Overcoming the barriers to Commercial Card use

By James Sykes and David Legg | 06 October 2021

Using Commercial Cards for business-to-business (B2B) payments can offer a host of benefits, from making payments more time and cost-efficient to helping secure the supply chain, improving cash flow and working capital, and providing an additional source of income through rebates for public sector organisations.

However, while a growing number of organisations are aware of these benefits, some are coming up against a number of barriers which can, frustratingly, prevent them from unlocking the added value Commercial Cards can bring.

Barriers to Commercial Card use

Some of the most common perceived challenges when it comes to using Commercial Cards for paying suppliers include:

  • Process change – the idea of changing how payments have typically been made and rolling out new processes can seem daunting and time-consuming for both buyers and suppliers.
  • Loss of control – for buyers, there can be concerns around losing control of when payments are taken; the effects that might have on their own working capital position and the ability to meet Prompt Payment Code obligations.
  •  Supplier acceptance – some suppliers, particularly those who don’t have retail or customer relationships, can be reluctant to accept card payments due to the initial cost of setting up card acceptance and/or the ongoing costs associated with card transactions.
  • Transaction size – traditionally Commercial Cards have been viewed as having a ‘ceiling’ when it comes to transaction size.

Overcoming the challenges

Organisations have been coming up against many of these challenges for years, and it’s fair to say that up to now the payments industry hasn’t really delivered a solution. But that’s rapidly changing. The pandemic means the way organisations think about payments has evolved at an accelerated rate and the industry needs to take steps to keep up.

As an issuer, we are taking proactive steps to redesign our payment solutions so they offer a greater opportunity for our buying customers to utilise card payments as a part of their transaction mix, and reap the rewards of doing so.

In recent months we’ve rolled out a number of products aimed at making Commercial Cards more accessible, from both the buyer and supplier perspective. We’ve also adapted card payments to meet the needs of the B2B space by aligning them to electronic fund transfers, but with some extra benefits.

For example, embedded payment solutions enable the supplier to take the payment as soon as they’ve been authorised to do so, and offer greater control in terms of spend as well as supporting quick and efficient purchasing with no need for time-consuming approval processes or paperwork.

Similarly, Straight Through Processing (STP) solutions are aimed at overcoming many of the barriers to card use. By enabling you to settle invoices direct to your supplier’s bank account and settle all your payments with a monthly direct debit. STP can create time efficiencies by making it easier to automate payments and simplifying reconciliation, as well as protecting your working capital position.

Just the start

These developments are just the start. We’re committed to a roadmap of change over the coming months and years which aims to address customer pain points, overcome the barriers to B2B Commercial Card use and create a smoother transaction landscape for both buyers and suppliers.

All our solutions are being built and designed in a way which fits within the modern technology landscape and minimises friction for our customers – like making more Application Programming Interfaces (APIs) available to connect to.

We’re also placing a greater emphasis on really understanding our customers’ supplier footprint and using this information to identify and recommend appropriate solutions.

Help and support from Lloyds Bank

The nature, and scale, of businesses’ B2B payment challenges can vary significantly and require very different solutions. At Lloyds Bank we’re keen to hear about your individual circumstances - whether that’s navigating a complex payment landscape or wanting to implement a simple B2B payment system - so we can help identify the right solution for your needs and help you unlock the added value Commercial Cards can bring.

To see how we can support your payment needs visit lloydsbank.com/cardsolutions

James Sykes is Head of Commercial Cards and David Legg is Head of Corporate Card Products, at Lloyds Bank

Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278.

This is commercial content for The MJ

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