Where do rebates rank?

July 22, 2015 Lynn Larson

I started in the industry when cards were all about convenience, but it did not take long for rebates to take center stage. This has shown no signs of slowing, which is why recent emails in my inbox intrigued me. One referenced a study about surprising consumer attitudes toward credit card rewards. Another email had an eye-catching subject line: ‘Rebates are toxic’—do you agree?

Consumers vs. Organizations

Last month, the results of a 2015 Bankrate Money Pulse survey made headlines with these statistics:

Only 14% of American consumers noted that points and cash back are their major driver of card use
51% of respondents would continue to use a card in the same manner as before if their issuer eliminated rewards*

I am certain that the results would be very different for a survey aimed at Commercial Card users. Why don’t our consumer views carry over to the workplace?

*On a related note, at least two European issuers have cut consumer credit card rewards in light of new debit and credit interchange regulation in the European Union (excludes Commercial Cards).

Industry Perspective

The “rebates are toxic” email was from Commercial Payments International (CPI). They are generating a discussion now in preparation of their fall Global Commercial Cards & Payments Summit during which they plan to tackle this sensitive topic.

I would not necessarily say rebates are toxic (nor did CPI claim this as their belief), but I previously wrote about the dark side. I questioned how long the high levels, especially in the United States, would be sustainable. Even without U.S. regulation of credit interchange, banks/issuers face pressures stemming from other regulation. Yet, I recognize no one wants to be the first issuer to cut back on rebates. It is an interesting topic, so I applaud CPI and their partner EuroFinance for being willing to discuss it.

A couple years ago, I had a hypothetical conversation with an end-user about what would happen to their traditional P-Card program if rebates were reduced. He quickly replied that they would decrease or even cease card usage. In reply, I observed this would cause a huge increase in work for their accounts payable staff (e.g., handling invoices for every purchase, most of which were under $2,500, and setting up all suppliers in the AP system). He initially overlooked the bigger picture, but then acknowledged the value of Purchasing Cards even without the rebate. How would your organization react?

What You Can Do

I do not know where rebates will be in the future. Everything might remain as-is. Regardless, I do suggest that organizations routinely evaluate the other benefits gained from Commercial Card usage. For a review, see benefits of Purchasing Cards, and benefits of electronic payables and how they compare to P-Cards. As an end-user, make metrics a regular part of program management to ensure your internal decision makers are aware of the advantages. Industry providers can play a role by helping end-user customers measure the status of their card programs and identify improvement opportunities.

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…

Subscribe to the Blog

Three program success factors for Canadian company.

July 14, 2015 Lynn Larson

If asked about the top three things that drive Commercial Card program success, what would you say? The collective answers from industry professionals would likely be diverse, which is a good thing. The more insights we garner from others, the stronger we can make our card programs. During the first half of 2015, I caught up with Linda Dyck, CPCP, manager, corporate accounting, Canadian Blood Services, to hear more about what has made their programs successful and what might be in their future. She specified technology, supportive management and card diversification, as described below.

Technology Instrumental to Growth

When Linda joined Canadian Blood Services 11 years ago, she inherited what she called a “poor program” primarily due to a lack of technology and too many manual processes. She recalled few reporting options and reconciliation that “was a mess.” By her second year, this began to change after they completed a request for proposal (RFP) process that resulted in a new provider and more online tools. The online tools, providing easy access to transactions, also initiated an attitude change as management loosened their conservative approach toward card issuance.

A few years later, receipt scanning was another victory. They only keep paper records approximately six months, whereas, in the past, they had the expense of storing paper for seven years.

Supportive Management Keeps Program on Track

Overall, Canadian Blood Services sees the value of Commercial Cards, so Linda has never had an issue obtaining executive management support. She shared they are smart enough to know that cards decrease the number of invoices processed by AP and also reduce the number of full-time equivalents (FTEs) needed.

Managers take their reviewer/approver role seriously, which Linda views as a key reason that internal fraud has not been an issue. They know what their employees are buying and why. She likened manager review of transactions to their sign off on time sheets for payroll purposes; both responsibilities are equally important.

Program success involves getting key components in sync.

Card Diversification Resolves Pain Points

In addition to Purchasing Cards, Canadian Blood Services makes use of traditional Ghost Cards. For example, purchases of office supplies by their various sites are tied to Ghost Cards, eliminating what used to generate approximately 1,000 invoices per year for AP to manually process. They also utilize Visa Payables Automation (VPA) with around 30 suppliers—a program that is steadily expanding and further reducing their use of paper checks.

Looking ahead, Linda is intrigued by an upcoming type of prepaid card with enhanced controls from Payabillity. She would be able to keep unfunded cards on hand until she needs to fund and distribute them. They could be used for things like honorariums and petty cash replenishment, which today involve cumbersome processes.

Based on my discussion with Linda, I can easily see that her success is driven by an ongoing pursuit of improvement. She does not cease learning and evaluating how what she learns can benefit her organization. Excellent approach!

To continue expanding your education, see also four tips from another industry professional and check out the growing content from Recharged Education.

About the Author

Subscribe to the Blog

Conquering mountains, figuratively and literally.

July 6, 2015 Lynn Larson

In our careers, we regularly encounter challenges that often feel like mountains we must face. Interestingly, aspects of actual mountain climbing align with what we experience in the workplace. I can draw many parallels (see below), stemming from my husband’s summit last month of Mt. McKinley, North America’s highest peak. However, you do not have to be a mountain climber to relate. You can apply the same type of preparedness and fortitude used for mountain climbing to achieve success on the job and in life.

Mountain climbing, like life and daily job demands, is often a balancing act.

“Obstacles don’t have to stop you. If you run into a wall, don’t turn around and give up. Figure out how to climb it, go through it, or work around it.”

— Michael Jordan

Mountain Climbing Mirrors Life and Work

Prepare as best as you can.

Research what you will be embarking on or tackling. Follow the guidelines and best practices provided by proven experts. Pursue the necessary training. Do not lose valuable preparation time. You cannot achieve long-term goals by procrastinating.

You have to figure out some things on your own.

Use the expert advice and resources to develop a plan that will work best for your specific situation.

You do not always get to choose your team.

Most likely, you will be among a diverse group of people, some of whom you would not have chosen. Dig deep to find patience and appreciate what each offers.

You might have to carry a heavier load than your teammates.

Hopefully all team members support the same goal, but you might be more equipped than others to accomplish the necessary work. Instead of being discouraged, embrace being a leader and utilize your capabilities to the fullest. Try to help out others to make the process easier for everyone.

Expect change.

Whatever it is, something unexpected will occur and it will likely be out of your control. Focus on what you can control, which might only be your response to what happens.

Reaching a goal requires drudge work.

Everything takes time. Executing the steps of a plan can be tedious. Sometimes there is forward progress followed by steps backward before you can proceed again. Not every day will be the high of a summit day.

Celebrate Success

Summit days are when the hard work pays off the most. At work, this could be getting the rebate from your card provider, reaching your supplier on-boarding goal for electronic payables, completing that overdue risk assessment, launching a Declining Balance Card program, or other. Summits are great, but so are milestones. Both can provide a sense of satisfaction for what you have accomplished. Enjoy the views throughout the journey!