Business Today Net Special

Amex Deals Out A New Card

It's aspirin for corporate headaches. This card is a hi-tech tool for streamlining purchasing costs.

BY Vinod Mahanta

Costs, Costs, Costs...that's what gives every CEO sleepless nights. And if you're controlling costs be sure of getting a headache as well. American Express probably doesn't think so. Recently, American Express launched an expense management solution, a corporate purchasing card designed to help corporations achieve process and purchasing efficiences, while retaining financial control.

The corporate purchasing card offers a paperless payment system that cuts the high administrative costs associated with processing company purchases and achieve savings of up to 80 per cent on process costs, and up to 15 per cent on purchasing costs for everyday goods and services. Says Grant Johnstone, Head, Amex Corporate Purchasing Card, Asia Pacific: "The card is the key to greater efficiency---helping companies reduce administrative costs, without relinquishing control."

The card was developed after a study conducted by Amex and Ernst & Young, dubbed The American Express Purchasing Process and Automation Study. The non-strategic purchases, like office supplies, telecommunications, periodicals , and Maintainence, Repair and Operating Expenses (MRO) usually tot up to 80 per cent of the total transaction volume for a firm and are extremely costly to process. In India, some firms incur costs as high as $50 per transaction. That's where the card helps, as American Express claims the buying costs are reduced by about 80 per cent and tasks completed about 70 per cent quicker.

Since buying process covers evaluating options, preparing requisition, obtaining approvals and placing order, reductions in costs can be brought about by re-negotiating supplier discounts, eliminating approval steps, and using the purchasing card with limits to retain control. Adds Johnstone: "Implementation of the card is crucial to streamline and automate payment, and simplify reconciliation tasks."

Using the corporate card brings down data reconciliation and integration costs as card users reconcile their own purchasing card statements and use an electronic tool to integrate billing data into the general data. Payment costs can be drastically cut as firms consolidate vendor in-voices---from thousands to a single bill. It looks like Amex has a corporate aspirin. How potent, time will tell.

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