The Economist Intelligence Unit’s 2013 Strategies for managing customer and supplier risks report shows that businesses worldwide are aware of the hazards within their supply chains. Some 58% said it was at least somewhat likely that a supplier would fail to meet their obligations in terms of either quality or volume, while half said the same of production problems causing supply chain disruption. Meanwhile 38% confirmed the likelihood of business continuity being lost as a result of a supplier’s financial problems. Data security and corruption are also constant worries, with 30% saying it was likely that a supplier would be affected by an IT security breach and a quarter even fearing legal risks thanks to fraud or other crime.
It is vital that businesses adopt processes that will afford them protection in the event of these breaches. Corporate Cards can contribute to a risk management strategy in several ways. For example, without punctual deliveries from suppliers it can be difficult for many firms, especially in retail, to raise the funds needed to maintain cash flow and pay their other suppliers. An Amex account affords firms 51 credit-free days on every purchase, meaning they can pay suppliers promptly and make the most of extra time to pay their bill.
Fraud and data security are significant risks, and losing the right information can result in large financial and reputational losses. The Verizon 2013 Data Breach Investigations Report found that more than half of all data security breaches involved some form of hacking, while a striking three-quarters involved users intruding onto networks having stolen or exploited weak credentials. Threats can come from anywhere at any time and it is important that if a supplier falls victim to a cyberattack, businesses that buy from them are not in automatic jeopardy.
To an extent some of these risks are inevitable, but a Corporate Card system can help to protect companies from financial and data losses as a result of breaches among suppliers. Comprehensive data captured from every transaction in almost real time provides maximum visibility so that transactions can be traced and monitored and suspicious purchases spotted almost immediately. Moreover, Amex’s Fraud Protection Guarantee ensures that any transactions proven to be fraudulent will not lead to financial loss for the account holder.
But significantly, adopting a Corporate Card regime can lead to added value throughout the supply chain. Through Supplier Enablement, firms can work directly with the businesses in their supply chains to improve their internal processes and where necessary, prepare them to upgrade from paper-based processes to more secure ePayments. As well as minimising the risk from data breaches, these collaborative relationships with suppliers can help to prevent them.
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