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. Technology 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. Technology 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 card program expansion opportunities, the client'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 expansion opportunities
- An evaluation of existing card performance to benchmark the card program against best practice companies of similar revenue size
- An identification of best practices to reveal opportunities to enhance card program
The following highlights the current card program:
- Program in place for five years
- Annual card spend of $5.2MM, representing 6 percent of non-payroll spend
- Average transaction size of $1,075
- Annual savings of over $40,000 with an average savings per card transaction of $9
Commercial card program expansion opportunities were identified during the Optimization Review:
- A Visa Commercial card expansion plan was developed to identify a $17.5MM card expansion opportunity
- Over 11,000 check payments were identified to move $17.5MM spend to the card, saving over $98,000 in processing costs at an average savings of $9 per transaction
- Based on the expansion recommendation, the average transaction size would increase from $1,075 to $1,400
Additionally, card process best practices were recommended that, once implemented, could reduce processing costs and streamline internal processes:
- Mandating purchasing card compliance through a refresher training course, specifically highlighting card use for all purchases less than $1,000, specific suppliers, and spend types
- Reaching out to business unit leaders to present analyses of where expansion opportunities exist in terms of number of cardholders and who they are
- Use of Electronic Invoicing with key suppliers further to automate the payment process
- Incorporating purchasing card acceptance into every appropriate supplier contract, and encouraging card acceptance for 100 percent of transactions for specifically targeted suppliers
- Exploring options to improve sourcing tactics through consolidation of suppliers
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.