Taking Your Corporate Card Program Global
An increasing number of companies are expanding their existing travel and entertainment (T&E) card programs and are taking them company-wide, which in this day and age, means global. Research with multinational companies1 (MNCs – defined as two or more locations and revenues exceeding US$2bn), conducted between October 2006 and January 2007, suggests that 32% of MNCs already have a comprehensive multinational T&E card program, 60% have not yet implemented one and 8% are uncertain of the scope of their program. Of the 60% who have not yet implemented a multinational card program, 21% said that they will take their T&E program across borders, many of them within two years. This research indicates that the number of MNCs implementing a global card strategy will continue to grow, and at an increasing rate.
There are several reasons behind the increasing number of companies migrating to a global T&E card program. T&E is one of the largest controllable corporate expenses. Although home-country T&E programs may be fully implemented, the study indicates that companies still have a lot of opportunity to expand and leverage their card programs in other regions.
Companies are now looking at ways to achieve economies of scale via strategic sourcing, as well as consolidating and centralising their processes throughout the entire procure-to-pay cycle. Technology that makes this possible is now accessible to more companies than ever before and provides greater policy compliance and proper expense allocation.
All of these initiatives require more accurate and complete data and leading-edge companies are demanding it. Many companies require detailed point-of-sale information; this data is more comprehensive than that needed to merely clear and settle a transaction. An example is an itemised travel itinerary from an airline ticket purchased, or a hotel bill that details all additional services used, such as minibar, phone, etc. The more detailed and accurate the data, the easier it is to ensure travel policy compliance, to automate employee expense reporting and to negotiate preferred rates with suppliers.
MNCs are increasingly under pressure to make the best possible use of all resources, driving an increased focus on optimising global cash management. Every aspect of cash management is being centralised and increasingly handled on a regional, if not global, level; T&E card programs are included in these initiatives. Gaining economies of scale and sensible company-wide policies can help to make travel spend as efficient as possible.
Best practice MNC travel programs employ global product consistency, local cardholder service, globally consolidated data, centralised supplier negotiations, as well as automated expense management and reconciliation.
There are several best practices for multinationals to consider when setting up a global T&E card program. Below are a few considerations.
The first step should always be to define the program’s objectives and to quantify the benefits of consolidation. This will give a clear benchmark to measure the consolidated program’s success. This step necessitates a good understanding of the company’s needs and a plan for implementation.
Next, understand the company’s unique needs. To do this, it is necessary to define all operating locations, as well as an appropriate contact at each location who is best informed about local travel practices and is cognisant of the cultural connotations of mandates, consolidation, and employee-employer relations.
Developing a simple but effective questionnaire to understand the company’s local payment practices is a recommended method to gather and compare data across countries and regions. The questionnaire should gather the following information:
The questionnaire process will give an indication of how cooperative each company or location is likely to be and this will help prioritise the implementation. Depending on the MNC’s needs, the potential to provide solutions (data requirements can play a role here) as well as the expected level of cooperation must be considered. The largest volume location might provide the greatest financial reward, but the smaller location may be more enthusiastic and be an ideal location to begin the process.
Establishing a company-wide travel policy is also an essential prerequisite to a global card program. In building the travel policy, it is critical to recognise regional and cultural differences across all the locations around the world. Recognition of those differences will provide a strong policy without compromising adherence.
The endorsement of senior management is necessary at the outset of the implementation. This is one of the greatest challenges cited by corporate treasurers in implementing a global corporate card program. In order to gain executive endorsement, it is necessary to present a well-articulated business case detailing the direct cost savings to the company as well as the process efficiencies of the program for both company travelers and the various impacted departments such as treasury, finance, procurement and travel.
A core project team should be set up early, including an appropriate contact at each location who is best informed about local travel and/or procurement practices. These individuals will not only help to understand the local dynamics, but can serve as champions in promoting the new program.
The next step is selection of the brand of card. The brand will determine a number of critical components of the program. For example, level of acceptance will impact cash usage and reporting. The level of data required for the global program and the flexibility of reporting and data integration capability is also impacted by the brand choice. Matching the needs of the program and the capabilities of the brand is essential. After selection of the brand, the next decision is the issuer. One approach is to narrow down the candidates through an RFI before sending out an RFP. The RFI, at a high level, details the scope of the program, countries, currencies, volumes, brand of choice and expectations. The objective of the RFI is to determine which providers are able to meet the needs of the program. This will narrow the number of suppliers that participate in the RFP process. Representatives from the brand/association can provide valuable input as they have a thorough understanding of the needs at this point in the process.
Once the issuer is determined, an implementation schedule should be developed. Highlight the project milestones and identify any steps that are conditional upon other actions taking place. Rolling out the program in phases, both at the local level and by region or country will achieve the highest level of satisfaction at each location.
Last but not least, it is important to set up an ongoing review process for the program.
Implementing a global T&E card program can lead to savings in several areas of the company: from negotiated discounts with key travel suppliers, to more efficient use of employee time due to automated online travel expense systems, better control and visibility over travel spend.
Paying for T&E expenses is a process that can be globalised provided that there is adequate representation from the regions and markets outside of the home country, as these employees are likely to encounter most change in their day-to-day activities. Program managers should view this as an opportunity to understand more about their company, work with new contacts, and appreciate other cultures.
1Research commissioned with nxtMove. Analysis based on 470 interviews held between October 2006 and January 2007 with multinational companies with at least two locations and revenues exceeding US$2bn.