• Managing Cash Flow
    • Make & Receive Payments
    • Improve Efficiency
    • Ensure Sufficient Cashflow

Optimizing Payments with Commercial Cards

  • Article

Investments in technology and emerging COVID trends have expanded the way businesses view digital and card payments

Commercial cards are fast emerging as a payment mechanism that allows businesses to take advantage of cost-effective ways to better manage their working capital, streamline operations, and gain greater control over them.

Historically, these cards were used primarily for travel and entertainment purposes – however, with the pandemic propelling the need to make payments digital, Corporates are migrating away from cheques to commercial cards, allowing them to make B2B payments more seamlessly.

Today, commercial cards are amongst one of the preferred tools used by businesses to pay suppliers while allowing them easy reconciliation and an avenue to earn attractive rebates.

Key trends in liquidity and working capital

Businesses continue to invest in technology that aims to streamline payments and respond to working capital constraints. The following trends emerged amid COVID-19 and are likely to continue post-pandemic:

  • Suppliers are more receptive to accepting card payments to manage their cash flows better, while buyers seek to leverage supply chain financing solutions that enable them to extend their DPO (Days Payable Outstanding) while strengthening relationships with their suppliers.
  • Paper based payments like cheques continue to decline as buyers seek to streamline their AP processes
  • A surge of investments and innovation in fintech is being driven by a rising shift from consumer applications to B2B solutions as more end-users increasingly expect an improved customer experience that effectively leverages artificial intelligence (AI) and automation.

The financial services industry has actively responded to these trends through new and improved product and service offerings that leverage technological advancements and allow businesses to use card payments as an optimized working capital tool. These include increasing use of ePayables like Virtual cards, which acts as an electronic AP payment alternative to cash, paper cheques and wire transfers.

According to research by Mastercard, an accelerated migration to digital payments has led to an increase in spends in virtual cards which are expected to register a CAGR of 23.4% from 2021 to 2025.

Unlocking capital opportunities with HSBC

Today, HSBC is offering its customers a more straightforward and seamless card experience. Indeed, Corporate Cards and Virtual Card are among HSBC’s most rapidly evolving product lines to date.

The increasing popularity of HSBC’s optimized card platform reflects how customers are adopting new solutions in the rapidly evolving digital space. Commercial cards are complementing the digital payment methods like ACH and wires and the exponential growth in the cards spends suggests the ongoing adoption of cards as one of the primary methods of payments.

“We’re focused on enhancing our offering, streamlining the on-boarding process and providing value back to our customers in how they use their cards, best leverage working capital optimization and take advantage of end-of-year rebates,” says Michael Klopchic, Country Head for Canada, Global Liquidity and Cash Management, HSBC. “Instead of you paying us to make a wire payment, we’re paying you to use your card in settling a payment.”

To maximize the opportunity for you, HSBC also offers value add solutions like B2B Analytics. This is the next level analysis of the AP data to help identify the best card program fit for each of the supplier categories based on several factors including insights from the MasterCard database. Our consultative approach helps you review your suppliers and vendors, not only to identify card spend opportunities, but also help improve Accounts Payable processes. In addition, HSBC can assist in customizing Purchasing Card solutions on spend where a PO and invoice may not be needed, to create maximum program efficiencies and generate the highest possible process savings.

To learn more about how Corporate Cards and Virtual Card can help optimize your working capital, simplify procurement, provide improved visibility and analysis of your expenses and save costs, Contact HSBC Bank Canada.

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