Commercial Cards in Action: Businesses Gain Working Capital Flexibility

Against today’s shifting macroeconomic backdrop, companies are prioritizing their agility and ability to react to unforeseen events.

Increasingly, firms are backing that ability up with savvy working capital management strategies that leverage commercial and virtual cards to manage their B2B spend, ensuring that there is enough capital on hand for whatever the marketplace throws their way. 

Even firms in traditional industries like the transportation and logistics sector, where lockboxes and paper checks abound, are revisiting commercial cards as a versatile tool for managing various aspects of their operations and employee spend. 

This transition is being accelerated by the commercial landscape evolving toward a more equitable sharing of credit card transaction costs. While historically, sellers bore the brunt of these costs, the value proposition for each party involved in a B2B card transaction is constantly being reevaluated.

As just one example, businesses can negotiate longer payment terms with their commercial card issuers, allowing them to defer payments while still maintaining positive relationships with suppliers. This helps to optimize cash flow and working capital. 

At the same time, commercial cards streamline the B2B payment process, reducing the time it takes to complete transactions compared to traditional invoicing and payment methods. This quicker turnaround enhances cash flow, providing businesses with more working capital to invest in operations, growth and other strategic initiatives — even modernizing further their accounts receivable (AR) and accounts payable (AP) programs.

See also: Businesses Give Commercial Cards a Fresh Look

Commercial cards have climbed up finance teams’ priority lists in part due to the interest rate environment of the past few years, where higher rates have helped heighten the appeal of commercial cards for B2B transactions and underscored the need for more effective working capital tools that provide businesses an efficient way to manage their cash flow. 

“Working capital is very important in shifting and uncertain economic times … and businesses are increasingly looking at opportunities to utilize commercial cards in a meaningful way,” David Bork, head of AR solutions at Boost Payment Solutions, told PYMNTS in July, noting that there is also “less fraud in virtual cards. The numbers are something like 40% for ACH attempted or actual fraud, and for virtual cards, it’s around 3%.” 

Commercial cards facilitate the procurement process by allowing businesses to make secure and controlled transactions with suppliers. This is particularly beneficial for purchasing goods and services related to transportation operations, such as vehicle maintenance, spare parts and equipment.

Transportation businesses often use commercial cards to cover fuel expenses for their fleets. This helps in monitoring fuel consumption, controlling costs and simplifying the reconciliation process.

Commercial cards offer real-time visibility into expenses and advanced security measures, and are widely used for managing travel expenses such as airfare, lodging, meals and transportation for employees. They provide a streamlined and efficient way to track and control travel-related spending.

As PYMNTS reported, Visa’s suite of B2B payment solutions last month (Feb. 12) launched the ability for financial institutions to add virtual corporate cards to the digital wallets of their clients’ employees. 

And underscoring the sector-agnostic benefits of commercial cards, FLEETCOR Technologies on Thursday (Mar. 7) announced it is rebranding to Corpay, saying the new name better reflects the range of corporate payment solutions the company offers beyond its central vehicle payments line of business.  

Read more: North American Marketplaces Lead in Corporate and Virtual Card Usage

Streamlined payment processes with commercial cards can lead to reduced administrative costs associated with manual invoice processing, reconciliation and handling paper checks. This efficiency contributes to overall cost savings and allows businesses to allocate resources more strategically.

Additionally, many commercial card programs offer rewards, cashback or other incentives for transactions. Businesses can leverage these benefits to further enhance their working capital by gaining additional value from their B2B spending. 

“The companies that aren’t embracing virtual cards or B2B payments innovations will be the ones that fall behind. The suppliers that are not as flexible and willing to embrace these new forms of payments are going to lose business, while the buyers who are not using them are losing revenue, which results in them not being as competitive in their space,” Bob Kaufman, founder and CEO at ConnexPay, told PYMNTS on Tuesday (Mar. 5).

“When companies take a one-size-fits-all approach [to payments], it tends to be limiting,” he added.

PYMNTS Intelligence found that middle market firms that take a strategic approach to the use of working capital outperform their peers that do not.

That’s why Visa, in partnership with PYMNTS Intelligence, has launched a new benchmarking tool for middle-market CFOs to evaluate their working capital efficiency compared to industry peers. This tool, featuring a calculator and interactive report, is based on a study, “The 2023-2024 Middle Market Growth Corporates Working Capital Index,” released by Visa and PYMNTS Intelligence in September.

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