FRASERS and Visa^® are pleased to bring you the fourth e-newsletter of 2007, designed to help enhance your commercial card program. In our third issue, we discussed how to identify potential benefits and savings of implementing or expanding a purchasing card program. This issue demonstrates how the development of an overall Procure-to-Pay technology strategy helps ensure the success of a commercial card program.

Point to Point

Through Best Practice clients, we have learned that proper planning and strategy are required to ensure that a commercial card program brings maximum benefit in terms of reduced costs and improved efficiencies. The same can also be said for the implementation of Procure-to-Pay technology, i.e. technology to enable your procurement process. A commercial card program has the potential to vastly increase the type and amount of information that can be gleaned during the purchasing process. A Procure-to-Pay technology infrastructure that is well integrated with the procurement process can improve purchasing now and enable improvements in the future, such as: increased leverage from suppliers; improved internal compliance; or a reduction in the number of purchase orders that need to be issued and processed. Side-by-side with technology integration and user compliance – driven by top-level management support and cardholder buy-in –  a Procure-to-Pay technology infrastructure will ensure that the commercial card program realizes its full potential, handling the maximum amount of spend in the most efficient way.

Wired To Win

Companies should have a focused technology strategy to complement their overall Procure-to-Pay strategy. This strategy should describe how technology implementations and enhancements would enable the achievement of overall company goals.¹

One critical challenge in ensuring that an organization will be able to derive maximum value from its commercial card program is to integrate the program as closely as possible with the technology infrastructure from the ground up. The technology platform must be aligned as closely as possible with business and information-handling processes to enhance the required flow of information. The increased amount, type and detail of transactional data being captured can be used wherever, whenever and however required to maintain and improve the procurement process. This means that it’s necessary to involve Information Technology (IT) as early as possible in the planning phase, in direct cooperation with other business units such as procurement, finance and human resources. The goal is to make purchasing and transaction processing easier and faster for the company’s users and to enable a new level of detail and accuracy in the reporting and analysis of corporate spending across a range of spending categories.

The technology component of a Procure-to-Pay strategy has to be aligned not only with the Procure-to-Pay strategy and overall company goals, but must also be designed taking present IT resources into account. It will seldom be physically possible or financially feasible for the developers of a Procure-to-Pay strategy to be given whatever new technology investments they request. The procurement strategy of the previous year must also be reviewed, not only to identify areas for improvement but also to ensure that plans are consistent with previous years and that changes are not made so radical that end user buy-in is lost. The users – as well as other key stakeholders such as management – must be able to understand the new strategy as a logical progression from what went before, even if the changes are significant and fundamental.

Several companies that participated in the VisaProcure-to-Pay Best Practices Study assigned representatives from their IT departments towork directly with the procurement staff, in order to ensure that boththe technology and procurement-process implementations were insync. One midsized company, taking its cue for Procure-to-Paytechnology investment from its IT strategy, even decided to delay aplanned e-procurement system because it couldn’t be integrated withthe existing IT platform and other initiatives.  This decision is an excellent example ofthe kind of organizational vision that can result when departmentscooperate closely, recognize each other’s priorities, and take their cuesfrom broad organizational strategy.

The Payoff

One common goal in integrating technology and purchasing is to allow users to fill out and submit expense reports online. Technology integration will enable reports to be pre-populated with general ledger and cost centre information drawn from back-end systems such as enterprise resource planning (ERP) systems. This level of functionality deepens user buy-in by making the increased process efficiency readily apparent at the desktop. Ultimately, the technology strategy should pave the way for even more advanced functionality, for example, the ability to pay commercial card statements automatically.

“We’re making reconciliation easier all the time,” says one large enterprise Visa® customer that has integrated advanced ERP and e-Procurement systems into its commercial card program. “Now every cardholder’s basic information – cost centre, email address, supervisor and so on – is automatically uploaded into the directory file and our Issuer can apply any changes for commercial card reporting.”

Best practice organizations strongly encourage and enforce use of commercial cards. Consolidating eligible spend onto commercial cards improves the organization’s ability to achieve cost savings and control maverick spend. Each company must determine how best to encourage commercial card usage for eligible transactions based upon their culture and policies.²

A strong technology foundation enables companies to implement Procure-to-Pay strategies consistently and uniformly across disparate business units, corporate ‘cultures’ and geographic locations. A sound IT foundation, aligned with the requirements of the company’s Procure-to-Pay strategy, enables supervisors and program administrators to obtain clear, accurate, to-the-minute reports on spending trends. The ability to receive immediate notification of spending inefficiencies and instances of purchasing non-compliance enables new savings opportunities to be identified and existing ones to be maximized.

But it’s through encouraging and enforcing user compliance that companies can realize the full potential of a Procure-to-Pay strategy and thereby focus on improving user compliance where it can bring the greatest savings. As with the implementation of the technology support for a Procure-to-Pay strategy, an approach to user compliance must be handled with care. Program managers must regularly communicate which purchases are eligible for commercial card use. If an eye is kept on purchase categories still being handled in other ways, such as by purchase orders, managers can develop a better idea of transactions that could benefit from being added to the program, as well as tracking purchases that should have been made that way but were non-compliant. The Accounts Payable function at another company sends standard emails to encourage frequent spenders either to get a card if they don’t have one, or to use it more frequently if they do. Success should always be rewarded by communicating the benefits associated with card use and commending actual instances.

The best way to ensure that a Procure-to-Pay strategy reflects an organization’s unique culture, as well as fulfills tangible business goals and priorities, is to involve key business stakeholders up-front. This naturally includes individuals with decision-making authority whose buy-in is critical, but broader interdepartmental representation is also necessary. One large enterprise Visa customer formed a key stakeholder committee when it embarked on a card program redesign, and included representatives from the security, tax, audit, legal, finance, treasury, procurement and expense management functions.

Best practice companies often soft-peddle commercial card implementation, insisting only that card use is “strongly encouraged” rather than mandated. Such a strategy will be more effective if encouragement is made regularly and in innovative ways. As part of the Visa Best Practices Tool Kit, two CD-ROMs are available to help identify potential benefits of implementing or expanding a card program, as well as to help measure current practices against these proven best practices benchmarks. To find out more about the Visa Best Practices Tool Kit, contact your Visa-Issuing Financial Institution.

Visa Commercial Card Programs

Canadian businesses are continually challenged to gain control and balance of their procurement and travel & entertainment (T&E) expenses.

Visa Commercial Card Programs can help companies manage the purchasing process more efficiently to meet this challenge head-on. This not only helps to lower costs, but also speeds up the delivery of goods and services and frees up time for more strategic business priorities.

For more information on Visa Commercial Card Programs and how they can help your business, or to contact a Visa Issuing Financial Institution, please visit www.visa.ca/largecorporate