Building flexibility into treasury
An immediate benefit is payment flexibility. Businesses could, for instance, negotiate an early payments discount or flex the payments cycle to create additional working capital, while still ensuring suppliers are paid on time.
Anna explains “Let’s say a business has 30 days to pay. By introducing a card-based solution, they can still pay on time, but the treasurer can extend the corporation’s terms by up to 86 days because of the payment cycle back to the card provider. They now have additional days to use the additional working capital.” Or an opportunity to build stronger supplier relationships through better dialogue or by paying more strategically.
Increasing control and visibility
Insight and control are other factors. “Controls can be embedded within the payments features and applied on the value of spend on certain items, or where those items can be spent,” says Anna. “Through the data our solutions provide, treasurers get real insight as to what money’s been spent and when it is coming in and out of the organisation. This gives them the control, visibility and transparency they need.”
“The data insights give …control, visibility and transparency.”
Businesses adopting a card solution for working capital opportunities typically have either cash targets or growth and investment targets. For mid-sized organisations in a growth phase, access to cash and the ability to pay via bank transfer have particular appeal. Adoption has been highest among these companies, not least because it allows them to enjoy the benefits of a credit card account when working with suppliers – such as those who are new or at the tail end – and don’t accept credit cards.
Treasury adds value to the business
Access to working capital is a key driver of treasury and, as card solutions change the dynamics of the payment landscape for businesses, Anna expects treasurers to continue to grow their influence. As well as becoming core to business decision-making, they will have greater involvement in leveraging technology solutions.
“Treasurers …will leverage solutions to drive change and value.”
Take accounts payable as an example. Treasury’s ability to optimise credit terms for cash flow can turn this from a cost centre into a profit-making or revenue-generating department. “I think that will become more evident,” says Anna, “and you’ll see treasurers being alerted to that and leveraging these solutions to help drive change and value in their operation.”