U.S. Businesses Plan to Reduce Use of Checks, Survey Reveals

SAN FRANCISCO, CA – Findings from Visa USA’s second annual cash management survey, released today, indicate that more than half (51 percent) of financial executives plan to reduce their organization’s reliance on checks as a form of commercial payment. To fill this gap and increase operational efficiencies, 40 percent of respondents plan to increase their use of commercial payment cards.

The survey of several hundred financial and treasury executives from more than 20 industries provides an in-depth analysis of the effectiveness of today’s corporate cash management processes.

Responses indicate that a significant and growing perception among financial executives is that commercial payment cards play a very important role in almost every aspect of the cash management process. Some key activities companies hope will reduce costs and boost operating efficiency include the increased use of electronic payments through cards and the elimination of paper checks and invoices.

“This annual survey helps us to track trends in the attitudes of corporate financial executives regarding their cash management processes and to aid our Member financial institutions in meeting the needs of the commercial payments marketplace,” said Mike Dreyer, senior vice president, commercial solutions, Visa USA. “It’s encouraging to see that low satisfaction with paper-based payments like checks is leading companies to pursue alternatives like commercial payments cards. Through the electronification of commercial payments, corporate America will realize incremental benefits from an integrated e-procurement process and detailed transaction information essential to more efficient cash management.”

While few corporate CFOs, treasurers and controllers find their current cash flow and cash management processes to be highly efficient, the survey findings indicated some improvement in achieving greater process efficiency. Nine percent of respondents in 2003 rated their cash flow management process as “very efficient,” increasing to 13 percent this year.

Technology and Company Policy are Positive Impacts on Cash Management
A growing number of financial executives view the introduction of new company policies and technological advancements as having the greatest impact on improving their ability to more effectively manage cash flow. Two thirds (66 percent) of respondents said changes in company policy have had at least a significant impact on the cash management process, and nearly as many (58 percent) cited changes in technology as having at least a significant impact. A solid majority (54 percent) said changes in corporate governance policies or other regulatory issues have had a significant to major impact on their company’s ability to manage cash flow.

Thirty percent said changes in technology have most positively impacted their ability to manage cash flow, followed by changes in company policies (27 percent). In addition, a majority of respondents said that changes in technology are expected to have one of the greatest impacts on cash management in the future, indicating technology investment may be a front-burner issue in the months ahead.

Visa has anticipated these trends by enhancing card functions that make corporate policy compliance easier by increasing visibility into commercial payments through enhanced data reporting. Visa has also introduced new payment technologies like Visa Commerce, a new non-card based payment and information management solution, which interfaces seamlessly with e-procurement systems and handles high value payments of up to $10 million per transaction.

Satisfaction with Commercial Cards Also on the Rise
Corporate America’s overall satisfaction with commercial payment cards is also increasing. Of those respondents who indicated that they use card programs for collections and disbursements, 70 percent said they were somewhat or very satisfied, up from 55 percent in 2003.

“We’re encouraged by the continued and growing satisfaction among commercial card users,” Dreyer said. “Clearly, more companies recognize the benefits that really set commercial cards apart from other payment methods – from reducing administrative costs to enhancing the use transaction data.”

The survey found that commercial payment cards were used by 34 percent of respondents for an average of 22 percent of their total commercial payments. Most respondents recognized the cards’ value in each step in the cash management process, even more so than last year:

• 62 percent (up two percent from 2003) believed they were relevant or very relevant for cash disbursements
• 53 percent (up five percent from 2003) believed they were relevant or very relevant for short-term money management and the collection and application of receivables
• 48 percent (up five percent from 2003) believed they were relevant to very relevant for cash positioning and forecasting

Importance of Payment Card Data Cited
Using payment card data to further improve the cash management process is clearly an ongoing goal for businesses. An increasing number of respondents identify the importance of data access and utilization for the following key areas:

• Visibility into payables and receivables (75 percent, up two percent from 2003)
• Online access to payment and invoice-related detail (77 percent, up seven percent from 2003)
• Automated information reporting and back-end integration (70 percent, up two percent from 2003)

About the Cash Management Survey
The Visa Cash Management Survey was conducted by Survey.com over eight days (October 13-20, 2004) and involved the responses of 405 executives from more than 20 industries. The majority of respondents (81 percent) had annual sales of more than $50 million per year – of which 40 percent represented more than $500 million per year. More information about the survey is available on request.

About Visa
Visa is the world’s leading payment brand and largest payment system, enabling banks to provide their consumer and business customers with a wide variety of payment alternatives. Nearly 21,000 financial institutions worldwide rely on Visa’s processing system, VisaNet, to facilitate $2.5 trillion in annual transaction volume with virtually 100-percent reliability. Cardholders in more than 150 countries carry more than 1 billion Visa-branded cards, accepted at millions of locations worldwide. Within the United States, nearly 14,000 financial institutions issue 450 million Visa cards, accounting for more than $1.1 trillion in annual transaction volume. Visa offers a trusted, reliable and convenient way to access and mobilize financial resources – anytime, anywhere, any way. For more information about Visa Commercial Solutions, please visit www.visa.com/commercial.