Leading global financial services firm JP
Morgan has released a report encouraging businesses to target the
‘large untapped’ middle ground field of transactions using
electronic payment technology in order to improve working capital,
increase visibility into cash management, and generate higher
rebates on accounts payable (A/P) spending.
Until recently the prime focus for treasury
departments has been at two ends of the payment spectrum according
to the report ‘Payment’s New Land of Opportunity’. Credit cards
have traditionally been used for travel and entertainment and some
low value expenses, while Automated Clearing House (ACH) has been
reserved for the high ticket, direct suppliers.
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However companies can now see a new land of
opportunity: the fertile ‘middle ground’ of payment, encompassing a
wide field of transactions that have, until this point, been
handled by paper.
“Corporate treasury departments are under
great pressure to manage costs, control spending and increase
working capital,” said Eduardo Vergara, global commercial card
executive, J.P. Morgan Treasury Services. “Card programs are
becoming the payment tool of choice as organisations increasingly
migrate higher-value, paper-based transactions to electronic
payment with complete confidence.”
The ‘middle ground’ is the spend landscape
that falls in between low and high ticket transactions, with
suppliers that invoice regularly but may not be high volume
vendors. In a bid to address this opportunity companies are using
two payment solutions which work together in tandem: Purchasing
Card and Single-Use Accounts.
Single-Use Accounts is an electronic payment
tool that optimizes an existing procure-to-pay process by
automating and linking payment, reporting and reconciliation. The
report claims that Single-Use Account rebates can be significant
with some companies earning 100 bps on their larger, indirect
purchases, and participating suppliers can also be paid 15 to 20
days earlier, improving the company’s Days Payable Outstanding.
The report also notes that some companies are
capturing higher rebates and paying vendors more quickly by using
purchasing cards to pay for a variety of services.
