Overview
In PrecisionLender Treasury Pricing, Commercial Cards are payment solutions that financial institutions provide to businesses and corporations as a way to help those customers maximize cash flow and improve efficiencies. An employee at the financial institution can be empowered to structure and price Commercial Card Programs in the Treasury Pricing tool and perform activities, such as allocating spend and negotiating rebate tiers. This article will cover setting up commercial card programs and applying them to an opportunity.
In this Article
Setting up a Commercial Card
To set up Commercial card you will first need to complete the following four steps:
Configure Billing Cycles
From the Administration section on the dashboard, make sure you are on the Regions & Users tab, and then select the appropriate region.
Select the Edit and scroll down to the Cycle/Payment Terms section. Here you will fill out the following fields:
- Billing Days - The number of days the statement is generated for the card program in each cycle.
- Payment Days - The number of days the payment has to be made for the card program for each cycle.
- Cycle Factor - The factor applied to the annual spend for the Billing and Payment days to calculate average balance for that cycle.
- Is Default - This indicates which Billing and Payment Cycle will be the standard setting in the Commercial Card Program within the pricing experience for the user (the user can change this to a different Billing and Payment Cycle, but when whichever default is selected is what will be represented first).
Be sure to click Save at the top of the screen to apply your configurations.
Add Spend Types
Spend Types allow you to categorize the types of spending, such as purchasing or travel expenses.
To add a new spend type, navigate to the General tab of the Administration section.
Scroll down to the Commercial Card Spend Types section, then click New.
On the net screen, enter the spend type Name, and click Save.
Create a Commercial Card Program
From the PrecisionLender dashboard, select Products from the left-hand menu and then scroll down to the Commercial Card Program Products section.
To add a Commercial Card Program Product, select New.
Product Configurations & Defaults
You will first need to enter a Name for the new product.
Enter the appropriate information in the following fields:
- Operational & Market Risk Capital Allocation for Economic Capital - Capital, or Equity allocated, expressed as a percentage of the balance for the product plus a percentage of revenue.
- Operational & Market Risk Capital Allocation for Regulatory Capital - Capital, or Equity allocated, expressed as a percentage of average balance and/or a percentage of gross revenue for the product.
- Spend Types - Spend types can be categorized by the types of spending, such as small (standard) or large ticket transactions. If the checkbox is selected, that spend type will be enabled for the program you are configuring.
- Risk Ratings - This "Risk Rating" represents the risk grade of the Borrower and is used to indicate the "Probability of Default (PD)" for that Borrower and an allocation of credit risk capital.
- Facility Ratings - A Facility Rating is a category or grade that you can select to specify the level of credit risk to calculate on the loan.
- Expenses - The expenses associated with the program. These can be one time or annual expenses.
- Available Regions - Regions for which these settings are active are signified with a check next to the region name. You can select Split Out Region to choose regions to separate from this group of regions so they can have separate assumptions.
Once you have entered all necessary information, select Save to add the treasury product.
Create a Commercial Card Product
From the PrecisionLender dashboard, select Products from the left-hand menu and then scroll down to the Commercial Card Products section.
To add a Commercial Card Product, select New.
Product Configurations & Defaults
You will first need to enter a Name for the new product.
Enter the appropriate information in the following fields:
- Target ROE - The Target ROE (Return on Equity) is one of the main ways to guide users. It should be noted that these are meant to be targets, not the minimum acceptable ROE.
- Interchange & Transaction Size - The rate applied to designated spend type for this specific
product. The average transaction size is the assumption by the financial institution applied to the designated spend type for this specific product. - Allowable Rate Type - You can select either Fixed or Floating from the drop down and it will make that rate type available for this product.
- Allowable Commitment Type - You can select either Committed or Uncommitted from the drop down and it will make that commitment type available for this product.
- Configurable Servicing Expense - The expense associated with servicing the product. These can be flat or tiered.
- Expenses - The expenses associated with the product. These can be flat or tiered.
- Available Regions - Regions for which these settings are active are signified with a check next to the region name. You can select Split Out Region to choose regions to separate from this group of regions so they can have separate assumptions.
Once you have entered all necessary information, select Save to add the Commercial Card product.
Pricing a Commercial Card Opportunity
To price a new commercial card opportunity, select New Opportunity. This drop down will provide a list of Commercial Loan Products around which you can create a new pricing Opportunity. This list is completely customizable and should represent the types of Commercial Loans that you typically price at your institution. Select the applicable Commercial Loan Product name from the list.
If your opportunity does not have a loan attached you can select the "Deposit/Other" option.
Enter the appropriate information in the fields as you would when pricing a commercial loan and when you are ready, select the Treasury tab.
On the New Treasury Opportunity screen, select the Commercial Cards tab. This is where you will have the ability to add the appropriate Commercial card program to the opportunity.
The Opportunity Impact window will show your target.
Select the Add Program button.
In the pop-up window, check the box next to the program you would like to add to the opportunity and then click Add.
- The Spend section displays the anticipated spend associated with each Spend and Card Type.
- The Card Count section is where you can enter the amount of physical cards that will be distributed.
- The Terms section is where you are able to indicate the terms and conditions of the card such as the billing cycle and credit limit.
- The Rebates section will show any rebates that are offered.
Once all necessary information is entered, be sure to click Save in the top left corner to apply any changes.