The value of card payments in corporate supply chains

Supporting businesses’ working capital optimisation needs

More than 73% of top-performing growth corporates across Europe use finance strategically to grow their business¹. Across the board, maintaining robust supply chain management with enough liquidity to pay suppliers on time is an ongoing strategic objective. Card payments in particular provide growing businesses and well-established corporates with the flexibility they need to maximise resilience throughout the entire supply chain.

While cards were once viewed as a plastic card product mainly used to cover travel, entertainment and low-value procurement costs, today they are rapidly expanding in scope. New products such as virtual cards combine auto-reconciliation benefits with risk controls, offering businesses a powerful procurement tool.

As businesses aim to maximise trade robustness in cost-effective ways, they may either seek to release trapped liquidity or increase their days payable outstanding (DPOs). Card payments can be a unique way of building transactional resilience and enhancing supply chain operations. Understanding the transactional relationship between corporates (the buyer) and their suppliers is key, and can help identify multiple points of optimisation, both on a working capital and process efficiency front.

Paving the way for card payments across the supply chain

With cards increasingly becoming a genuine supplier financing tool, the best starting point for businesses is to get a clearer understanding of card receptivity within their own specific supply chains, which in turn can help align the strategic and operational objectives for their treasurers.

HSBC, in partnership with Visa and Mastercard, can help clients divide their supply chain into card-receptive and non-card-receptive subsets, helping devise a strategic payables approach for each group. Historically, clients have only been able to use the card proposition to make traditional card-to-merchant payments, using either physical and/or virtual card capabilities, providing them with working capital optimisation, process efficiencies and potential for rebates (cashback). With HSBC’s investment over the last few years, clients can now make direct card-to-bank account payments to their non-card-receptive suppliers.

More effective management of working capital

A third of pan-European growth corporates are planning to tap into working capital loans within the next year as their primary working capital solution². The use of cards to support working capital objectives for corporates has proven to be an optimal tool, with payments reaching suppliers in full, on time and complying with corporates’ risk parameters.

This new way of managing working capital can also enable corporates in negotiating trade settlement discounts and improving trade relationships. Another great example of using cards to optimise working capital is for overheads such as rent, rates and HMRC tax, which can help neutralise expenditure spikes through the year.

By adopting a simple and streamlined payment method that provides extended cash flow – subject to credit status – your business can optimise its transactional relationships within the supply chain. A smarter, more efficient way to pay suppliers and secure working capital can help your business go further.