Follow our step-by-step guide to improve company cashflow and reduce the cost of processing expenses

STEP 1: Define a clear objective: manage cash flow better; consolidate spend into one payment method; save on processing costs. Robert Daykin of The Corporate Travel Partnership says that each expense form costs between £25 to £35 to fill and process it, and that you can “get it down to between £7 to £10 if you automate the process. You can strip out around 70 per cent of the process costs, changing from a paper-based to a fully automated process.”

Daykin believes that a vital part of this first stage is to consult with all the stakeholders in the process, including not only the travellers, but finance (who have to administrate the card), HR (who may need to establish a hirers and firers process for issuance and retrieval of the card), and purchasing (who will be interested in the data for any vendor negotiations).

Improving cash flow is another major benefit. “From a cash flow perspective we have a longer time to pay – 55 days* – so that helps,” explains James Maltby, managing director of Thoughtbubble, a full-service web agency with 20 staff and a £20,000 annual travel spend. “It also empowers our staff,” he says. “It’s a real kudos thing. Before, staff were having to use their own money and we paid them back. I wish I had done this nine years ago when we started.”

STEP 2: Find a provider that is tailored to the SME sector and who will provide the right level of MI for you, the right functionality and which is accepted in sufficient establishments. All providers are the same in terms of being a payment mechanism, but they differ slightly in terms of functionality and capability as part of a fully integrated travel and expense process.

“It’s all about service, support and contractual terms,” says Daykin. “When you have a problem, is it easy to change the fixed limits? Ask what the risks are if you default on the card, does the corporate get chased or the individual?” Also, ask whether they provide card statements online so an employee can check it at their convenience, whether the card state-ment can be manipulated to resemble the company expense claim form, and that there is sufficient space to write in a justification for the expense.

Thoughtbubble needed daily access to a US$ account, which swayed their decision when choosing American Express as a card provider. It has two frustrations with its provider: “the general take-up of the card on the web is not good. A few suppliers won’t take it. Also, I would like to have both online and paper state-ments but I can only get one or the other.” Amex says clients can have both.

STEP 3: If you prove to be a good customer – that is, you achieve average spend and pay on time – you can choose whether to get a rebate at the end of the year or upfront discounts. The provider should automatically credit your company bank account with what you’ve saved. American Express’ Corporate Savings Plus Loyalty programme, for example, provides upfront discounts with suppliers.

STEP 4: Decide between one of three liability options: the individual will be wholly responsible for everything they spend on their card; joint and several, which means that both the individual and the company is responsible. This is particularly useful for an employee who travels for long periods and clocks up high bills. Lastly, corporate liability, under which the company takes full liability. This option is usually used for chief executives. Best practice is normally an individual card and the individual pays, having accounted for all their travel spend through the expense claims process.

STEP 5: Control the utilisation of the card. Bar certain type of merchant use – such as DIY shops or grocery chains, for example – in an effort to limit any potential abuse of the card. “It’s about traveller behaviour. If you can get them to behave well in relation to all parts of the travel programme, this is where corporates can save the most money,” says Daykin.

STEP 6: Communicate the arrangement so every traveller knows who’s going to pay the bill. Good providers will have an implementation team to advise on how to launch the card internally. Use posters in the coffee areas, talk to potential users online, leaflet desktops, upload details of the corporate card programme on your intranet. “They need to get the message out there,” says Karen Penny, VP account development & marketing UK at American Express.”We give the company a pack of templates and they can cherry pick the posters and forms that are appropriate,” she says.

STEP 7: Mandate card use and encourage take-up with incentives such as earning points or miles when they use the card. “If there’s something in it for them they’ll do it,” advises Amex’s Penny. For example, American Express offers a co-branded card with British Airways. “We go to America at least twice a year and flight-wise, we’ve already collected enough points for a few flights to Paris,” says Thoughtbubble’s James Maltby.

STEP 8: Request reports from your card provider on a quarterly basis to track number of cards issued.

STEP 9: Consider going one step further with the card and making it part of an integrated travel process. “It can then be a very powerful link mechanism between the product you’re buying and the expense process,” advises Daykin, “and is key to building a proper travel infrastructure.” A traveller could then go to their computer screen, log in, call up their expense form and it will already be completed with items pulled from their card. Some clarification might be needed – for example, to specify whether a meal paid for was business (to claim VAT back) or entertainment (no VAT claim) – and then the traveller allocates the expense to a budget code and/or project code. It can then go straight to the department head or whoever signs off expenses, who then sends it, electronically, to expenses payable. It is then an electronic process all the way through. Corporate card companies do not offer a fully automated expense process, so this option requires a piece of software. Corporate cards do support an end-to-end offering. *Not all providers offer 55 days to pay.

Choosing a fully integrated expense process provider
CONCUR: the largest provider in the world. Has the greatest functionality. An expensive option.

GELCO: works well in the United States, but has less presence in Europe. Again, an expensive option.

GLOBALEXPENSE: a UK-based company with 130 clients including Sainsbury’s, Alcatel Telecom and Renault. It doesn’t have a travel booking tool, but is about to launch a travel requisition tool (like a pre-approval travel request process). Its ‘end-to-end’ solution only starts at the claim submission stage and is fully integrated with all company card providers and to existing travel providers.

EXPENTURE: a European-based (but global in scope), all-in-one streamlined process that can include the provision of a corporate card mechanism and which effectively allows you to totally outsource the entire expense management and travel payment process. The tool produces one invoice at the end of the month for the company’s entire travel spend, so it requires just one single payment for each period. It has Concur imbedded in the system and incorporates a data ware-house for the provision of meaningful management information. It’s targeted at medium to large companies and is part of Travel Pool Europe.

KDS CORPORATE: claims to be the most advanced end-to-end solution in the marketplace. Its single database makes it easier to configure and, from a single application, users manage both their travel booking and their expense claims.

It pre-fills into the system every purchase made from corporate credit cards to expedite expense claim processes. When trips are booked through KDS Corporate, expense reports with relevant line items are automatically generated to reflect fares, car hires, and hotels – and when charges don’t align, warning flags let managers know there’s a situation that may need investigating.

CHOOSING A CORPORATE CARD
AIRPLUS: able to capture very good airline data at point of sale. The largest European business travel payment provider, providing lodge cards, corporate cards and state-of-art analysis systems. (Partly owned by Lufthansa, but it’s a totally neutral product).

AMERICAN EXPRESS: 100 per cent a card company, so fully focused on the card. Very detailed level of data from establishments. Arguably not the same acceptability as Visa and MasterCard, although Amex is widening the number of establishments to include the likes of Nando’s, Woolworths, Boots and Starbucks. Higher merchant fee than Visa and MasterCard.

BARCLAYCARD BUSINESS: offers commercial cards to suit businesses of all sizes, from SMEs to large corporates. It claims to be Europe’s leading Visa commercial card provider, offering value-added services and supplier discounts.

DINERS: (Citibank Commercial cards) arguably not the same acceptability as Visa and Master-Card; has higher merchant fee than both. None-theless, has a presence in over 100 countries and local issuance of commercial cards in 40, claiming the highest global acceptance. Also offers support of its proprietary global network, innovative transaction reporting and range of cash management banking solutions.

MASTERCARD: issued by individual banks. Thought to have better acceptability than Diners and American Express, probably due to its lower merchant fee.

VISA: issued by individual banks. Thought to have better acceptability than Diners and American Express, probably due to its lower merchant fee.

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