Business travel is a growing concern for the modern enterprise. Whether it’s saving on the cost of airline tickets, or trying to keep traveling employees in compliance with corporate policies, managing business travel expenses can be a massive headache. That’s why the corporate travel card can be so valuable to the typical enterprise. Read on below to find out more.
What are Corporate Cards?
Corporate cards and their cousin, the central travel account, are designed to help enterprises manage travel and entertainment expenses. The first such card was launched in 1934 as a collaboration between American Airlines and the Air Transport Association. Called the “Air Travel Card,” cardholders could book airline tickets and receive a 15% discount off the purchase price when using the card. By the 1940s, 17 airlines had signed onto the Air Travel Card plan and offered the card to business travelers. The card remains active today, operating as the Universal Air Travel Plan, and is still airline-owned with partners around the world, including British Airways and Lufthansa.
Corporate cards are, on their face, not particularly special when it comes to operation. A physical card that can be used by on-the-road employees to pay for rental cars, airline tickets, or any other business-travel expense, many travel cards still offer rebates on transportation expenses, and some—such as American Express—provide access to special airport lounges at certain cardholder levels (typically an executive travel card).
Why Are Corporate Cards Valuable?
According to Ardent Partners research, business travel accounts for anywhere from 10% to 15% of enterprise budgets. Without a method of centrally managing business travel expenses, it’s very easy to miss out on cost-savings and other efficiencies. And this doesn’t even begin to consider the paperwork that can occur when traveling employees submit expenses and the finance team must analyze the reimbursement paperwork to determine if everything was compliant with internal policies.
Using a corporate card allows enterprises to more efficiently manage travel and entertainment expenses because of the increased visibility and control over enterprise spend. Many solution providers offer travel and expense program managers the ability to set spending limits and see, at a glance, how well individual travelers comply with corporate policies. Moreover, these same card issuers also in some cases provide robust reporting and analytics so program managers can analyze program data and look for greater cost efficiencies. This sort of granular ability may not happen when corporate travel spend is managed via a reimbursement set-up and not an enterprise-provided travel card or central account.
Moreover, beyond cost savings, the analytical back-end of a corporate card solution allows enterprises to drill down into spend data and mine for multiple insights. These can include: spend by category and department, as well as help determine spend against contract and compliance monitoring capability. Implementing a corporate card solution thus allows enterprises to capture more accurate data on business travel expenses so that the enterprise is leveraging its business travel spend in the most effective manner.
Who Offers Corporate Card Solutions?
Practically every large bank offers corporate travel card solutions; in general, if a bank issues credit cards and has commercial banking operations then the chances are fairly good that a corporate card is on offer. That said, there are a few major players in the space. One of the largest is Citigroup, which has a self-owned issuing network operating in 100 countries. US Bank and SunTrust Bank are two more banks that offer corporate cards.
There are also a few non-bank providers of corporate card solutions, including Comdata Corporation and American Express. The Universal Air Travel Plan is also still in existence, and is accepted at 260 airlines, travel agencies, and rail networks worldwide. Mastercard also offers corporate cards direct to businesses, in addition to working through its network of issuers.
Final Thoughts
Business travel is one of the biggest single indirect spend category in many enterprises. It’s because of this size – roughly 12% of enterprise budget – that business travel spend needs to be managed effectively and efficiently. To do that, enterprises must have clear visibility into travel-related spend as well as a sufficient method of collecting all that spend into one place. Add in the possibility of a rebate, which some card solutions offer, and it’s easy to see the value in adding a corporate card into an enterprise’s travel and expense management program.
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