Commercial Cards:

Business Intelligence for

Better Cost Management

Miami, May 6–8, 2015

Emilio Fortou

Visa Inc.

LAC Regional Director

Global Expansion

Treasury and Trade Solutions

Martin Cannings

Citi Treasury and Trade Solutions

LAC Regional Director

Commercial Cards

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Notice of confidentiality

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The Characters in Today’s Story!

Challenge :

Individual and Group Compliance

2

Increasing Complexity,

Global or Organizational 1

Time and Limited Resources 3

Requirement :

Business Intelligence for Better Cost Management

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To begin at the beginning….

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The importance of Commercial Cards and Data

Leading cost effectiveness efforts throughout the corporation

Developing efficient processes for financial report production

leveraging information tools and systems

How Commercial Cards can fit into your Payments Strategy and

the added controls and compliance of Expense Management

1

2

3

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Commercial Cards as a Source of Business Intelligence

Which of the following define your Top 4 Objectives?

You have 4 Votes (You can raise your hand 4 times)

Compliance Data Integration

Policy Enforcement & Control

Payment Processing Cost Reduction

Cost Savings

Process Automation

Improved Vendor Management

Cash Flow Control

None of the above

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Funding Cash flow

Data : Vendor Discounts

Data : Process Automation

Data : Compliance Management

Control : Per Transaction spend limits

Control : Category spend

limits

Control : Individual

Employee Limits

Control : Reconciliation

Payments can

add significant

value to Policy

Measurement

and fulfillment

However many

organizations

are not aware

of the relative

merits of

payment

methods

ACH / DD

Why Cards?

Why Are Cards Important? Cards can capture

corporate

transactions and

spend

This capture can help

corporations take

control and enforce

policy but more

important can provide

DATA

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The Value of capturing Transactions

Does your company have a mechanism for tracking program

leakage (expenditure not captured on the corporate card that

could be)?

Yes

No

I don’t know

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Defining Success by Spend AND Transactions management

Air, Hotel Every other type of transaction…..

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Business Case based upon the potential Value of a Compliant Transaction?

Rebate?

Expense submission,

approval, reimbursement

automation?

Increased policy control,

compliance and audit?

Improving Vendor

leverage?

Reducing Cash associated

fees?

Other? How many Transactions

could you be capturing

per annum?

A

With an Average

Transaction Value (ATV)

Of $157 this suggests that

for every $10Million in

Spend 64,000 Transactions

could be captured

What is Your number?

B

What is the potential

value of capturing each

Transaction

for Your Organization ?

C

$157

$0.5

$4

$3

$1.5

$1

$5

$15

ACH

Wire

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Compliance, Risk and Fraud

What areas of Compliance and Reduced Fraud are most

important to your Organization?

Tracking and Enforcing compliance across Business Units

Reducing and Controlling the amount of internal “Fraud” or misuse

Minimizing the $ risk/Exposure associated with potential fraud and misuse

Other

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What is the major obstacle to you meeting your Forecasts, achieving High Compliance and Control?

Organizational

Controls

Reporting

Policies

Technology

Systems

Card Products

Other payment

products

Processes

Management

Why should I

comply?

What

happens if I

don’t? High visibility Reporting & managing the behaviour of

Your Employees at all levels is essential

Spend

Spend Spend

In Theory The Reality?

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Policy

Policy Checklist

Payment Terms (DPO)

Approved Vendors (Price)

Transaction Cost (Fees)

Approved Process (Cost)

Risk Approval (Credit)

Preferred Payment Tool (?)

98% of large

companies have

policies

surrounding the

procurement,

acquisition and

payment of

suppliers

The full extent of

their policies

varies

E.g. Is there a

Payments

Policy in Your

Organization?

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Policy Fulfillment will be a problem if

there is no measurement and

consequences of non-compliance

Policy

Reality?

Control &

Compliance

98%

Companies

Have Policies

52%

Measure compliance

with Policy

26%

Deploy consequences

For non compliance

Control and Compliance

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Reality?

What % of your

Workforce are part of the

Younger (non compliant)

generation?

There are challenges

ahead in Compliance

management

Employees increasingly

respond well to any Policy

or Tools which are

The success of

your Policy in

‘reality’

depends upon

the

Compliance of

your Individual

Employees

How confident are you

that you use the best

Payment Tools to

ensure and track

Compliance with

Policy?

Reality of Compliance

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Typically around 10-20 out of every

100 employees conducts expenditure

and should have a card

In some countries and some

companies there is a culture of

suspicion about giving Cards –

perceptions of Misuse arise

Note that the spend hasn’t changed

nor the transactions….but for some

reason Cash and Personal Cards are

deemed – safer

What is the evidence? $10,000,000

Card Distribution & Correlation with Policy Fulfilment

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RPMG Study

Fraud & Misuse

Perspectives

T&E Cards

Employee

Misrepresen

tation

Internal

Fraud (not

authorized to

use the card)

External

Fraud (3rd Party

internet / Merchant)

Median $ Per Incident $500 $100 $400

Loss to Organization as % of

T&E Card Spending

0.015% 0.001% 0.059%

Example

For Every $1,000,000 spend is there is no more than $150 of Fraud and Misuse in Total

This occurs 1 in every 650 Travel cards and 1 in every 36,000 Transactions.

Internal Fraud is even lower – 1 in every 3,846 Cards and 1 in every 200,000 Transactions

Cards are safe payment payment instruments – they potentially make misuse / fraud more visible than any

other payment method

Misuse : Evidence?

RPMG 2009 & 2013 Corporate Travel Card Benchmark Survey

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The Right product, the Right Solution

Thinking about your company’s card management, policy development and execution,

would you say it occurs primarily in a single, central location, spread across several

regions or localized?

Does your company have a mandate to use a specific company-issued credit card for

purchasing, or to pay for such things as travel and entertainment?

Central

Regional

Local

Business Unit / Division

Other

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Different Card Types & Commercial Solutions

Company Type of Card

Product

P-Card

CTA / Lodge

Corporate Card

Policies

Risk

Size

The Need for a Balanced Solution

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The Visa Central Travel Account (CTA) Key Component of a balanced Solution

CTAs Help Companies To:

Centralize travel spend

Distribution of individual credit

Lines

The need of Enhanced Data

A centrally billed T&E card/account used to consolidate travel-related spend that is booked via a corporate travel management company (TMC)

VCF

Needed for Payment Processing

FINANCIAL DATA

Amount ,

Currency,

Posting Date, etc.

Needed for Reconciliation

ENHANCED DATA

Airline Routing,

Cost Centre,

Project Code

Puerto Rico – Commercial Card Solution Strengthens Working Capital

Success Story Ballester Hermanos:

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Decentralized expense

processes

Desire to increase

operational efficiency,

enhance liquidity and

strengthen working capital,

without incurring additional

costs

Company sought to extend its

Days Payable Outstanding

(DPO).

Business Card

solution with lower to

zero fees than checks,

ACH or wire.

Electronically captured

data

Payments debited in a

single transaction.

Ballester Hermanos has

extended its DPO and

strengthened its working

capital

Enhanced visibility and

control of employees’

business expenses

Program capturing $2MM of

spend/month

Gained liquidity and up to 56

days of financing at no cost.

Challenge

Solution

Result

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Commercial Cards your best source for Business Intelligence

The importance of Cards in the corporation’s ecosystem and the

cost effectiveness and efficiencies that can be gained

Data and the Value of Transaction Capture

Policies, Compliance Risk and Fraud

1

2

3

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Your Questions Go back to your Organization

Think about any questions you have around

– Payments Strategy

– Compliance, Visibility improvement opportunities

– Examples of card deployments you would like to hear about

– Particular categories you would like to use cards for but have questions about

– P2P Processes you would like to integrate using card payments

– Cards technology / functionalities

– Or anything else!!!

Please contact you Citi Account Representative or Visa with your QUESTIONS

and we can set up a Webinar to answer your Questions

Check the Visa White Paper!

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Thank You