A new report out on commercial card spending notes that 2009 is the first year since purchasing cards were introduced to see a drop in overall spending. In fact, it was a year of decline for the commercial card industry on the whole, which, for more than a decade has posted double-digit spending growth figures.
According to the report, "this explosive growth was driven mainly by the administrative cost savings that card programs were able to deliver. Throughout the decade, as complementary technologies such as program management systems improved, card programs delivered still greater costs savings by improving transparency of spend, particularly in the area of MRO and T&E related purchasing. Taken together, these benefits sparked a secular movement away from costlier paper-based purchasing to more efficient electronic purchasing."
After reading this, I can't help but think how meeting cards -- as part of a comprehensive strategic meetings management program (SMMP) -- have helped countless numbers of companies:
a) discover the scope of their meetings spend separate from T&E,
b) use the data to create policies and rules around purchasing to implement more control,
c) apply what they've learned to increase bargaining power with their meetings suppliers.
Further, meeting cards linked to SMMP technology are powerful tools to help reduce administrative processes, such as budgeting and reconciliation of supplier bills. Card data is pretty solid in the eyes of the CFO, too, and auditors also like the ability to track spend that is documented.
I'm afraid the report, published in the online publication Commercial Payments International
doesn't offer too rosy a picture of recovery for spending. It says spend won't keep pace with GDP growth. Not great news for card companies.
But T&E restrictions and purchasing policies that companies have implemented and strengthened won't be abandoned, either. And as I've said many times before, that's good news. The focus -- even when good times return -- will remain on strategic management of spend, whether it's on T&E, meetings or widgets. Ultimately, I think the power of cards as spend management tools will once again drive up spending levels.
Commercial cards are the instruments of purchasing power that employees hold in their hands -- the first line of defense in spend control. And, when the transaction is complete, cards are the great provider of data that companies need to manage costs. And, in the case of meeting cards, companies can add extra power to the cards by integrating them into their overall SMMP.
The best news about all of this is that if you are in danger of paying a claw back to your credit card provider, due to travel freezes negatively impacting your card spend thresholds for an annual incentive pay out, then issuing meeting cards and funneling their spend volume through your card program may actually help you to meet your basis point hurdles and earn an annual incentive, or at minimum, pay less of a claw back to your card provider. Having managed a very large multinational card program prior to my new life at StarCite, this is an area that you can definitely leverage to your company’s advantage.Kevin Iwamoto is vice president of enterprise strategy at StarCite. This post is syndicated from his blog, Strategic Meetings Management