Reappraise the value of B2B card payments.

January 5, 2015 Lynn Larson

What will drive your organization to reduce its check volume in 2015 by adopting more card payments? A new year, or any time really, is a great time to instigate positive change. The trick is quantifying your opportunity first to garner internal buy-in. This will also help you evaluate the outcome of your efforts down the road.

So, what is your B2B card payments opportunity? In a blog post last month, AOC Solutions provided a striking example showing more than $400,000 in annual benefits. It used an organization who:

had 3,000 invoices/month, with half typically paid via check
switched half of the check payments to a combination of P-Cards and Virtual Cards

Do the same type of exercise, filling in the card metrics and related data specific to your organization:

process savings per P-Card transaction
average P-Card transaction size
average ePayables/Virtual Card transaction size, if applicable
average rebate percentage/basis points earned

If you do not have an ePayables program today, explore how (or whether) one would round out your payment strategy. Consider the 2014 status of your check payments to build goals for 2015. What percentage of your B2B payments do checks comprise? Enlist the help of your card provider to identify the best supplier candidates to migrate away from checks.

I cannot think of any good reason to continue making checks the foundation of our payment strategies. While checks will not go away any time soon in the United States, we sure can be doing more to change to more efficient electronic payments. Make 2015 a new year other than by just changing the calendar.

Leave 2014 (and checks!) behind. Make B2B card payments a priority in 2015. — Leave 2014 (and checks!) behind. Make B2B card payments a priority in 2015.

“The price of doing the same old thing is far higher than the price of change.”

— Bill Clinton

My Experience

As a P-Card program manager, I created an expansion plan centered on switching 10 key suppliers to card payments. This was exciting and manageable. Where I failed was in measuring the expansion results. What did we achieve in terms of additional process savings and rebates? Did we reap the expected benefits? What about the suppliers?

Even if you have, as I did, full management support to pursue expansion, which makes documenting the results less urgent, doing so can be inspiring. It might help drive similar positive change in your organization’s other offices/regions/districts. Whether you are launching or expanding a traditional P-Card program and/or Virtual Card program, a good plan—one that includes follow up activity—is important.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…

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Sharing your knowledge is regifting at its best.

December 16, 2014 Lynn Larson

Is it ever okay to regift, as in giving a gift you have acquired to someone else? Many websites address this delicate topic, but, in the professional world, I think the answer is simple. Regift your knowledge. The beauty of it is, as the giver, you retain something valuable, but others receive value, too.

When I started in the Purchasing Card arena more than 16 years ago, I had no prior card experience, so I embarked on a quest for knowledge. Fortunately, I encountered many people who were willing to spend time teaching me about things relevant to P-Card program management. Knowledge sharing is something we can all do (see related blog post on leadership). It is what drove me to launch this company last January.

Part of the mission of Recharged Education is making Commercial Card education readily accessible to all at little to no cost. The industry as a whole is stronger when end-users, providers and suppliers possess the fundamentals to help make card programs successful.

I’m excited to wrap up the year with more than 30 posts to the P-Cards Refocused blog and other free education on many different topics. Go ahead and regift the Recharged Education URL (www.recharged-education.com) to other industry professionals! I look forward to expanding the offerings in 2015.

Sharing with others what we learn is the best form of regifting.

A Note of Gratitude

I thank the individuals who have contributed to the complimentary online content this year: Jeff Avery and Paul Sammer, Jennifer Clark, Dan DeBraal, Matthew Dragiff, Greg Evans, Steve Evans and Paul Musselman, Jack Jania, Tiffany Lovelace, Dan O'Neill, Richard Palmer. Contributing industry providers include: Bora Payment Systems LLC, First Annapolis, Gemalto, LIMA3 Systems, RPMG Research Corporation, SunGard, Wind River Financial.

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Two key P-Card topics resurface in Dr. Palmer interview.

December 9, 2014 Lynn Larson

In what two areas do organizations often face challenges? During my recent interview with Dr. Palmer, RPMG Research, about their 2014 Purchasing Card study results, two hot topics were controls and supplier acceptance of card payments. Both could contribute to a plateau in card use; as he explained:

a constant reconsideration of how to exercise appropriate control over spending causes changes in the policies, procedures, and practices related to card use
the desire to use cards often runs ahead of supplier acceptance in the market

What can we do about these issues to avoid a plateau and increase the value of P-Card programs? Below are more observations plus suggestions from Dr. Palmer.

Controls

Organizations reflexively move toward a “belt and suspenders” concept of control that is both unnecessary and inefficient. Program managers need to be thought leaders who work with, and enlist the support of, other thoughtful associates in the finance function to construct the right blend of controls for card-based procurement. In an era of constrained resources, one should be able to make a compelling case for the technology-enabled controlled growth of P-Card spending.

See related blog post on how to reassure management about your P-Card controls.

Ensure your P-Card program offers the greatest value at the lowest cost. Follow best practices, including those pertaining to controls and working with your suppliers.

Supplier Acceptance

It is very important, particularly in the “business-to-business” segment of the market, that card issuers and card-using organizations quantify and educate suppliers on the beneficial aspects of acceptance. Absent a clear demonstration of value and education, suppliers will focus on the costs of card acceptance and remain unaware of, or ignore, the benefits. Articulating and measuring the benefits will insure an open and honest discussion.

With respect to the level of supplier enablement, we did find that “best practice” organizations were more likely to have requested and obtained the support of their card issuer in expanding card acceptance.

See related blog post by AOC Solutions, including a quote from Recharged Education, about raising the bar on supplier enrollment in regard to electronic accounts payable (EAP).

Learn More

Read the two-page interview with Dr. Palmer in which he also describes key opportunities for the majority of organizations, including EAP, and shares what keeps RPMG motivated to conduct the industry studies.