Diversified Media Industry
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. Diversified Media company - and Visa Commercial card client - was exploring the possibility of launching a card program to reduce processing costs and increase efficiency across its entire Procure-to-Pay process. Their Visa Issuer introduced them 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. Diversified Media 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.
Visa PerformSource Background
To identify opportunities to most effectively introduce a card program, the Diversified Media company's Issuer and Visa collaborated to conduct the following Optimization Review:
- A review of non-payroll Accounts Payable data to provide a focused list of opportunities
- An evaluation of current spend data to identify the potential of the new card program against best practice companies of similar revenue size
- An analysis of current Visa Commercial card best practices in order to enhance card program performance once it is launched
- A strong interest in launching a best practice Visa Commercial card program
- 47 percent of annual spend is paid by check to Visa card-accepting suppliers
- Average check payment size is $1,170
Commercial card program opportunities were identified during the Visa Optimization Review:
- The launch of a commercial card program has the potential to capture $8.1MM, or 24 percent, of annual spend on the new card program
- 7,650 check payments less than $25,000 were identified to be transitioned to the new card to save an average of $23 per transaction, generating savings of over $175,000
- Targeting transactions less than $2,000 would move 86 percent of check transactions to the new card program
- $5.6MM of e-procured spend could be captured on the card with integration of the card program with the e-Procurement system
Additionally, Procure-to-Pay best practices were recommended that, once implemented, could further reduce processing costs and streamline internal processes:
- Establish appropriate spend limits; a $2,000 limit was selected to provide the optimal balance between ease-of-use and controls and to capture 86 percent of payment transactions
- Increase the invoice variance threshold from 5 percent ($20) to 15 percent to reduce the rate of exception invoice processing, which is currently at 50 percent
- Explore options to increase savings by establishing a center-led strategic sourcing organization; a team should be established that will assess opportunities and eventually develop supplier relationships and monitor savings
- Develop a plan to regularly communicate Procure-to-Pay successes to senior management and encourage participation
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.