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“Visa’s recent annual global Commercial Consumption Expenditure (CCE) index showed that Vietnam’s commercial spending is expected to reach over $236.6 billion in 2013,” Lorijon Bacchi, country manager of Visa in Vietnam, said.
“With the increased commercial spending, businesses will need to find innovative ways to track expenses, manage cash flow, and keep costs under control. Businesses around the world have already migrated from cash and checks to electronic payment. It is time for local businesses to exercise this option. As an expert in payment technology, Visa is committed to supporting the growth of businesses in Vietnam with our commercial card solutions,” added Bacchi.
Representatives from local business associations – Vietnam Chamber of Commerce and Industry (VCCI) and Vietnam Association of Small and Medium Enterprises (VINASME) – and business owners gathered at a seminar in Hanoi today to learn more about how Visa’s commercial card solutions can help SME owners better manage their expenses.
According to the Vietnam Small Business Market Analysis 2012 by BDRC Asia, Vietnam has a large SME presence with more than 600,000 business entities. Each company spends around $1,800 every month on cardable travel and entertainment (T&E) expenses. T&E represents the largest controllable expense for most companies. This sector covers items such as flights, dining, hotels and others.
The study also showed that more than 40 per cent of the respondents take international trips every year with an average of 11 international business trips a year per company. Unsurprisingly these expenses are a challenge to manage without the right tools.
Large opportunities exist for electronic payments as cash remains a popular mode of purchase with almost 99 per cent of businesses still using this payment method. Not only is using cash a cumbersome way of payment, companies also face difficulties in tracking expenses. While some local businesses appreciate the benefits of using commercial cards, over a third of the firms let their employees use personal cards for business purposes. This causes difficulties as expenses are subject to personal credit limits and companies also have to reclaim interest charges.
According to Bacchi, financial institutions have every incentive to embrace the Commercial Card: “When surveyed, 60 per cent of local businesses said they already have a credit relationship with their banks and 85 per cent are likely to apply for a “business card” if made available,” she said.
“This shows a clear opportunity for financial institutions to optimise their commercial card program to capture more spend with electronic payments and better meet the needs of their commercial and government clients.”