Issuing and Managing T&E cards in Multiple Countries and Currencies
There are many reasons for taking up a corporate card programme, but it’s fair to say that for most companies the desire to monitor, control and analyse expenditure is usually high up the list. The ultimate aim, of course, is to reduce costs and save money. A card that delivers management information on spending patterns, the ability to negotiate preferential rates with regular vendors, advantageous card and data fees, and a strong rebate or financial incentive will certainly achieve all these.
If the card is managed on a regional or even global basis the cost savings and efficiencies, when aggregated across a whole group, can be substantial. For companies that operate in more than one country this means making a decision between operating one multi-national card programme, that is issued and managed centrally, or several programmes that are run on a local country basis. That decision is being faced by more companies as the business world gets smaller, new markets emerge and business travel and entertainment increases. All of which provides a huge opportunity for both issuers of corporate cards, and their users.
However the circumstances surrounding the issue and management of cards in more than one country are complex and should not be underestimated. At first glance it seems clear that a multi-national card programme is the most advantageous for all concerned. It will create a universal product to be used in all countries, which will deliver similar experiences for the user, and one set of processes to be controlled by the corporation.
It will also drive a consistent company-wide T&E policy for both submission and re-imbursement of expenses. In so doing it could well contribute to the minimisation of fraudulent expense and, through the provision of audit trails and a verifiable process, will help organisations meet the stringent requirements of the Sarbanes-Oxley Act – particularly sections 302 and 404 – as well as European Accounting legislation.
But, of course, it’s hardly ever this straightforward. There are in fact very few options if an organisation chooses the multi-national card. The number of issuers who are able to offer a consistent programme across multiple countries/regions, and be able to provide data to anywhere in the world is limited. In addition, there are a large number of hurdles to be cleared, not least the often-lengthy negotiations at the local level, the different pricing structures to be established in each country, and the diverse legal frameworks that affect the nature of the contracts to be signed. Citigroup is one issuer that has the global reach, technological ability and demonstrated experience to address the above issues via its Citibank Commercial Cards.
If we take airline travel as one example, airfares are often cheaper with the national carriers, even before specially discounted rates are secured. A centrally managed programme that only works with one airline for all locations may lose these financial advantages.
Nor is there a universal attitude towards the use of credit, or a common set of legislation governing the use of credit. For example, France has very particular requirements regarding credit cards and who can issue them, while Germany has very strong data protection and privacy laws that affect the nature of the information companies can see about employee spend – and how long it can be held.
In addition to differences in legislation there are also cultural differences that they need to manage effectively. The UK has a strong credit culture – and consequently a high usage rate of both corporate and personal credit cards. Italians on the other hand are far less likely to have a wallet full of plastic. These differences mean that the benefits on offer, the incentives for use, and the controls in place may be far more effective in one country than they are in another.
Then there’s service and support to consider. A multi-national card implies a consistent standard, regardless of location – and both users and administrators will realistically expect this. Delivering that consistency is a further challenge for issuers. Not only do they need to take on board different attitudes to credit, they need to take on board different work ethics and customer service standards as well.
Furthermore if the card issuer is embedded firmly in one location, but less so in others, users will ask themselves whether this will limit the effectiveness of the programme. Issuing, and indeed managing, a multi-national card is far from being a matter of ‘one size fits all.’
Companies also need to consider how corporate cards are used. If 85 per cent of a card’s spend occurs in the UK, with the remaining 15 per cent being spread across another five countries across Europe, is it really worth using a global card?
In other words organisations really need to know their business before choosing their card issuer. In the same way, issuers need to be thoroughly conversant with the details of their clients’ business if the card programme is to be a success.
This is particularly true when it comes to the issue of currency if exchange fees are to be avoided. The card really needs to be available in the local currency of the country in which it will be predominantly used.
Ideally the card issuer will have a presence in the host countries of all the world’s major currencies – although where the issuer has no presence, for example in developing countries, the dollar is still preferable. However, it is a fact that for most companies 90 per cent of global spend is in the top 10 countries, so these 10 should be the primary concern.
This may all change though. The creation of the euro zone has certainly made the management of multi-currency cards somewhat easier. However there are still important areas outside the single currency – including the UK and, increasingly, Russia.
Certainly the location of the company’s HQ will affect which currency to choose. Nordics and Europe-facing former Soviet states may well find a card in euros more effective. When it comes to currency, flexibility can be the essential component of any programme.
Furthermore, as the epicentre of international business shifts gradually away from western Europe and major markets in eastern Europe, India and China open up, the matter of currency will become more important. This is a big challenge for issuers and users, both of whom need to have a firm understanding of the changing nature of international business.
There are, therefore limits to both options. Issuers need to be aware of these and counter them with carefully tailored programmes. Users need to thoroughly investigate all their alternatives and select the issuer that will deliver the benefits they are looking for. The ideal option is a regional card that can take account of local differences while at the same time offering the benefits of central control of spend. This needs to be supported by a management structure that can work at local, regional and global level if necessary. It’s quite a challenge for all concerned – but if users and issuers work closely together the chances of success are high.