American Express: Mobile first: seamlessly linking the buyer and supplier - Jose Carvalho

As businesses work to take advantage of the globalised trade landscape, optimising working capital is a priority. Jose Carvalho, head of global commercial payments Europe at American Express, talks innovative digital payment solutions for buyer and supplier.

As the global trade landscape grows, international commercial boundaries are breaking down, offering unprecedented opportunities for growth. At the same time, businesses are finding their growth restricted as commercial lenders become more guarded, limiting access to capital from traditional sources. CFOs are realising that their best bet is to concentrate on maximising their working capital.

The landscape is changing and paperwork is giving way to efficient digital solutions. American Express's multinational commercial customers need effective payment solutions to cover a wide range of situations with a minimum of fuss - whether they're looking to extend DPO, prevent fraud, optimise their supply chain or simply make travel plans using their corporate credit cards.

Jose Carvalho, head of global commercial payments for Europe at American Express, meets regularly with finance directors and CFOs representing businesses at every stage of the payment process.

"The demand for broad payment solutions that help maximise working capital are sought by buyers and suppliers," he says. "And, it's not just restricted to small and mid-sized companies. We also see this need in our large multinational clients as they seek to adapt the way they access capital, the way they structure the organisation and the way they streamline their operations. We know it's an important aspect for CEOs - earlier this year, a global survey of finance executives [the American Express/CFO Research Global Business and Spending Monitor] found that 68% of CFOs plan to focus on optimising cash flow as the key way to grow their enterprises in 2017. Improving their working capital management systems is clearly top of mind for them, and that's why we want to make sure we help them with the best possible solutions."

Take another path

Carvalho confirms that American Express is focusing on cash flow solutions. "We've been expanding significantly beyond what we are traditionally known for, which is in the T&E and corporate card space," he says. "Business is going towards more holistic payment solutions, encompassing B2B lending, working capital and international payment solutions."

Naturally, digital and mobile platforms form the crux of much of the company's current innovation. Not only is it creating new platforms to improve the ability to track spending in its traditional sphere of corporate cards, but American Express is also now connecting its global network of clients to each other through digital tools, and positioning itself as an expert partner for all companies, whether buyers or suppliers, allowing both to maximise working capital simultaneously.

One of those solutions is buyer-initiated payments (BIP), an online platform that balances opposing payment interests between buyer and supplier. After an invoice is approved, American Express pays the supplier directly according to the buyer's instructions. The buyer holds on to its capital until it receives a single consolidated statement of all invoices from American Express at the end of its billing cycle, allowing it to balance an extended DPO with the need to maintain good relationships with its supply chain. Payments can be tracked within the platform, and it needs no new software or resources for implementation.

"We're seeing different trends in terms of where the leverage sits on the supply chain, and that's the real reason why things like pricing dynamically and BIP came to bear: to deal with the value that you generate in the transaction for both parties," says Carvalho. "We want to make sure to give the flexibility to our clients and integrate the paying process in the middle of the core supply chain process."

V for payments

To help streamline the payment process, American Express has introduced vPayment, a virtual payment tool that assigns a single-use account number to each transaction. When a supplier charges the virtual account number, the charge is verified against the currency amount and date range preset by the buyer, reducing billing errors. Transaction data is matched to predefined expense details and consolidated into a data file for easy invoice reconciliation.

Carvalho and his team work to develop new tools through conversations with not only CFOs but also their procurement teams, in order to find comprehensive solutions that cover the whole supply chain and payment process - combining working capital optimisation with supply chain management.

"Working capital optimisation doesn't just rest with the financial side of the business," says Carvalho. "It also rests with procurement; it has to involve the streamlining of processes, and making sure that your supplier base is well selected and well thought through. We're working towards a procure-to-pay system, an end-to-end system, to optimise not only capital but also the payment process, which can be quite costly and quite operationally intensive for large companies."

The vPayment tool is also integrated with @Work, the American Express portal that allows corporate card and corporate purchasing card customers to manage their programmes efficiently online. vPayment clients can see billing statements and transaction details online through @Work Reporting. Programme managers can use the portal to add new cards and credit lines, report problems and track spending, while employees can submit expenses via a mobile app.

Out and about

Mobile has increasingly become a priority for American Express. Its corporate cardmembers can use the Tripcase app, which pulls information from bookings made with corporate cards to give travelling cardmembers easy access to the details of hotels and flights as well as travel tips for their destination.

"I wouldn't say it was 'digital first' - I would say today we're operating a 'mobile first' mentality across the company. We've been investing in digital and mobile payments for the past five to six years," says Carvalho.

As American Express works to prevent maverick spend and fraud, digitalisation provides clients with better visibility and real-time control. The days of long waiting periods for incorrectly identified transactions are gone. Within milliseconds, roughly 1,000 variables are checked on each transaction to detect fraud. If any red flags are raised, customers can receive a text or push notification to confirm a transaction instantly with minimal hassle.

"The other angle of this question is: how do you give clients the control so that they understand which transactions are being billed on their corporate card programme? We have a host of reporting capabilities, so they understand where the spend is coming from and if it's legitimate or not. You can not only control but also create savings in terms of spend," Carvalho expands.

To Carvalho and his colleagues, @Work is more than just a digital platform; the phrase "Changing the World @Work" appears prominently on his LinkedIn profile. It's a way of thinking and a reminder that clients rely on them to stay on top of a rapidly evolving industry.

"We use that phrase internally and externally," he explains. "It's a way for us to communicate that we need to be agile and help our clients to adapt to the very quick pace of change in the way companies operate. Companies are trying to expand significantly, perhaps overseas where employees are working from several different locations, where companies are trying to reinvent and adapt to disruptive new business models. This is why we've got a particular focus on offering tools that facilitate fast and simple ways of making international payments for companies doing business abroad."

More on offer

Aside from the details of its payment programmes, American Express offers its clients the side benefit of easy supplier integration. vPayment only requires that merchants accept American Express, while the corporation works with BIP clients to migrate their suppliers on to the platform. With a vast network of clients on both sides of the payment process, American Express is well placed to provide expert solutions. In many cases, its position provides it with full visibility of the entire transaction, from the initialisation by a cardmember to the details of the receiving merchant. It seems like a natural next step to leverage this network to provide flexibility, allowing buyers and suppliers to make the right decisions for their business.

"In the majority of countries, we're also rolling out the ability to price dynamically into the same platform," says Carvalho. "The buyer and supplier will be able to take different decisions for different times, and also different reasons: if the buyer wants to extend and pay an invoice later, the supplier can choose to receive the money earlier for an additional fee. So there is a very good way to create flexibility on the system, and we are in the perfect position to provide a streamlined, expert process to facilitate that relationship."

As international boundaries become transparent and mobile platforms connect cardmembers instantly to their expense reports, it seems the time is right for disruption: a breaking-down of the traditional separation between procurement and payment. When lenders are treading carefully and funds are scarce, working capital optimisation takes on a new importance for the survival of a business. The environment is ripe for a new way of paying, and American Express is in prime position, with a wide global network of buyers and merchants ready to be connected in an unique way.

Article in association with American Express.

Jose Carvalho, head of global commercial payments Europe at American Express.