Treasury Today Country Profiles in association with Citi

Ericsson

Ericsson, Highly Commended, Best Card Solution

James Lee, Citi and Virpi Salomonsson, Ericsson

In total, more than 80,000 cards have been issued to Ericsson employees since the programme launched and there are currently 60,000 active cardholders. The company has achieved this by replacing 61 fragmented programmes with a single bank’s global proprietary solution.

Photo of James Lee, Citi and Virpi Salomonsson, Ericsson.

Ragnar Lodén

Global Head of Corporate Finance

Founded in 1876, Ericsson (Telefonaktiebolaget LM Ericsson) is a Swedish multinational provider of communications technology and services. The company is headquartered in Stockholm, Sweden and looks to use innovation to empower people, business and society.

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The challenge:

Historically, Ericsson worked with 61 commercial card suppliers around the world. Each card programme was accessed and managed in a myriad of different ways and there were significant differences in terms and conditions, resulting in a convoluted administrative process. In addition to this, the back-end processes were fragmented, hampering efficiency and making payment settlement complex.

Managing relationships with these 61 providers was also a time-consuming and cumbersome endeavour and a lack of scale in programmes with many providers resulted in higher costs through inconsistent card fees and FX charges on outbound transactions. It also meant that Ericsson had no consolidated reporting and no global view of its programmes, meaning that the huge volumes of data produced around spend per supplier and employee travel behaviour were inaccessible. As a result, Ericsson could not use this information to produce benefits for the company, such as negotiating improved terms with suppliers. Moreover, as Ericsson’s spend was fragmented among multiple card providers, its ability to earn rebates was constrained.

As Ragnar Lodén, Head of Corporate Finance explains: “we wanted to transform our use of commercial cards around the world by implementing a truly global proprietary solution. We sought a provider that could cover as broad a geographical footprint as possible with high levels of card acceptance.”

The solution:

To overcome this challenge Ericsson decided to move from the fragmented and non-proprietary programmes from multiple suppliers to one global proprietary programme and partner, Citi. The decision to centralise its global commercial card programme from 61 providers to one has enabled the company to develop and implement a global travel policy, whereby Ericsson has been able to implement a holistic control mechanism globally – for the first time.

The new solution captures 95% of the company’s travel and expenses (T&E) spend through a Central Travel Account (CTA) offering the following benefits:

  • 60,000 of Ericsson’s registered travellers are now part of one commercial card programme, representing 93% of eligible users.

  • Non-compliant spending has been substantially reduced since the implementation of the corporate card in emerging markets which are growing by 50% and becoming increasingly important to Ericsson.

  • Spend tracking has increased by over 15% at the same time ensuring high levels of merchant acceptance in markets where Ericsson previously used cards that were not Visa/MasterCard branded.

  • Efficiency has improved and their costs have been significantly lowered; the use of local currency cards across 57 markets means employee spend does not incur additional FX-related costs in these countries.

  • Through this one global card programme Ericsson has received a 25% increase in its rebate since launch.

Best practice and innovation:

Ericsson’s commercial card programme is the world’s largest individually billed/individually paid solution. While many multinationals are satisfied with spend accounting for 70% of expenses, 60,000 of Ericsson’s employees – 93% of their travellers – now use its programme, representing 95% of all cardholder expenses. The company continues to expand its solutions; soon all travellers will be included.

“This solution has facilitated a shift to two shared service centres, giving us greater control and economies of scale by, for example, reducing administration by 1,500 hours a month which has increased employee productivity, saving approximately 3,000 working hours per month,” explains Lodén. “This has enabled staff to spend time on more value added tasks.”

Key benefits:

  • Risk removed/mitigated.

  • Process efficiencies.

  • Productivity gains.

  • Time taken to implement solution and realise benefits.

  • ROI.