Mid-sized companies can now save up to 40 per cent of their travel and entertainment expenses with a new corporate card launched especially for them by American Express.

According to American Express estimates, mid-sized firms in India collectively incur travel and entertainment costs of $2.7 billion every year. The card can bring about savings of $1.08 billion a year.

The savings, American Express executives say, take place in two ways: one, American Express has tie-ups with 20 service firms (airlines, hotels, car rental agencies, insurance companies) offering discounts to card-users; and two, it will give corporates details like frequently used airlines or hotels which can help them negotiate rates on their own.

"Many mid-sized companies do not, on their own, enjoy volume discounts for business expenses. But that changes with the corporate card. We have 20 partners who can give discounts to card-users. Over time, American Express will bring in more partners," Firdaus Mogul, head of American Express corporate services in India, said.

Apart from savings, the corporate card would do away with functions like tour advances and multiple billings, with companies having to issue only one cheque to American Express at the end of the month, Mogul explained.

The card also provides various liability options as well as user-defined spending controls, which help companies to control expenses and protects them against potential misuse of the card by employees. American Express claims it is the first to launch such a card for mid-sized firms in India.

Before launching the corporate card, American Express conducted interviews with financial executives at about 20 typical mid-sized companies to assess how they viewed growth opportunities and bottomline requirements.

There are around 30,000 middle-market companies in India, with sales revenues ranging from Rs 5 crore (Rs 50 million) to Rs 1,000 crore (Rs 10 billion). About a third of these are in manufacturing.

"In our conversations, we found several firms have not had the time to focus on discretionary spending because they had grown aggressively," Mogul pointed out.

"Business travel and entertainment are two of the biggest costs faced by any business, and they are unavoidable heads. With the corporate card, we can help rationalise this cost."