Commercial cards as a payment solution have developed a lot in recent years. More and more businesses of all sizes, across all different sectors, are seeing the value in using commercial card solutions in both day-to-day and business critical transactions.
For businesses looking to streamline their payment processes, support their working capital and achieve greater efficiency, commercial cards can be a smart solution. If your business has used commercial cards in the past for travel and expenses, for example, but hasn’t considered them as a broader payment option, you might be surprised.
Far from being just a physical card, commercial cards can deliver real business value in a number of ways, including:
Working capital efficiency: by giving access to a period of interest-free credit, commercial cards make it easier to manage liabilities conveniently and cost effectively.
Additional protection: card payments come with chargeback protections. Any issue with receipt of goods is covered. Security of payment is also enhanced.
Freeing up time: by simplifying and automating payments and reconciliation, and working alongside existing accounts payable processes, back-office efficiencies can be achieved and more robust management information provided.
Securing supply chains: card payments can reduce suppliers’ days payable outstanding without impacting cash flow.
With so many commercial card solutions available, it’s important to choose one that works for your business, your circumstances, and your supply chain. While many suppliers are happy to accept card payments, some might have restrictions on the type of payments they accept, or transaction limits. Others might view accepting card payments as an extra cost or burden on their own processes. But that can be a missed opportunity.
If that’s the case for your business and parts of your supply chain, finding a commercial card solution that overcomes that issue can deliver important benefits for both parties. As commercial cards have developed, some of the latest – such as Lloyds’ new eOptimise solution (see box out below) – offer more sophisticated and flexible solutions that address many of the pain points that have previously deterred suppliers from accepting credit card payments.
For example, by ensuring that the processing costs of transactions are borne by the buyer rather than the supplier, and that the supplier still gets paid as quickly as possible, these solutions eliminate the perceived downside for suppliers. Even if they don’t take regular card payments, with such new solutions, suppliers simply process payments as they would any other type of payment. This allows buyers using these commercial card solutions to enjoy the benefits of commercial card payments even when trading with suppliers who don’t accept card payments.
Allowing more seamless transactions helps reduce friction for businesses. And in an environment where supply chains and costs are being squeezed, it can support working capital and help secure supplier relationships, managing a key business risk.
Commercial cards are a rapidly evolving area and there’s new technology and innovation coming through all the time. It’s an exciting space for us to work in because it’s very much driven by business need and opportunity.
Using cards to support business-to-business relationships is an evolving landscape and, as an industry, card issuers are working hard to specifically address the needs of businesses operating in that space. It’s about enhancing capability and reducing friction, which Lloyds’ eOptimise service demonstrates.
It sits within an even broader range of business-to-business solutions, too, of course. But it’s really just the start and we’re going to see more and more innovation in the coming years. Our commitment to innovate will mean that we improve data analysis, make price points more competitive, and deliver greater value than ever before.
Looking ahead, Lloyds is committed to innovation across the whole business, and in commercial cards we see a fantastic opportunity to deliver value at both ends of the transaction by enhancing the seamlessness of processing.
Alongside the overall benefits that commercial cards offer, the key difference of Lloyds’ new eOptimise solution is that it’s available to use with suppliers who might otherwise have been unable or even unwilling to accept card payments. eOptimise means:
1. Shifting the processing of the transaction, and the cost, from the supplier to the buyer, or even allowing that cost to be shared.
2. Enabling buyers to achieve early payment discounts. Providing payment amount certainty by putting the buyer in control of the amount being paid, rather than giving a card number to a supplier, who could then net off the invoice value with a credit note.
3. A win-win solution, with credit terms that help buyers keep their cash for as long as possible and suppliers to get paid as quickly as possible.
4. No process change, because eOptimise works with existing systems, avoiding the time, effort and money associated with change.
5. No limits. Whether it is paying a £20 or a £20m invoice, it works the same.
As an extra layer, Lloyds’ Optima tool is a data analysis solution that overlays business goals and data with Lloyds’ commercial card technology and working capital solutions to provide a smart payment strategy that’s tailored to your business.
For more information, visit lloydsbank.com/cardsolutions or email lbgcommercialcards@lloydsbanking.com
Linda Weston is head of commercial card products at Lloyds
