Commercial Cards Become Cash Flow Catalysts for Cross-Border B2B Payments

Cross-border trade is a huge business, totaling roughly $190 trillion in 2023. Sourcing goods and services globally and establishing supply chains that transcend borders have become part of the corporate DNA. However, navigating the complexities of cross-border payments remains a challenge as businesses grapple with fluctuating exchange rates, lack of transparency and high costs tied to the multiple intermediaries that move money that last mile.

As more businesses navigate international markets, finance leaders are focusing on optimizing payments to keep those supply chains running smoothly. This shift is not just about reducing costs but also about leveraging payments as a strategic tool to enhance working capital and drive business growth. The outcome is simplified global trade with a more streamlined and efficient office of the chief financial officer (CFO).

“Many people are unaware of more viable, cost-effective and efficient methods for making cross-border payments,” Dean M. Leavitt, founder and CEO of Boost Payment Solutions, said in an interview with Karen Webster.

The Growing Need for Payment Optimization

Sophisticated CFOs and finance leaders, particularly in mid-sized to large enterprises, are increasingly prioritizing payment optimization. These leaders aim to leverage payments as part of broader working capital strategies, regardless of their industry.

“There are many ways to move money internationally, but few incorporate a credit component,” Leavitt said. Although blockchain technology shows promise in addressing some cross-border inefficiencies, its primary function is to facilitate instantaneous value transfer between parties, without the added benefit of credit terms.

Commercial cards have emerged as a critical tool in this landscape, functioning as a “working capital weapon,” according to Leavitt. These cards allow businesses to extend payment terms by increasing their days payable outstanding, giving buyers more flexibility. However, despite their advantages, adoption faces barriers due to uneven capabilities among financial institutions.

“Some financial institutions can issue cards that work seamlessly across the globe, but most cannot,” Leavitt said. This disparity forces enterprises to establish banking relationships in suppliers’ countries, a process that is both expensive and time-consuming.

Boosting Progress Through Innovation

“Cross-border payments for enterprise-level B2B transactions are inherently complex,” Leavitt said. Yet, progress is being made. Advancements in technology are connecting the dots, enabling smoother transactions and providing access to critical data for international fund flows.

Boost Payment Solutions is among the companies trying to solve this for U.S. companies that have multiple vendor relationships in multiple global jurisdictions. In September, the firm launched its Boost 100XB solution, designed to help financial institutions and program managers enable enterprise buyers to use their existing U.S.-issued commercial cards to pay suppliers in over 180 countries.

“We’re leveling the playing field,” Leavitt said. “The world hasn’t yet standardized cross-border payments, but we’ve made them interoperable.” This innovation allows financial institutions (FIs) to offer corporate customers a seamless solution: the ability to use their U.S.-issued commercial cards to pay global suppliers without the need for complex banking arrangements.

The Mechanics of Boost 100XB

Leavitt described Boost 100XB as a two-legged transaction. The first leg is a traditional transaction processed domestically using a U.S.-issued commercial card. Boost processes the payment in the United States, settling it into a U.S.-based depository account. The second leg involves moving the funds internationally, completing the transaction as an account-to-account transfer in the destination country.

“As long as you are a globally licensed money transfer agent, you can move money while remaining fully compliant with regional regulations,” Leavitt said. This streamlined process circumvents many regulatory hurdles and offers a passive experience for both buyers and suppliers.

Critically, the solution ensures that data travels with the transaction. “For transactions that can reach tens of millions of dollars, data is mission-critical,” Leavitt said. The Boost solution ensures that all transaction details are meticulously formatted and integrated into enterprise resource planning (ERP) and accounting systems.

A Case in Point: Reducing Costs and Complexity

Leavitt provided an example: A Belgian company or a Belgian affiliate of a U.S. firm wants to pay a supplier in Brussels. If their FI can issue a card on a Belgian BIN, the transaction avoids cross-border fees and currency conversion costs. The supplier benefits from lower acceptance costs compared to other payment methods, creating a win-win scenario for both parties.

Educating the Marketplace

Despite these advancements, education remains a critical hurdle. “As an industry, we have a lot of work to do to get the word out,” Leavitt said. Cross-border commercial card usage is still a relatively new development, and many businesses are unaware of its potential benefits.

But buyers are increasingly motivated to shift as much spend as possible to card-based solutions, leveraging the extended payment terms and grace periods commercial cards offer. Suppliers, in turn, benefit from faster payments and potential rebates offered to buyers.

A Vision for the Future

Looking ahead, Leavitt envisions a future where the use of commercial cards for cross-border payments becomes the norm rather than the exception. His vision is backed up by what he sees as real interest on the part of large corporates using Boost to pay suppliers in 30 countries around the globe, with little more than the press of an “OK to Pay” button. Their tech transfers those funds to their respective receivers, eliminating manual intervention and reducing costs.

“Scarcely a year from now, we’ll no longer be talking about the novelty of using commercial cards for international payments,” he said. “Instead, we’ll be discussing how many billions of dollars have shifted from traditional payment methods to cross-border cards.”