Are P-Cards Even Needed Anymore?

Despite the long history and proven value of Purchasing Cards (P-Cards), the decision-makers at some organizations still resist them for one reason or another. They might prefer the traditional purchase-to-pay process for everything, even low-value purchases. Imagine, then, if or when an organization’s AP automation solution offers the ability to auto-approve select invoices. This type of functionality is already out there. Will it mark the end for P‑Cards? Why issue cards to employees when small-dollar invoices could zip right through the accounts payable process? AP automation solutions continue to evolve and offer a lot of benefits. However, following are reasons why a P-Card program should remain an important part of a payment strategy, even when an organization has robust AP technology.  

Reasons to Retain P-Cards

Let’s revisit P-Cards 101 for a moment. P-Cards allow employees and departments to buy what they need when they need it. See more about P-Card benefits. Take a close look at what your organization purchases and how. Not everything is suitable for a traditional P2P process. Small-dollar purchases and/or in-person purchases are prime examples.

Mary Schaeffer, founder of AP Now, agrees. She points out, “P-cards play a very real role in the portfolio of payment tools/options used by best practice organizations. Processing an invoice is expensive, regardless of whether that invoice is for $10 or $10 million. Like it or not, every organization has situations where purchases are under $500. In fact, for many, over half the purchases are under $500. To get an invoice for every single one of those purchases and use valuable human resources to process them would be anything but best practice.”

Even with AP automation to handle invoices with ease, it does not make sense to burden accounts payable with the task of setting up one-time suppliers in the master vendor file. You might need to increase AP staff size as a result.

Speaking of suppliers, we have repeatedly heard about resistance to card payments due to the fees. However, the traditional P2P process can be cumbersome and more costly to them than accepting cards, depending on the purchase. With or without automation, many suppliers will resist providing goods or services and then sending an invoice, which delays payment.

Further, not all suppliers will be keen to learn how to use your AP automation solution and send every invoice, regardless of dollar amount, through it. The process cost to them may be higher than the invoice amount.

Mary Schaeffer adds that under-utilization of AP automation can also be due to less legitimate reasons, such as AP staff who, fearing job loss, continue to do things the old way. This leads to my following final thoughts.

Final Thoughts

Any time your organization implements new technology and/or a new payment method, it will be necessary to adjust purchase-to-pay processes. It is also critical to clearly communicate changes to employees and suppliers alike, as well as provide related training.

Every organization is unique. In some situations, a P-Card P2P process will be best; in others, a traditional process aided by automation is best. Either way, both buyers and suppliers need to benefit. You can take a lead role in educating your management about how P-Cards and AP automation are both part of a comprehensive payment strategy.

Are P-Cards still needed, even when there is an AP automation solution in place? Absolutely yes! Both are part of a comprehensive payment strategy.

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About the Author

Blog post author Lynn Larson, CPCP, launched Recharged Education in 2014. With 20 years of commercial card experience, her mission is to make industry education readily accessible to all. Learn more…