Settling Up

"Meetings are the Wild West of corporate spend, typically uncontrolled," says Michael Boult, CEO of StarCite Inc., a Philadelphia-based provider of end-to-end meetings management tools. Increasingly, however, new kinds of charge cards, virtual accounts and other tools are coming into play to help companies and planners manage meetings-related expenses, raising hopes that what is commonly referred to as the “last frontier” of corporate cost management will soon be tamed.
    The emergence of the dedicated meeting card is perhaps the most important of these new developments. “The cards in and of themselves are not much different than other credit cards,” notes Marcie Verdin, vice president of large markets, corporate payment solutions, for Purchase, N.Y.-based MasterCard International. “Their value is in making data available and streamlining the business process.”
    Indeed, a great advantage of meeting cards is that they serve as accounting tools that provide detailed reporting on each event’s expenses. Companies can then accurately calculate total meetings spend numbers that can be used as leverage in future negotiations with venues and suppliers. For some planners, this ability would be nothing short of revolutionary.

Tracking elusive costs
Many companies, including some that pay for meetings with traditional corporate cards, have but a rough idea of how much they spend on meetings; consequently, they might well be leaving money on the negotiation table, notes Shelle Santana, vice president of corporate card product management for New York City-based American Express. “Very few companies in the neighborhood of 5 percent have a dedicated line item that says ‘meetings,’” she adds.
    Collecting aggregate data on meetings spend traditionally has been daunting, especially for companies that plan events in a decentralized environment, meaning different employees or departments are responsible for organizing meetings. But the imperative to track spend is greater than ever, thanks to procurement’s increasing shadow over the planning process.
    “Bottom line: If a planner isn’t doing this, they need to start,” says Mickey Schaefer, president of Tucson, Ariz.-based Mickey Schaefer & Associates. Every dollar planners can account for is critical, she adds, because they can use that data to prove a meeting’s value to their own organizations, as well as to a hotel or supplier during negotiations.
    A 2005 American Express study of 105 companies in the United States and Europe, conducted by Chicago-based A.T. Kearney, concluded that firms could save up to 10 to 15 percent on meetings spend by reducing fragmentation of the planning process, adopting a dedicated payment mechanism and mandating its use, along with increasing visibility of overall meetings spend. Meeting cards can effectively support those initiatives, building on the success companies have achieved in curbing travel and entertainment expenses with T&E cards. 
    Savings isn’t the only reason to implement a meeting card program, according to Chicago-based John Ohaver, vice president of Management Alternatives Inc., a travel management consulting company. “I recommend the cards because they are a whole heck of a lot easier for everyone involved,” he says.

It’s in the cards
Meeting cards, like any charge cards, offer general administrative advantages to a number of key players. They reduce reconciliation time and paper pushing by eliminating invoices, purchase orders and checks; the cards allow suppliers to be paid faster than via an invoice system; and, because expenditures can be tagged with an identification code for each meeting, the card programs also can help companies comply with the Sarbanes-Oxley Act of 2002, which requires full financial disclosure from public companies a bonus for CFOs.
    “I think everyone wins in a simplified approach to the purchase-to-pay process,” says David K. Hillman, New York City-based principal of Consulting Strategies LLC, a travel management consultancy. “There’s a recognition that this needs to be done, and now there’s technology to support getting it done part of that being commercial cards.”
    Because the market is in its infancy, detailed data on the benefits of, and satisfaction with, meeting card programs is lacking. American Express published a case study on Home Depot, which, with Amex’s meeting solutions services and its corporate meeting card, reduced the number of hours to process bills for a single event by 90 percent, down to two or three hours. (Home Depot declined to provide details.) Amex plans to do specific research on meeting card results soon. 
    Meanwhile, Shelle Santana considers Amex’s meeting card the gem in the company’s portfolio, having seen consecutive years of double-digit growth in use. Still, she and other card executives note that most firms do not use meeting cards. The A.T. Kearney study found 59 percent of firms surveyed pay with cash or check for some or all of their meetings expenses. Also, 82 percent of companies pay for at least some of their meetings-related expenses with a corporate card, though not necessarily a meeting card. 
    Ohaver attributes the reluctance to use meeting cards to the relative newness of the product, inertia, and the fear of potential turf wars between procurement and meetings departments over who would be in charge of the card programs and whether planners would wind up increasingly beholden to procurement officers as a result. But Ohaver believes mainstream adoption is inevitable. “Everyone will be using them eventually,” he says. “It’s simply good business.”

Types of solutions
While meeting cards work on similar basic principles, different card programs have different features. 
    Stored value card: An alternative to the cash advance, such cards are designed to be used for single meetings and are good options when a meeting has an inflexible budget. If a planner has subcontractors who will be making their own purchases, giving them a stored value card is an easy way to cap their spending and get detailed reporting on their purchases.
    Declining balance card: Sometimes referred to as a controlled value card, this has a set limit that doesn’t refresh on a monthly basis. The declining balance card is like the stored value card in that it’s a good option for managing a single event, only in this instance companies will not tie up funds prior to purchasing goods and services. The cards can be set to have customized expiration dates.
    Virtual account: Credit card companies also offer cardless accounts that give planners tight control over transactions. Virtual accounts can be integrated with centralized or decentralized environments, because they do not bear the name of a single cardholder, and they work well for planners who are organizing multiple events at once, since they can flag each transaction with a specific meeting code.
    The latest virtual account option is vPayment On-Demand, launched by Salt Lake City-based GE Corporate Payment Services late in 2004. Authorized users can access the account via a secure website and set individual limits and valid date ranges for each transaction. The account appears as a MasterCard to merchants, who cannot charge more than the authorized amount or process payments on an invalid date.
    Traditional card: A card doesn’t have to be branded as a “meeting card” in order to be effective. Sometimes the best solution for planners is to dedicate to meetings a central-liability, centrally billed commercial card that can handle dozens of transactions per day and that has a high limit that refreshes each month. This allows planners to keep meetings spend separate from other T&E spend while maintaining the ability (however undesirable) to exceed a given budget. This makes it more flexible than other cards, especially in an emergency. However, planners using traditional corporate cards might not get the maximum level of reporting data on transactions detail that is built into meeting-branded cards.

Other solutions
Meeting cards are designed to help planners achieve greater efficiency and savings through increased visibility of purchases. But other tools, including the nascent APEX (Accepted Practices Exchange) Post Event Report software, and products by companies such as StarCite and Santa Clara, Calif.-based OnVantage, can generate comparable accounting data for planners who don’t use meeting cards. In other words, the benefits of meeting cards can be enjoyed without requiring subscription to a new card program. The FutureWatch 2005 study, co-sponsored by Meeting Professionals International and Amex, found that half of the 960 planners surveyed had adopted or were implementing organizationwide meetings management processes, programs or tools. 
    In September, StarCite announced it had formed a partnership with Reston, Va.-based Uversa International, provider of technology for the business travel industry, that would allow its meeting solutions customers to combine both meetings and transient travel spend data in one place, for increased leverage in negotiation with hospitality suppliers. Soon after, StarCite agreed to a deal with MasterCard to integrate the card company’s data system with its own meeting solutions.

Making the transition
For the vast majority of firms already using corporate or purchasing cards, choosing a meeting card shouldn’t be complicated. A company that uses Amex purchasing cards, for example, could go with an Amex meeting card to maximize the company’s financial relationship and improve its rewards or rebate packages. 
    “A meeting card program is rarely done as a stand-alone,” notes a spokesperson for San Francisco-based Visa U.S.A. Firms can choose a prepackaged meeting card or work with their card provider to customize a program.
    When choosing a meeting card, consider the number and type of meetings held annually, how meetings are planned, whether a restructuring of the meetings department would coincide with the adoption of a card program, and the level of purchasing capabilities needed for each staff member.