California Business - Volume 3, Issue 1 - Northern California - 16

BUSINESS
INSIDER

A VALUABLE TOOL
How commercial card creates efficiency for purchasing processes
A company can issue cards
to different employees, and
each can be restricted as far
as usage.

ommercial card, a program that is sometimes
called purchasing, travel or fleet card, has become a hot product as companies realize how it
can create efficiencies within their organizations.
Commercial card has been around for a while, but
businesses were leery of issuing employees credit cards
that could lead to fraud and misuse, says Veenindra J.
Singh, first vice president and treasury management
consultant in the Corporate Services Division at California
Bank & Trust.
Today, commercial card not only reduces internal costs
when it comes to purchasing practices, it also - unlike
business credit cards - offers upfront controls on usage,
with a very robust reporting system that captures data,
allows automated postings and so forth.
"There is more acceptance because companies have realized that the product has evolved," Singh says. "It makes
sense for a lot of companies to start looking at putting a
program such as this in place."
Typically, 80 percent of business purchasing is below
a certain dollar amount, and the remaining 20 percent
is high-end purchases. However, the approval process for
both is usually the same, whether you're buying a box of
pens or a $10,000 piece of software.
With commercial card, you set a benchmark, and
then an employee uses the card to make all purchases
under that limit without layers of approval. Higher-dollar

16 * California Business

purchases go through the normal approval process, and
employees still utilize cards to avoid processes like invoicing, purchase orders, etc.
With upfront controls, a company can issue cards to different employees, and each can be restricted as far as usage.
"For example, if you've issued cards to a maintenance
group, then those cards could have features turned on
that allow those employees to make purchases only at
related stores or companies," says Singh.
In addition, the reporting is robust. Within 48 hours,
a company will see the purchases. Commercial card has
three levels of reporting, and the level of detail you receive on a purchase depends on the merchant's capability.
With the higher levels, there is the ability to capture sales
tax, general ledger codes and exact specifications of the
purchase.
While any size company can take advantage of the service, larger companies have more purchasing needs and
requirements. Smaller companies can use these cards, but
most banks have a minimum, and if a business is below
that threshold, the bank probably won't offer a commercial card solution.
Commercial card services vary by provider, so it's important to understand all the details.
"Commercial card has no interest rate because it is
paid off in every billing period," says Singh. "Banks also
only qualify the company, not the individuals who are issued cards. A bank will give the business a total limit, and
then you can issue as many cards and assign whatever limits you wish, as long as it's underneath that umbrella." *
Veenindra J. Singh is the first vice president, treasury
management consultant in the Corporate Services
Division at California Bank & Trust. Reach him at
(510) 808-3557 or veenindra.singh@calbt.com.

California Business - Volume 3, Issue 1 - Northern California

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