Should My Business Use a Purchasing Card?
P-cards have the flexibility and controls that make them a valuable tool for certain businesses.
P-cards have the flexibility and controls that make them a valuable tool for certain businesses.
Purchasing cards, also called procurement cards or p-cards, are a type of company card that businesses traditionally have provided their employees to streamline payments (especially modest or recurring expenditures) and efficiently track expenses.
Businesses can distribute p-cards to each employee, or each department, to simplify purchasing processes, eliminate unnecessary administration and, of course, save money. P-cards are used for varied expenses, from travel and entertainment to large capital purchases to recurring online payments.
Deciding when to obtain — and use — a p-card instead of alternative cards or financing options depends on your business spending patterns and preferences regarding features and functionality.
For security-oriented companies, p-cards offer employers valuable restrictions that can help bolster safekeeping and control — an especially valuable feature in an environment where fraud is increasingly prevalent. From monthly limits to transaction size to the ability to block out certain industries, p-cards help protect against fraud and employee misuse. P-cards also may provide more options for connecting with online administration tools, which aid businesses in tracking and managing expenses.
Somewhat of a hybrid between debit and credit cards, p-cards require balances to be paid monthly. They may also have monthly or annual service charges and other fees, so businesses should evaluate any new costs against the potential benefit.
Another highly used amenity of most p-card programs is the ability to create a virtual, or “ghost,” card. This application enables a business to create a plastic-less card number for card-on-file, on-line applications, and is commonly used with large vendors. With this tool, companies not only can further expand purchasing locations but also can eliminate the costs and fraud risks associated with checks.
Common p-card benefits include:
Consider your needs and credit requirements, along with a comparison of financial incentives and customer services associated with various offerings. Include your preferred benefits in your research, which may include customized restrictions and/or the ability to integrate purchasing information with financial management tools. For specific needs, your business can also look into specialized p-cards that cater specifically to travel, one-time purchases or vendor payments.
1. Educate: Inform your employees of how and when to appropriately use the card, what restrictions are in place and processes for making and managing transactions.
2. Create a Policy: Rolling out a new program provides the opportunity to instill safety practices into your company culture and outline the guidelines for how the program is intended to be used.
3. Monitor: Utilize financial management statements and tools available to continuously review purchases and keep your business expenses in check.
4. Maximize: Work with your banking partner to not only maximize the amenities of the program, but also to maximize the usage to minimize check use and generate higher returns.
