**London**: As companies adapt to a shifting financial landscape, many struggle with outdated methods in expense management. Recent errors at Citigroup underscore the need for improved oversight, prompting innovations like Emirates NBD’s virtual card integration to enhance operational efficiency and reduce fraud risk.
Digital transformation in enterprise spending is gaining momentum as companies adapt to the fast-paced and often uncertain financial landscape. While the push towards a more automated and instantaneous financial process is evident, many organisations still grapple with manually intensive methods within their financial back offices. This dependence on traditional approaches leaves room for human error, particularly in corporate expenditure management, which can lead to significant financial mishaps.
Recent events at Citigroup have highlighted these vulnerabilities. Over the past week, the banking giant experienced two notable transactional errors: a nearly disastrous miscalculation close to $81 trillion and an inadvertent copy-and-paste mistake that resulted in an erroneous transaction of approximately $6 billion. Both incidents serve to underline the ongoing challenge faced by firms in balancing oversight and efficiency in enterprise payments, with human error remaining a significant risk.
The increase in digital payments, heightened remote working arrangements, and the complexities of globalised supply chains have created a multifaceted environment for corporate spending. Despite these challenges, many businesses continue to depend on outdated processes to manage their expenses, which exposes them to greater inefficiencies, potential fraud, and compliance risks.
To address these issues, Emirates NBD recently announced that it has become the first bank in the United Arab Emirates to implement Visa’s Commercial Pay Mobile module for its small business and corporate clients. This move marks a notable advancement toward utilising virtual cards and centralised expense management platforms for corporate payments. Such innovations reflect a growing awareness among businesses of the necessity to adapt and improve their payment systems to mitigate risks and enhance operational efficiency.
Fraud remains a pressing concern, particularly with traditional corporate cards, which are often susceptible to misuse and theft. The payroll and payments platform Papaya Global has recently partnered with verification and compliance solutions provider Sumsub to implement artificial intelligence-powered fraud prevention technologies. “Fraud is growing as fast, or faster, than the pace that the overall B2B market is growing,” remarked Eric Frankovic, general manager of business payments at WEX, in comments to PYMNTS.
In contrast to conventional credit cards, virtual cards represent a modern solution by being issued digitally with customisable limits for either one-time or recurring use. “Virtual card numbers offer a modernized solution with flexibility in transaction amounts, merchant types and frequencies,” said Marcos Gelfi, vice president and global head of commercial fraud/dispute products and cardholder solutions at Discover® Global Network. Gelfi emphasised that leveraging data effectively can lead to enhanced supplier negotiations and improved budget management, further supporting the push for virtual cards.
A recent report, the second edition of the “Growth Corporates Working Capital Index,” issued in collaboration between Visa and PYMNTS Intelligence, suggests that the adoption of virtual cards has increased significantly, with nearly a third growth year over year, positioning them as an effective working capital remedy. Many virtual card platforms are designed to seamlessly integrate with enterprise resource planning systems, accounting software, and expense management tools, effectively creating a cohesive financial environment.
Additionally, when combined with a unified expense management system, virtual cards can greatly enhance financial operation oversight. These platforms aggregate various aspects of corporate finance, including card transactions, reimbursements, accounts payable, and vendor payments, into a holistic overview. This integration allows finance teams instant access to spending data and enables rapid decision-making, which is crucial in maintaining profitability.
Indeed, unified expense management solutions also help enforce corporate policies automatically, ensuring all expenditures are meticulously tracked and potential overspend is curtailed before it escalates. Such systems enable businesses to achieve better cash flow management, optimised working capital, and a more robust financial foundation, fostering a climate in which spending can be controlled effectively amid the complexities of modern business environments.
Source: Noah Wire Services
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