Asia Pacific Travel and Entertainment Corporate Card Spend Rose 44% in 2006

A new global survey commissioned by Visa International and the Association of Corporate Travel Executives (ACTE Global) and conducted by analyst firm Aberdeen Group has revealed a 44% increase in travel and entertainment spending on corporate cards in Asia Pacific during 2006, compared with 2005. This was twice the average global percentage increase during the same period and equated to an average annual spend of more than US$17,300 on travel and entertainment per company surveyed in Asia Pacific.

The survey, titled “Global Commercial Payment Cards: Cutting Costs and Boosting Control on a Global Stage”, also found that of the companies surveyed in Asia Pacific, 69% have implemented a compulsory policy of corporate card use for travel and entertainment, while 78% were looking at how to expand their card programs to non-travel related expenses.

The survey explored the practices and strategies around the use of commercial payment programs, specifically around corporate cards and P-cards (also known as purchasing cards) for organizations in Asia Pacific, Europe, Latin America and North America. Corporate cards are used primarily for travel and entertainment expenses, while P-cards are mainly used for expenses related to maintenance, repair, operations, and office supplies.

Michael Cannon, senior vice president for Commercial Solutions, Visa International Asia Pacific said the majority of organizations surveyed worldwide indicated that mandating the use of corporate cards was an important factor in driving growth of card programs.

“Businesses here and abroad are being faced with increased scrutiny and higher control and compliance measures as part of doing business in the global economy,” Cannon said. “Commercial payment programs are a recognized tool for offering improved administrative and payment efficiency, as well as transparency, tracking and compliance monitoring capabilities. Improving Spend Visibility On a global scale, the Aberdeen survey showed that the major objective for implementing a corporate card program was to drive spend visibility. Other reasons given were employee convenience, policy compliance, reduction of expense reporting costs and elimination of cash advances.”

“In Asia Pacific, improving spend visibility was the main objective of putting a corporate card program in place, however companies also saw that corporate cards delivered greater convenience for employees charging expenses,” Cannon added. “When these two benefits are combined, management teams can identify cost savings through consolidation of and negotiation with suppliers, as well as eliminate spending at other vendors who may not offer the same discounts or incentives.”

The survey revealed that companies in Asia Pacific had a slightly slower adoption rate for corporate card programs compared with other regions globally. 51% of organizations surveyed in Asia Pacific have now had a corporate card program in place for more than three years, compared with 75% in North America. Latin American companies were the least likely to have implemented a P-card program with only 40% having had a program in place for a year.

P-cards were more often associated with delivering better processing efficiency and data analytics, improving cash flow visibility, driving expenditure cost savings, supplier acceptance and employee convenience. For companies in Asia Pacific, 45% of respondents said that P-cards were desirable for their ability to provide data and analysis. Most companies surveyed indicated that integration with the company’s general ledger was also very important to the success of a P-card program.

“The survey reinforced that these bottom-line benefits are achievable by showing that the average cost saving per transaction via a P-card was 70 to 75% lower than manual processing costs. Aberdeen extrapolated the cost savings based on the 56,509 transactions 81% of Asia Pacific-based respondents cited spend visibility as a top objective for implementing a corporate card program conducted by the companies in the survey and found this represented savings of approximately US$1.1 million annually,” Cannon said.

See other recent news regarding: Visa, Tourism, Travel, Survey, Research