THE RECESSION is causing finance departments to take a much bigger role in decisions on corporate cards, say card industry professionals. As a result, travel managers are having to make decisions based not only on what is right for the travel programme but what fits company strategy on issues such as debt and financial risk management.
In particular, the treasury function within finance departments is pressing for extended payment terms to improve cashflow. Some card issuers also report that chief financial officers are investigating whether they can switch from corporate liability to individual liability for the cardholder to help move short-term debt off the balance sheet.
Another reported trend is for corporate clients to choose banks with which they have existing relationships. Finance directors are starting to see cards as an additional way of leveraging their bank relationship, while banks wish to support existing customers, to whom they are more likely to extend lines of credit.
"Historically, the focus for cards has been far more on the requirements of the travel programme," says Alan Hawkins, multinational programme vice president for the global commercial products division of MasterCard Worldwide. "It has been about getting supplier discounts and ensuring compliance with the travel policy. Over the last few seven months, there has been a shift. Those travel management issues are still very important, but now there is a focus towards optimising working capital and risk management," he adds.
For in-depth analysis and a wide range of topics relating to the corporate card and expense management sector, see the accompanying supplement with this issue.