Purchasing patterns and cost analysis with Commercial Cards

“With traditional manual payment processes, it can be a challenge to oversee costs and analyse purchasing patterns”, says Lewis Sun, Regional Head of Product, Asia Pacific at HSBC. In the latest article in our B2B payments series, he explains how card-based solutions can help improve cost analysis, purchasing trends and working capital by using online reporting, such as Smart Data – HSBC’s online management and reporting platform.

A Commercial Card is more than just a credit card for employees to pay for day-to-day expenses. It can also be used for a wide range of purchases – from small transactions, to regular monthly purchases of services or goods, to paying key suppliers. And by introducing Commercial Cards into the procurement process, a purchasing department and treasury team can benefit from improved operations and cost savings.

Information leads to working capital optimisation

When a company uses HSBC’s Commercial Cards for procurement, all the transaction data is centralised in Smart Data, HSBC’s online management and reporting platform that allows data to be extracted and analysed through insightful reports.

It’s an online reporting tool that allows administrators and treasurers to pull up information on transactions both at a company and at an individual level. Its flexible reporting function has standardised report templates, as well as 200 fields that can be used for customised reports to suit the company’s own reporting or analytics requirements. The result of all this functionality is that a treasurer can take a bird’s eye view of the company’s card spend, before diving into specific spending patterns.

A treasurer that has more insight at their fingertips is in a stronger position to identify areas of spending that can be made more efficient, as well as reduce overall spend. For example, centralised data makes it possible to create efficiency gains that saves time and people cost. Ultimately these savings contribute towards the goal of optimising cash flow.

We can see these dynamics in play by looking at how easily accessible reporting tools improve the reconciliation process. It can improve the production cycle, and help the financial team to develop a strategic working capital plan.

A treasurer can also take advantage of Commercial Cards integration to reduce labour-intensive manual work and conveniently feed data into the organisation’s existing Expense Management System (EMS) or finance system. The result is that data is automatically centralised into one place, where it can be accessed by any relevant party for forward planning.

Better cost negotiation with suppliers

Fast payments made with Commercial Cards can make a big difference with your supplier negotiations. Paying by card means that the supplier receives the money faster, often within two or three days. That helps keep their supply chain moving since they are less reliant on credit, and in return, the buyer can start to negotiate for better purchasing terms. At the same time, both sides become less reliant on traditional payment channels, like cheques and wire transfers, which helps reduce labour costs all around.

Smart Data’s role here is to provide visibility of all transactions, and create customised reports that allow stakeholders to compare the costs from different suppliers and analysis spending over a period of time. The more detailed the analysis, the stronger the company is when it sits at the negotiating table.

In this series of articles, we have examined from a variety of angles the utility of Commercial Cards, and the many ways that they can free up cash in an organisation, simplify processing and improved visibility and reporting.

In a difficult and uncertain business environment, treasurers are heavily involved in realising a number of strategic objectives – such as managing costs savings and optimising working capital. Commercial Cards are an essential tool that allow treasurers to achieve these goals with all the efficiency you would expect from a digital solution. Start using HSBC’s Commercial Cards today or contact your Relationship Manager for inquiries.