as assist with communication between supporters and resisters. 

Working with strategic suppliers and internal IT is also vital. Before starting the implementation process, businesses must have a clear idea of procurement process goals by analysing current processes and identifying where improvements can be made. An efficient, well-considered procurement process that is embedded in the corporate culture will not be fully optimised without strategic suppliers and new internal IT processes. 

The keys to a successful implementation of a fully optimised process are employee and supplier engagement, executive support and internal system re-evaluation. However, organisations need to be proactive with procurement processes and use business insights to ensure they are constantly reviewed and improved.

Conclusion

Mid and large sized corporations in emerging markets face challenges when tracking global expenditures. With the introduction of a corporate payment programme, corporations get a better understanding and overview of their expenses and purchases. 

A good payment program offers corporations operating in many different countries customisable tools and technology to help leverage their spending power, increase efficiencies and reduce vulnerability to fraud. 

 

Case Study

A leading global pharmaceutical company was looking for a payment solution to increase control and compliance as well as to maximise savings. Additionally, this company required support to implement the programme internally across its 13 markets in Australia and Asia Pacific including a number of its new emerging markets around the region. 

The solution had to be enabled with a global data file, which was compatible with the company’s mandated expense management tool and enhanced data and reporting capabilities to support compliance management and supplier negotiation. The solution also needed to incorporate a high degree of card utility and acceptance through American Express and its partner networks to ensure that their employees spent at the company’s preferred suppliers.

A comprehensive analysis including the spending trends, types of expenses and payment process was conducted. Upon identifying the company needs and programme objectives, a solution was tailored and recently introduced to meet the requirements, instead of replicating any previous payment solutions on a larger scale. 

The customised corporate payment programme fulfils the company’s global objectives including data feed capability which enabled the company real time expense updates for all its 13 markets. The implementation of the programme within the company received favourable responses with minimal resistance, with travellers realising the value of having a consistent, secure and reliable product when travelling. 

 

 

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