Helping companies improve performance and maximize benefits from their Visa Commercial card program
Visa and its Issuing Banks (Issuers) have launched a new program designed to identify opportunities for clients to improve Procure-to-Pay operations and increase savings through their card programs. The Optimization Review, which requires minimal time and effort, helps clients benchmark their Procure-to-Pay process against best practices1, identify opportunities to realize both hard- and soft-dollar savings from process efficiencies, and explore Visa® Commercial card program expansion tactics.
A Visa Optimization Review Success Story
A U.S. Construction company - and Visa Commercial card client - was exploring options to maximize its card program by analyzing its processing costs and efficiency across its entire Procure-to-Pay process. Its Visa Issuer introduced it to Visa's Procure-to-Pay and Visa PerformSource.
Procure-to-Pay Process Scope
The Optimization Review utilizes analytical tools designed to help companies identify, benchmark, and improve their Procure-to-Pay practices. These tools help define a plan and financial impact estimate for the expansion of Visa Commercial card programs.
The Issuer and Visa analyzed payment data and formulated recommendations
To help the U.S. Construction company identify cost reduction opportunities and increase benefits from the Visa Commercial card program, the Issuer performed an Optimization Review utilizing Visa's Procure-to-Pay Performance Gauge and Accounts Payable Analysis Tool.
The Procure-to-Pay Performance Gauge
This tool is designed to assist a company in understanding how to improve its current Procure-to-Pay processes and technology. A customized diagnostic report is developed that rates the company's practices against a baseline of best practice metrics and processes and identifies areas for improvement. In addition, specific best practices are identified and recommended to help improve work efficiencies and reduce operating costs.
The Accounts Payable Analysis Tool
This tool helps companies analyze their spend patterns and develop both strategic and tactical commercial card program implementation or expansion plans organized by commodity, business unit and supplier. Additionally, the built-in ROI calculator estimates the financial benefits they can realize through the card program. Companies can set program goals over a three-year time frame for the Visa Commercial card program expansion.
Performance Gauge Key Findings
Visa evaluated the Procure-to-Pay processes of a $2 billion construction company against a baseline of best practice companies of the same revenue size using Visa's Procure-to-Pay Performance Gauge. Overall, the company scored an advanced best practice rating. Here are a few of its best practices:
- Clear Procure-to-Pay strategy
- Use of ROI analysis to determine future initiatives
- Automation of the Procure-to-Pay process
- Inclusion of payment method into preferred vendor contracts
Commercial Card Program:
- Distribution of approved vendor list
- Accounts Payable “interception” of invoices
- Distribution of cards to “super-users”
Yet, despite the existence of many best practices, opportunities still exist for the company to enhance performance for further cost reductions, greater control, and process efficiencies:
- Ongoing vendor list management of all who accept Visa
- Communication of Accounts Payable control, audit procedures, and reporting of non-compliance
- Regular reports to senior management regarding the Procure-to-Pay function and card program to demonstrate and reinforce benefits of program compliance
ROI Calculator Key Findings
Visa analysis projects net process efficiency savings of over $600,000 by Year 3 from expanding the company's Visa Commercial card program.
|Number of cardholders||624|
|Length of card program||3 years|
|Cost of PO & invoice-based payment||$10.20|
|Cost of card purchase & payment||$5.40|
|Savings per transaction||$4.80|
|Total current savings of card programs||$398,000|
|Number of additional card transactions||49,000|
|Purchase & payment process savings/invoice||$4.80|
(Number of transactions x PO process savings)
(Current savings + savings opportunity)
Want to learn more?
Visa PerformSource may bring similar benefits to your company. For more information, or to request related materials and tools, please contact your financial institution today.