Category: Blog

Corporate treasury professionals are focused on improving cash flow, managing working capital and increasing operational efficiency. A significant part of this process involves optimizing payments and accounts payable (AP) to ensure liquidity while also maintaining strong relationships with suppliers. Using corporate credit cards for supplier payments is fast becoming an effective strategy for achieving that aim.

Here are six key ways treasurers can better manage cash flow and working capital by leveraging credit cards as a financial tool:

1. Extend Payment Terms without Straining Supplier Relations

Suppliers often require prompt payments to maintain their own cash flow, but businesses may prefer to hold onto their cash longer to improve liquidity. Using credit cards for payments can be a win-win solution. Buyers can extend their payment terms by utilizing the 55-day grace period built in to a corporate card, without delaying payments to suppliers. This improves working capital management for the buyer while ensuring the supplier gets paid promptly, fostering stronger relationships.

As getting paid on time is becoming less normal, most buyers with a corporate card are choosing to leverage the extra 55 days, by paying suppliers early – a counter-intuitive yet positive move, securing a preferred customer status with suppliers.

Pro tip: Split the 55 days with the supplier – use your credit card to pay suppliers early and extend your own cash retention, at the same time.

2. Increase Cash Flow Flexibility

Cash flow forecasting and management are top priorities in the treasury game; and particularly so in volatile economic environments. By integrating credit cards into the AP process, companies can gain more flexibility in managing outflows. Instead of paying suppliers directly from cash reserves, which impacts liquidity, companies can consolidate payments through credit cards and settle the balance later, helping preserve cash reserves for longer periods.

This also aids in aligning outgoing payments with incoming revenues, creating a smoother cash flow cycle, which is crucial for treasury management.

Pro tip: Align credit card payment dates with revenue inflows to optimize liquidity cycles and mitigate potential shortfalls.

3. Automate and Streamline Accounts Payable

Automation is a major driver of efficiency in corporate treasury functions. When credit cards are used for supplier payments, it simplifies the AP process by consolidating multiple payments into a single monthly transaction. This reduces the administrative burden of handling numerous invoices and processing multiple bank transfers, which can involve time-consuming manual entry and reconciliation.

B2B payment solutions can integrate with ERP and treasury management systems (TMS), enabling automatic reconciliation, reducing errors and enhancing visibility into payment data. This not only saves time but gives treasurers more control over their cash flow forecasting too.

Pro tip: Integrate a card-to-bank solution into your ERP system to fully automate AP processes and reduce reconciliation times by up to 80%.

4. Maximize Working Capital with Rebates

Many corporate credit cards offer cash-back (or rebates) on purchases. While treasurers may traditionally view credit cards as a mere payment tool, leveraging these benefits can turn routine transactions into an opportunity to optimize working capital. These rebates effectively reduce the cost of goods or services, freeing up additional capital that can be reinvested into the business or be used for other treasury objectives.

In most cases, cash rebates earned on supplier payments can be used to offset operational expenses, ultimately improving the company’s bottom line.

Pro tip: Track and strategically utilize cash-back earned through supplier payments to offset future costs or reinvest in your working capital pool.

5. Enhance Payment Security and Mitigate Fraud Risks

Treasurers are always concerned about fraud (and rightfully so!), particularly as the digitalization of payments grows. Paying suppliers via credit cards introduces additional layers of security, such as encryption and tokenization, reducing the risk of fraud compared to traditional payment methods like cheques or bank transfers. In addition, most credit card issuers offer fraud detection tools and protection policies that minimize liability in case of unauthorized transactions.

This higher level of security can save companies from costly breaches and provide peace of mind, enabling treasurers to focus on strategic financial planning rather than worrying about potential fraud losses.

Pro tip: Use your credit card provider’s fraud detection software to monitor and flag any suspicious activity, preventing costly breaches before they escalate.

6. Improve Supplier Relationships through Payment Certainty

While suppliers value certainty in payments, delayed payments can strain business relationships. Credit cards provide a reliable and predictable payment method that helps strengthen supplier relationships. Suppliers are paid into their bank account, sometime within hours, when using a credit card, reducing their payment uncertainty. This reliability can also position your company as a preferred customer, leading to potential advantages like more favourable terms, pricing and early access to products and services.

Similarly, suppliers benefit from lower financing costs, as credit card payments eliminate the need for them to rely on expensive invoice discounting, factoring or short-term loans to bridge cash flow gaps.

Pro tip: Use a B2B card-to-bank solution that enables you to pay suppliers by card (even if they don’t accept cards) to secure better payment terms, reduce financing costs and access discounts.

Unlock Treasury Efficiency

For corporate treasurers, the primary goal is to ensure effective cash flow management while maintaining strong relationships with suppliers. By incorporating credit cards into the AP process, treasurers can achieve both goals simultaneously. Corporate credit cards provide the flexibility to extend payment terms, streamline AP processes, reduce costs through rebates, enhance security and improve supplier relations – all of which contribute to more efficient working capital management. As treasury functions continue to evolve in an increasingly digital and real-time payment environment, credit card payments offer a practical solution for businesses looking to optimize their cash flow while driving operational efficiencies at the same time. For treasury professionals, this represents a key strategic opportunity to future-proof their payment process and enhance the overall financial health of the organization.

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Efficiently managing accounts payable (AP) is crucial for any business. In today’s fast-paced B2B landscape, where cash flow is king, the ability to streamline AP processes directly impacts liquidity, supplier relationships and overall business growth. But how can you measure accounts payable efficiency effectively? Here are the key metrics you need to monitor, how to interpret them and strategies to elevate your AP processes. Whether you’re part of a growing start-up or a well-established enterprise, measuring AP efficiency is an essential step to optimizing cash flow and driving operational excellence. At Swipe2B, our mission is to empower businesses with seamless B2B payment solutions that not only enhance AP efficiency but also foster stronger supplier relationships.

Why Accounts Payable Efficiency Matters

Accounts payable represents a company’s short-term liabilities – the money owed to suppliers for goods or services already received. When managed well, AP processes can improve working capital, enhance vendor relationships and increase profitability. However, inefficient AP practices can result in late payments, strained supplier relationships and lost opportunities to take advantage of early payment discounts.

As your business grows, the complexity of managing AP also increases. This is where leveraging a modern B2B payment platform, can make a significant difference. These solutions are designed to streamline the entire AP process, from invoice approval to payment settlement, so your business can stay ahead of the curve and maintain a positive cash flow position.

Key Metrics for Measuring Accounts Payable Efficiency

To assess the effectiveness of your accounts payable process, there are a few key metrics that serve as reliable indicators. By focusing on these areas, you can identify bottlenecks, reduce inefficiencies and ensure you’re managing your AP department as effectively as possible.

1. Days Payable Outstanding (DPO)

DPO measures the average time it takes for a company to pay its suppliers. A higher DPO might suggest that your business is maximizing cash on hand by delaying payments, while a lower DPO could indicate stronger relationships with suppliers who appreciate faster payments. To calculate DPO:

A balanced approach is key. While maximizing your DPO may improve cash flow, it’s essential not to push payment terms to the point where it damages supplier relationships. Supplier payment solutions can help you optimize this balance, allowing for flexibility in payment terms without compromising relationships or missing out on discounts for early payments.

2. Invoice Processing Time

Another critical metric is how long it takes to process an invoice from receipt to payment approval. Manual, paper-based processes often lead to delays, errors and bottlenecks, costing businesses time and money.

The quicker your AP team can process invoices, the better. Reducing processing times frees up resources and ensures suppliers are paid promptly, fostering better relationships. With an automated AP solution, businesses can significantly reduce processing times by digitizing workflows and automating key steps in the procure-to-pay process, eliminating inefficiencies associated with traditional, manual systems.

3. Cost per Invoice Processed

Every business should track the cost associated with processing each invoice. This metric includes both direct costs, like labour and indirect costs, such as time spent resolving errors or tracking down missing paperwork.

Manual AP processes are notoriously expensive. According to industry data, it can cost up to $15 to process a single invoice manually, while fully automated systems can bring this cost down to under $3 per invoice. By leveraging an automated payment solution, businesses can achieve significant cost savings by eliminating manual tasks, improving data accuracy and reducing the need for human intervention.

4. Early Payment Discount Capture Rate

Many suppliers offer early payment discounts to incentivize prompt payments, typically in the range of 1-3% of the invoice value. However, without an efficient AP process in place, businesses often miss these opportunities. Tracking your early payment discount capture rate reveals how often you’re able to take advantage of these discounts and can serve as an indicator of your overall AP efficiency. The formula to calculate the early payment discount capture rate is:

Supplier payment solutions enable businesses to automate payments, ensuring you never miss an opportunity to benefit from early payment discounts, while extending your own working capital. This not only improves supplier satisfaction but also positively impacts your bottom line.

5. Payment Accuracy

Payment errors, such as overpayments, underpayments or duplicate payments, can disrupt cash flow and damage supplier relationships. Monitoring your payment accuracy rate helps you gauge how effectively your AP department is managing payments.

Automating your AP process can significantly improve payment accuracy by minimizing manual data entry and automating reconciliation, ensuring that invoices are matched accurately with purchase orders and payments are made only for approved transactions.

Strategies to Improve Accounts Payable Efficiency

Now that you know the key metrics to measure, here are actionable strategies to improve your AP efficiency:

1. Automate Your AP Workflow

Manual processing of invoices and payments is time-consuming, costly and prone to errors. Automation is the most effective way to streamline your AP operations. Supplier payment solutions offer a robust platform to digitize the entire payment cycle – from invoice capture and approval to payment execution – reducing human intervention and minimizing errors.

2. Implement Early Payment Programs

By leveraging early payment discounts, businesses can save on overall costs while building stronger supplier relationships. Automating early payment programs, ensures you capture every available discount while keeping cash flow healthy.

3. Improve Supplier Communication

Clear communication with suppliers regarding payment terms, approval timelines and invoice status is key to maintaining strong relationships. Supplier payment solutions provide you with real-time updates on payment status, that are communicated to suppliers, enhancing trust and transparency; and more importantly, saving time fielding calls from suppliers chasing payment.

4. Regularly Review Payment Terms

As your business grows, your relationships with suppliers will evolve. Regularly reviewing and renegotiating payment terms can improve your DPO, helping you maintain a balanced cash flow.

Driving AP Efficiency

As global trends show, automation is increasingly becoming the foundation of AP efficiency. Whether it’s reducing the time and cost of processing invoices, increasing payment accuracy or ensuring early payment discounts are captured, automation helps businesses streamline workflows and improve overall performance. Across regions like North America, Europe, MENA and beyond, businesses are reaping the benefits of digitizing their AP functions, resulting in significant cost savings and enhanced supplier relationships.

For companies aiming to enhance their AP processes, the path forward is clear: embrace technology, foster better communication with suppliers and regularly review and adjust payment terms to suit both business needs and market conditions. By adopting these strategies, businesses can unlock the full potential of their accounts payable operations, driving both financial and operational success.

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The advertising and media landscape in the UAE is vibrant and competitive, characterized by rapid growth and innovation. But the industry faces a significant challenge: the sequential liability dilemma. The dilemma arises when advertising agencies are caught between paying media suppliers before receiving payments from their clients or waiting for client payments before settling their dues with media suppliers. Both scenarios can lead to either cash flow and/or pricing constraints, hampering the agency’s ability to operate smoothly and effectively.

One increasingly popular solution to this challenge is the use of corporate credit cards to pay media suppliers. By leveraging the benefits of card payments, ad agencies can overcome cash flow issues, take advantage of early payment discounts and strengthen their relationships with media suppliers.

The Sequential Liability Dilemma: A Barrier to Smooth Operations

In the UAE’s advertising industry, sequential liability is a common practice where ad agencies are not liable to pay their media suppliers until they receive payments from their clients. While this practice protects agencies from bearing the financial burden in case of client defaults, it creates a cash flow bottleneck and often leading to less than favorable pricing as well. Agencies often find themselves in a position where they either delay payments to media suppliers or dip into their reserves to pay suppliers before receiving client payments. Both scenarios can strain an agency’s finances, affecting its ability to invest in growth and innovation.

According to a report by PwC Middle East, the advertising industry in the UAE was valued at approximately $2 billion, with digital media accounting for a significant share of the market. As the industry continues to expand, the need for efficient cash flow management becomes even more critical. Delays in payments can disrupt campaign schedules, damage relationships with media suppliers and ultimately affect the agency’s reputation and competitiveness in the market.

The Advantages of Paying Media Suppliers by Card

Improved Cash Flow Management

Using a corporate credit card to pay media suppliers allows ad agencies to manage their cash flow more effectively. Rather than relying solely on incoming payments from clients, agencies can use credit lines to pay suppliers on time, thereby avoiding the negative consequences of payment delays. This approach provides agencies with the financial flexibility to maintain smooth operations, even when client payments are delayed.

In a market as dynamic as the UAE, where the advertising industry is expected to grow by 10% annually, according to the Dubai Media City Annual Report 2023, maintaining a steady cash flow is crucial for agencies looking to capitalize on new opportunities and expand their market share.

Access to Early Payment Discounts

Media suppliers often offer significant discounts to agencies that can pay their invoices early or on time. By using corporate credit cards, agencies can take advantage of these discounts, leading to substantial cost savings. These savings can then be reinvested into the business, enabling agencies to enhance their service offerings, invest in new technologies, or expand their client base.

A recent study by the World Federation of Advertisers (WFA) found that agencies that consistently paid their media suppliers on time or early were able to negotiate up to 15% lower rates on media buys. In the UAE, where advertising costs can be high, these savings can make a considerable difference to an agency’s bottom line.

Strengthening Supplier Relationships

Paying media suppliers on time or early helps to build and maintain strong relationships with key partners. In the advertising industry, where timely execution of campaigns is crucial, having a reliable network of media suppliers is invaluable. By ensuring prompt payments, agencies can position themselves as preferred clients, gaining access to better deals, priority placements and more favorable terms in future negotiations.

In competitive markets, where media space is at a premium, agencies that are known for their reliability and prompt payments are more likely to secure the best advertising slots and rates. This reliability can also lead to long-term partnerships, which are essential for sustained success in the industry.

Earning Rebates

Corporate credit cards offer rebates (or cash back) for business expenses. For ad agencies that regularly spend large sums on media buys, these rebates can quickly add up to a significant amount. This additional revenue stream can be used to fund other areas of the business, such as marketing, talent acquisition, technology upgrades or simply help offset other costs across the company, further improving the agency’s financial position.

Mitigating Financial Risk

Paying media suppliers by card can also help agencies mitigate financial risk. In cases where suppliers fail to perform or clients default on payments, agencies that have already paid suppliers with their credit cards have the option to dispute the charges or negotiate extended payment terms with their card issuer. This added layer of protection can provide agencies with peace of mind, knowing that they are not solely reliant on client payments to meet their financial obligations.

Case Study

A leading advertising agency in Dubai, recently adopted a corporate credit card payment system to manage its media supplier payments. Within six months, the agency reported a 12% reduction in media costs due to early payment discounts and a 15% improvement in cash flow management. The agency was also able to strengthen its relationships with key media partners, securing prime advertising slots for its clients.

The agency’s CFO noted that the decision to switch to card payments was driven by the need to maintain financial flexibility and competitive advantage in a rapidly growing market. By leveraging the benefits of corporate credit cards, the agency was able to navigate the challenges posed by sequential liability and position itself as a leader in the UAE advertising industry.

A Strategic Advantage for Ad Agencies in the UAE

In the fast-paced world of advertising, where timing and relationships are everything, the ability to pay media suppliers on time or early is a critical competitive advantage. By adopting corporate credit card payments, UAE ad agencies can overcome the sequential liability dilemma, improve cash flow management, and unlock significant cost savings. As the UAE’s advertising industry continues to grow, agencies that leverage these financial tools will be better positioned to capitalize on new opportunities, build stronger supplier relationships and drive long-term success. In an industry where margins can be thin and competition fierce, the strategic use of credit card payments can make all the difference.

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In the complex world of corporate finance, every decision a CFO makes can significantly impact the company’s bottom line. One area where this is especially true, yet often overlooked, is in supplier payments. Traditionally seen as a straightforward cost of doing business, supplier payments can actually be a strategic tool for enhancing financial returns. By leveraging corporate credit cards for these payments, companies can unlock a range of benefits that turn routine expenses into valuable savings.

This article explores how UAE-based companies can maximize the return on investment (ROI) of their supplier payments by using corporate cards, driving both immediate and long-term financial gains.

Rethinking Supplier Payments as a Strategic Asset

Supplier payments are typically viewed as a necessary outflow of cash – a routine transaction that simply fulfills an obligation. However, when managed strategically, these payments can offer much more than just fulfilling a line item in the accounts payable ledger. In fact, by shifting supplier payments to corporate credit cards, companies can transform these expenses into opportunities for savings, cash flow improvement and even revenue generation.

Maximizing Cash Flow with Extended Payment Terms

One of the most immediate benefits of using corporate credit cards for supplier payments is the extension of payment terms. Unlike traditional payment methods such as bank transfers or cheques, which require immediate outflow of cash, corporate credit cards offer a grace period – often ranging from 50 to 60 days – before payment is due. This extended period allows companies to hold onto their cash longer, improving liquidity and providing additional flexibility in managing working capital.

In the UAE, where managing cash flow is a critical concern for many businesses, this extra time can be invaluable. It allows companies to keep their money in the bank for longer, potentially earning interest or being used to cover other operational costs. For CFOs, this means greater control over the timing of cash outflows, reducing the pressure on the company’s cash reserves.

Earning Rebates: Turning Spend into Savings

Corporate credit cards are equipped with rebate programs that can add significant value to a company’s finances. These programs typically offer rebates (or cash back) that can increase as card spends increase. For companies that make substantial payments to suppliers, these rebates can quickly accumulate, turning what would otherwise be a straightforward expense into a source of savings.

For instance, a company that spends millions annually on supplier payments could earn a significant cash rebate, which can be reinvested into the business. In the UAE, where operational costs are high and margins can be tight, these rebates offer a valuable opportunity to improve the bottom line.

Enhancing Supplier Relationships with Early Payments

While extending payment terms is beneficial for the payer, suppliers often prefer to receive their payments as early as possible. This is where the flexibility of corporate cards benefits suppliers. Many automated card-to-bank solutions, like Swipe2B, allow for card payments to be immediately processed and credited directly into suppliers’ bank accounts, ensuring they receive their funds quickly and reliably and without any software, hardware or human intervention.

By offering suppliers early payment through a corporate card, companies can negotiate better terms, such as discounts or extended credit periods. This creates a win-win scenario where suppliers benefit from improved cash flow and buyers enhance their own financial returns through better pricing or more favorable payment terms. In a market like the UAE, where supplier relationships are critical to business continuity, these improved terms can strengthen partnerships and create long-term value.

Streamlining Processes with Automation

The process of making supplier payments can be time-consuming and prone to errors, especially when done manually. Automating this process not only reduces the administrative burden on finance teams but also ensures that payments are made accurately and on time. This is where integrating corporate cards with automated payment solutions like Swipe2B can deliver significant ROI.

These automated solutions eliminate the need for manual intervention, reducing the risk of mistakes that can lead to costly penalties or strained supplier relationships. Additionally, automation frees up finance teams to focus on more strategic activities, such as financial planning and analysis, which can further contribute to the company’s profitability. For UAE companies that often deal with a diverse and global supplier base, this level of efficiency is essential to maintaining smooth operations and maximizing the benefits of corporate card spending.

Mitigating Risk and Enhancing Security

Commercial credit cards also offer enhanced security features that can protect companies from fraud and unauthorized transactions. With robust monitoring and reporting tools, AP teams and CFOs can keep a close eye on spending, ensuring that all payments are legitimate and authorized. This level of control not only mitigates risk but also provides valuable insights into spending patterns, enabling better decision-making and financial management.

In the GCC, where cybersecurity threats are a growing concern, having these security measures in place is crucial. By leveraging the built-in security features of corporate cards, companies can protect their finances while still reaping the benefits of enhanced cash flow and rewards.

Measuring the ROI: Turning Insights into Action

Ultimately, the true value of using corporate cards for supplier payments lies in the ability to measure and maximize the ROI. CFOs should regularly analyze the financial impact of their payment strategies, tracking metrics such as cash flow improvements, cost savings from rebates and the value of enhanced supplier terms. By doing so, they can continually refine their approach, ensuring that every Dirham spent is working to drive greater financial returns.

For UAE companies, where the business environment is both competitive and fast-paced, this strategic approach to supplier payments can be a game-changer. By turning what was once seen as a routine expense into a strategic asset, companies can unlock significant savings, improve liquidity and strengthen their overall financial position.

Unlocking the Full Potential of Corporate Card Spending

Supplier payments are more than just a financial obligation – they’re an opportunity to enhance your company’s financial health. By leveraging corporate credit cards and automated payment solutions, UAE businesses are transforming these payments into a powerful tool for savings, cash flow optimization and improved supplier relationships. As the financial landscape continues to evolve, those companies that recognize and capitalize on the ROI of their supplier payments will be well-positioned to thrive in an increasingly competitive UAE market.

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In the highly competitive and fast-paced motor insurance industry of the UAE, efficiency is paramount. As the sector grows and evolves, insurance companies face increasing pressure to settle claims quickly and accurately. The ability to process payments swiftly and without errors is crucial in maintaining customer satisfaction, securing market share and optimizing operational efficiency.

Traditionally, motor insurers in the UAE have relied on cheques and, more recently, bank transfers to pay workshops and garages for vehicle repairs. While this method has served its purpose, the underlying manual process is often slow and prone to errors, often requiring a significant number of payments to be re-issued. By switching to corporate credit card payments, motor insurers can significantly streamline their payment processes, enhance the speed and accuracy of claim settlements, strengthen their relationships with service providers and even enjoy additional financial benefits, such as rebates (or cash back).

Current Landscape of Motor Insurance in the UAE

The UAE’s motor insurance sector is one of the most dynamic in the region, with an estimated market size of AED 13 billion in 2023, according to the UAE Insurance Authority. With nearly 3.5 million vehicles on the roads, the demand for motor insurance remains high. However, the sector is also characterized by intense competition, with insurers constantly seeking ways to differentiate themselves through better customer service, faster claim processing and more efficient operations.

A key challenge faced by many motor insurers is the speed at which claims are processed and payments are made to service providers. Delays in payment processing can lead to dissatisfied customers, strained relationships with workshops and potential reputational damage. In a market where customer experience, not just price, is becoming a key differentiator, the ability to settle claims quickly and accurately is crucial. 

The Case for Card Payments in Motor Insurance

Faster Payment Processing

One of the most significant advantages of using corporate credit cards to pay workshops and garages is the speed of payment processing. Unlike cheques and bank transfers, which can take several hours to a few days to set up, authorize and clear, card payments are not just processed instantly, but are far simpler to set up and automate, eliminating the need for multistep workflows. This immediacy allows insurers to settle claims more quickly, reducing the time customers must wait for their vehicles to be repaired and returned.

According to a survey by the Dubai Chamber of Commerce, 67% of UAE consumers consider quick claim settlement to be the most important factor when choosing a motor insurance provider. By adopting card payments, insurers can meet this expectation, improving customer satisfaction and loyalty.

Reduced Errors and Manual Intervention

The manual nature of reconciling invoices and setting up traditional bank transfers can introduce errors into the payment process. Whether it’s incorrect account details, payment amounts or delays in processing, these errors can create significant inefficiencies and lead to disputes with service providers. Card payments, on the other hand, can be automated, significantly reducing human error and ensuring that payments are accurate and timely.

Automation also means that the entire payment process – from invoice receipt to payment – can be streamlined. This not only saves time but also frees up resources within the organisation that can be better used elsewhere. A report by the UAE Insurance Authority in 2023 highlighted that insurers who adopted automated payment systems saw a 30% reduction in payment processing errors and a 25% increase in overall operational efficiency.

Enhanced Cash Flow Management

While cash flow may not be the top priority for insurers, effective cash management is still essential for maintaining operational stability. By using corporate credit cards, insurers can benefit from extended payment terms, allowing them to better manage their cash flow. This flexibility can be particularly valuable during periods of high claim volumes, such as following major accidents or natural disasters, when insurers may face a surge in payouts.

Additionally, the ability to delay the actual cash outflow while still settling claims on time can provide insurers with more time to reconcile accounts and manage their liquidity more effectively. This is particularly relevant in the UAE, where the motor insurance sector is subject to strict regulatory oversight, including capital adequacy requirements set by the UAE Central Bank.

Rebate: An Added Financial Incentive

Many corporate credit cards offer rebates (or cash-back) on business expenses, including on payments made to workshops and garages. For motor insurers that process large volumes of claims, these rebates can translate into significant financial savings, profitability, be used to offset operational costs or passed on to customers in the form of enhanced services.

Strengthening Relationships with Service Providers

Timely and accurate payments are crucial in maintaining strong relationships with workshops, body shops and garages. These relationships are essential for ensuring that repairs are carried out quickly and to a high standard, which in turn affects customer satisfaction. By paying suppliers promptly through card payments, insurers can position themselves as preferred partners, securing better rates and priority service from these providers.

In the UAE, where the average cost of vehicle repairs is among the highest in the region, according to a 2023 report by the UAE Automobile and Touring Club, negotiating better rates with service providers can lead to substantial cost savings for insurers. 

Case Study

One of the leading motor insurers in the UAE recently transitioned from bank transfers to corporate credit card payments for settling claims with auto workshops. Within the first year of implementation, the insurer reported a 45% reduction in payment processing time, a 27% decrease in payment-related errors and an annual rebate of over AED 750,000.

The treasury manager claimed that the move to card payments had not only improved operational efficiency but also strengthened the company’s relationships with key service providers. The insurer is now exploring additional automation opportunities to further streamline its claims processing, including across other verticals. 

Strategic Shift for UAE Motor Insurers

As the UAE motor insurance sector continues to grow and evolve, insurers must seek innovative ways to enhance efficiency, reduce errors and improve customer satisfaction. By adopting corporate credit card payments for workshops, body shops and garages, insurers can achieve these goals while also benefiting from the financial incentives of better cash flow management and rebates.

In an industry where speed and accuracy are critical, the transition to card payments represents a strategic shift that can help motor insurers in the UAE maintain their competitive edge, drive customer loyalty and optimize their operations for the future.

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In the fast-paced business environment of the UAE, the timely movement of money is critical to economic health. Yet, corporate payment delays – often seen as minor, manageable issues – can have profound and far-reaching effects on the broader economy. These delays can create a ripple effect, disrupting cash flow, straining supplier relationships and ultimately affecting the overall economic stability of the UAE.

Here are some ways in which corporate payment delays impact the UAE economy as well as some strategies businesses can adopt to mitigate these effects to promote a healthier business environment.

Scale of the Issue: Payment Delays in the UAE

Corporate payment delays are a widespread issue in the UAE, with significant implications for businesses across the country. According to a 2023 report by Euler Hermes, the average payment delay in the UAE is approximately 67 days, with some sectors experiencing delays of up to 90 days. This is consistent with findings from Atradius’ Payment Practices Barometer, which reported that 48% of B2B invoices in the UAE were overdue, with an average delay of 45 days beyond the agreed payment terms.

These delays are more than just operational inconveniences. They create substantial cash flow challenges for suppliers, particularly small and medium-sized enterprises (SMEs). Given that SMEs make up over 94% of all companies in the UAE, according to the UAE Ministry of Economy, the widespread impact of payment delays on this sector cannot be overstated. Delayed payments can lead to severe cash flow shortages, forcing SMEs to delay their own payments to employees, landlords and suppliers, creating a domino effect throughout the economy.

The Ripple Effect on SMEs and Suppliers

SMEs are the backbone of the UAE’s economy, contributing around 53% to the country’s GDP and employing about 86% of the private sector workforce. When large corporations delay payments, the impact on SMEs is immediate and significant. Cash flow constraints prevent SMEs from meeting their financial obligations, which can result in delayed salaries, reduced investment in growth opportunities and in extreme cases, business closures.

A study conducted by the UAE’s Federal Competitiveness and Statistics Authority found that SMEs face the highest risk of insolvency due to cash flow issues, with 28% of surveyed SMEs citing payment delays as a major challenge. The consequences of these delays extend beyond individual companies, as they can trigger a chain reaction of delayed payments throughout the economy. This not only reduces overall liquidity but also dampens economic activity, as businesses and employees alike tighten their belts in response to cash flow uncertainties.

Broader Economic Impact

The broader impact of corporate payment delays on the UAE economy is substantial. The International Monetary Fund (IMF) has highlighted that delayed payments in the private sector contribute to a slowdown in economic growth, as reduced cash flow leads to lower spending by businesses and consumers. In the UAE, where consumer spending accounts for approximately 60% of GDP, this reduction in economic activity can have serious consequences.

Moreover, payment delays can lead to an increase in the cost of borrowing. As businesses struggle with cash flow, they may seek short-term loans to bridge the gap. Higher demand for these loans can drive up interest rates, making it more expensive for companies to access credit. This further constrains economic growth, as businesses are forced to allocate more resources to servicing debt rather than investing in operations and expansion.

The UAE’s financial sector, too, is affected by widespread payment delays. The Central Bank of the UAE has noted that persistent delays in payments can lead to higher levels of non-performing loans (NPLs) within the banking sector. As businesses struggle to repay loans due to delayed receipts, banks may tighten lending criteria, making it more difficult for companies to access the credit they need to grow.

Strategies for Mitigating the Impact of Payment Delays

Given the significant impact that corporate payment delays can have on the UAE economy, it’s crucial for businesses to adopt strategies that minimize these delays and promote a healthier economic environment.

Implementing Efficient Payment Processes

Streamlining and automating payment processes is one of the most effective ways to reduce payment delays. By adopting automated payment solutions, companies can ensure that payments are made on time, reducing the risk of delays. A study by the Institute of Finance & Management (IOFM) found that companies using automated payment systems saw a 60% reduction in late payments.

Companies like Swipe2B offer card-to-bank solutions that automate the payment process, ensuring that suppliers receive their payments early. By integrating such solutions, businesses can improve their cash flow management and strengthen relationships with suppliers.

Negotiating Flexible Payment Terms

Open and transparent communication with suppliers is essential for managing payment expectations. Businesses should negotiate payment terms that are mutually beneficial, taking into account both their own cash flow needs and the financial requirements of their suppliers. Offering early payment options in exchange for discounts can be a win-win strategy, providing suppliers with the liquidity they need while allowing the business to benefit from cost savings.

Promoting a Culture of Prompt Payment

Corporate culture plays a significant role in how payment practices are managed. By fostering a culture of prompt payment within the organization, businesses can ensure that timely payments are prioritized at all levels. A report by McKinsey & Company found that companies with a strong culture of prompt payment were 20% more likely to maintain positive supplier relationships and avoid supply chain disruptions.

Collaborating with Financial Institutions

Financial institutions in the UAE offer a range of tools and services that can help businesses manage their cash flow and reduce the impact of payment delays. Supply chain financing, factoring services and commercial credit cards allow suppliers to receive early payments on their invoices, improving liquidity without straining relationships between buyers and sellers. By working closely with banks and financial service providers, businesses can access the resources they need to maintain healthy cash flow and minimize the impact of payment delays.

Collective Responsibility

Corporate payment delays may seem like a minor issue at first glance, but their impact on the UAE economy is profound. As the UAE continues to grow and diversify its economy, it’s essential for businesses to recognize the consequences of these delays and take proactive steps to address them. By implementing efficient payment processes, fostering a culture of prompt payment and collaborating with financial institutions, companies in the UAE can mitigate the ripple effect of payment delays, supporting the health of the entire economy. Timely payments are not just a matter of financial responsibility – they’re a key factor in maintaining the UAE’s position as a leading global business hub.

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Effective cash flow management is essential for the financial health of any business, and in the competitive landscape of the UAE, it’s even more critical. Companies across the UAE face unique liquidity challenges, particularly when dealing with suppliers who expect timely payments. A growing solution to these challenges is the use of corporate credit cards for supplier payments, offering businesses a way to extend their (DPO) credit period while simultaneously providing suppliers with early payments, creating a win-win scenario.

Understanding Cash Flow Challenges in the UAE

Cash flow issues are a common concern in the UAE, where businesses frequently encounter delays in receiving payments. These delays cause a ripple effect throughout the supply chain. A 2023 survey by Atradius found that 39% of companies in the UAE face significant challenges due to late payments. These delays can strain a company’s cash reserves, making it difficult to meet obligations such as payroll, rent and crucial downstream supplier payments.

For medium to large corporates, managing these cash flow challenges is essential, particularly in industries where margins are tight and the cost of capital is high. Traditional payment methods, such as cheques or bank transfers, often lack the flexibility needed to navigate these issues effectively.

Leveraging Corporate Credit Cards for Extended Credit and Supplier Benefits

One of the most effective ways to manage cash flow is by leveraging corporate credit cards for supplier payments. This approach allows companies to extend their credit period without putting pressure on their cash reserves. Instead of paying suppliers through bank transfers or checks, businesses can use their corporate credit cards to pay suppliers immediately, while enjoying an additional 50 to 60 days (depending on the card issuer) to settle the payment. This extended credit period can be invaluable for companies seeking to maintain liquidity and ensure smooth operations.

For suppliers, the benefits are equally compelling. When a buyer gains an additional 60 or so days of interest free credit, it’s now able to pay its suppliers earlier, using an automated card-to-bank solution. Early payment improves suppliers’ cash flow, allowing them to reinvest in their operations, manage their own financial obligations more effectively and reduce the time and resources spent chasing overdue payments.

Expanding Payment Options for Suppliers

In addition to early payments, suppliers gain the advantage of adding a new payment method to their repertoire. By accepting payments through corporate cards, suppliers open up a new avenue for receiving payments from other clients as well. This flexibility can be particularly valuable in the UAE market, where diversifying payment options can attract more business and reduce the risk associated with relying on a single payment method.

Moreover, offering the ability to pay by card makes a supplier more attractive to buyers who prefer the convenience and financial benefits that come with using corporate credit cards. This added flexibility can enhance supplier relationships, positioning them as preferred partners in the eyes of their clients.

The Added Benefit of Rebates and Cash Back

Beyond the benefits of extended credit and early payments, corporate credit cards come with rebate programs that can add to a company’s bottom line. Many corporate cards offer cash back on transactions, effectively turning routine payments into a source of additional revenue. For instance, a company spending millions annually on supplier payments could potentially receive a significant rebate, which can then be reinvested into the business.

In a market like the UAE, where operational costs are high, and margins are constantly under pressure, these rebates can provide much-needed financial relief. They can help offset some of the costs associated with running a business, from office supplies to travel expenses.

Automation: The Next Step in Payment Evolution

While using corporate credit cards offers clear benefits, the process can be further enhanced through automation. Automated card-to-bank solutions, like Swipe2B, eliminate the need for manual intervention, reducing errors and ensuring that payments are made on time. Automation also streamlines the payment process, freeing up the finance team to focus on more strategic tasks, such as financial planning and analysis.

For UAE companies, which often deal with a diverse and global supplier base, the ability to automate payments is a game-changer. It ensures that suppliers are paid promptly, improving relationships and leading to better pricing and payment terms in the future. Additionally, automation can reduce the risk of fraud, a concern that is increasingly on the radar of businesses as they expand their digital capabilities.

Why UAE Companies Are Embracing the Change

The trend toward using corporate credit cards for supplier payments is growing in the UAE, particularly among medium to large corporates looking for ways to optimize their cash flow. With the added benefits of extended credit periods, cash back, early payments and the expansion of payment options, it’s no surprise that more and more companies and suppliers are adopting this approach.

With providers of card-to-bank solutions, UAE businesses and suppliers can work with partners who understand the unique challenges of the regional market. Swipe2B’s solution continues to be adopted by several local and Fortune 500 companies across the GCC, helping them streamline their payment processes and unlock significant financial benefits for both buyers and suppliers.

A Strategic Move for Buyers and Suppliers

For companies looking to improve their cash flow and gain a competitive edge, leveraging corporate credit cards for B2B supplier payments is a strategic move. With the right approach, businesses can enjoy extended credit periods, earn rebates and benefit from automation, while suppliers can receive early payments and offer more payment options to other clients. As more companies and suppliers recognize these advantages, the adoption of B2B card payments continues to rise, driving greater efficiency and financial stability across the region.

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In a rapidly evolving business landscape, effective cash flow management is more than just a financial necessity – it’s a critical component of long-term business success. As CFOs and finance leaders navigate the complexities of the UAE market, from fluctuating oil prices to global economic pressures, maintaining healthy liquidity remains a top priority. However, the methods to achieve this are evolving, with innovative strategies emerging.

For this article, we sat down with 22 CFOs and Treasury Managers across the UAE, to better understand their strategies to bolster liquidity, focus on proactive financial management and strengthen supplier relationships. We also asked them about the financial tools that are reshaping the way businesses manage their cash flow.

The Liquidity Landscape in the UAE

The UAE is a hub of commerce and innovation, yet its businesses are not immune to cash flow challenges. In a 2023 report by Atradius, a significant number of UAE businesses reported that late payments were impacting their operations. These delays can stifle growth, limit investment opportunities, and, in some cases, threaten the survival of the business. For CFOs, the challenge is clear: how to maintain liquidity in a market where payment delays and economic fluctuations are part of the business environment.

Rethinking Cash Flow Management

To strengthen liquidity, CFOs must adopt a multifaceted approach to cash flow management. This involves more than just balancing receivables and payables—it requires a strategic mindset that looks at the broader financial picture.

Dynamic Cash Flow Forecasting

One of the most powerful tools at a CFO’s disposal is dynamic cash flow forecasting. This goes beyond traditional forecasting by incorporating real-time data and predictive analytics to provide a more accurate and up-to-date view of the company’s financial health. By regularly updating cash flow forecasts and using scenario planning, CFOs can anticipate potential cash shortages and take preemptive action. In a market like the UAE, where external factors can rapidly change financial conditions, having a clear and current view of cash flow is invaluable.

Utilizing Supply Chain Financing

Supply chain financing is gaining traction as an effective way to improve liquidity. By working with financial institutions, companies can pay their suppliers earlier while extending their own payment terms. This approach not only strengthens relationships with suppliers but also frees up working capital. In the UAE, where maintaining strong supplier relationships is key to business continuity, supply chain financing offers a win-win solution. Suppliers benefit from improved cash flow, while buyers gain more flexibility in managing their working capital.

Optimizing Payment Terms through Strategic Negotiation

Effective negotiation with suppliers is crucial for improving cash flow. However, the key is not just to delay payments but to create mutually beneficial terms. For instance, UAE businesses might offer suppliers early payment in exchange for a discount or extend payment terms in return for better pricing. These negotiations require a deep understanding of both the company’s financial needs and the supplier’s position. By aligning these interests, CFOs can unlock liquidity while maintaining strong supplier relationships.

Exploring Alternative Financing Options

Beyond traditional bank loans, CFOs in the UAE have access to a variety of alternative financing options that can help enhance liquidity. These include invoice discounting, where companies sell their receivables at a discount to receive immediate cash and asset-based lending, which uses company assets as collateral for loans. These options can be particularly useful in a market where securing traditional financing can be challenging due to economic uncertainty. By diversifying financing sources, CFOs can ensure that their companies have access to the liquidity needed to seize growth opportunities.

The Role of Technology in Cash Flow Management

In today’s digital age, technology plays an increasingly vital role in how companies manage their cash flow. From automation to advanced analytics, the tools available to CFOs are transforming the financial landscape.

Automating Payment Processes

Automation is no longer just about efficiency; it’s about strategic advantage. Automated payment solutions streamline the process of paying suppliers, ensuring that payments are made on time and with minimal manual intervention. For CFOs in the UAE, this means less time spent on administrative tasks and more focus on strategic financial management. Furthermore, automation reduces the risk of human error and fraud, both of which can have severe impacts on cash flow.

Companies like Swipe2B have been at the forefront of offering automated card-to-bank solutions in the UAE, which seamlessly integrate with corporate credit cards. These solutions allow businesses to extend their payment terms and manage cash flow more effectively, while also providing suppliers with faster payments – enhancing relationships and creating financial stability on both sides.

Embracing Digital Payment Platforms

Digital payment platforms are revolutionizing the way companies handle transactions. These platforms offer real-time payment processing, greater transparency, and the ability to manage payments from anywhere in the world. For CFOs in the UAE, adopting digital payment solutions can streamline cash flow management and improve liquidity. By integrating these platforms with existing financial systems, companies can gain better control over their cash flow and reduce the time it takes to move money through the business.

Leveraging Data Analytics for Cash Flow Optimization

Data analytics is another powerful tool for enhancing liquidity. By analyzing payment trends, receivables aging and other financial data, CFOs can identify patterns and opportunities for improvement. For instance, analytics might reveal that certain customers consistently pay late, allowing the company to take proactive steps to address the issue. In the UAE’s competitive market, where every financial decision counts, leveraging data can make the difference between maintaining positive cash flow and facing a shortfall.

Building a Liquidity Resilient Business

To truly strengthen liquidity, CFOs must foster a culture of financial resilience within their organizations. This involves not only implementing the right tools and strategies but also educating and empowering the broader team to prioritize cash flow management.

Educating Stakeholders

Ensuring that all departments understand the importance of cash flow is critical. This might involve training programs for sales teams on the impact of payment terms or working with procurement to negotiate better deals with suppliers. By making cash flow a company-wide priority, CFOs can create a more financially resilient organization.

Building Strong Relationships with Financial Partners

Finally, having strong relationships with banks, financial institutions and service providers is crucial. These partners can provide the support and flexibility needed during times of financial stress. In the UAE, where the business environment is constantly evolving, having a reliable network of financial partners can help companies navigate uncertainty and maintain liquidity.

The Path Forward for UAE CFOs

In the UAE’s fast-paced and ever-changing market, effective cash flow management is essential for business success. By adopting innovative strategies, leveraging technology and building strong financial relationships, CFOs can enhance liquidity and position their companies for long-term growth.

With the right approach, businesses can turn the cash flow conundrum into a strategic advantage, ensuring financial stability and unlocking new opportunities.

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