The Last Frontier: New Purchasing Card Programs
Recharged Education’s consulting work has proven that Purchasing Cards are still new to some organizations. While the Commercial Card industry in general has become more focused on the growth of electronic payables solutions and advanced payment-related technology, these organizations—mostly in the middle market—are still learning the basics. They need support and guidance as much as anyone, if not more so. Maybe this describes your work situation. Following is more about these organizations, including why they need cards and preliminary considerations.
Don't forget to subscribe to the blog (no charge) to receive educational content!
Related Resources
Charge Ahead! An Introduction to Purchasing Cards and Tips for Program Implementation, a short eBook for $9.99 to help organizations get started
Consulting services offered by Recharged Education; please submit a contact form to relay your needs
Who They Are
When talking to these organizations, whether high-level executives or staff in the trenches, I have found that our industry jargon is foreign to them. They might be familiar with cards used for travel expenses (and they might currently use such cards), but they do not distinguish among the different card types. It is good to begin the conversation with some definitions, including what a One Card program means, as this is often the best path for them. Their current card usage will be one of the following:
Not using any today
Have a limited number (e.g., fewer than 10 cards), which are used only sparingly; in one case, I worked with a company that was “card sharing” among employees because they didn’t have enough cards—needless to say, this is an avoidable risk
Have implemented a P-Card/One Card program within the past year or two, but their program might be missing something and/or has failed to deliver
Why They Need P-Cards
Electronic payables can have a place within these organizations, too, but, most often, I have encountered inefficient purchase-to-pay (P2P) processes that need to be solved. For example, there might be workers in the field needing to make retail purchases, but without a means to do so. Further, without cards to handle low-value purchases in particular, the accounts payable (AP) function is buried in invoices that ultimately result in cumbersome check payments. One CEO told me about staying at the office late on a holiday to sign all the checks that had to be mailed.
With inefficiencies like these, Purchasing Cards can be a welcome addition to business operations.
Preliminary Considerations for New Programs
While there are many elements to a solid program foundation, the considerations below are things organizations may overlook.
How should P-Cards be used? Specifically, who needs a card, what will be the P2P process, what can be purchased via a card and from whom, and what is prohibited? Policies and procedures (P&P) should be robust; see what can happen when they are not.
Who has the skills and time to fulfill the role of program manager/administrator (PM/PA)? It is a mistake to assume the program will run itself once implemented.
How will auditing be conducted? More than one executive that I worked with thought P-Card auditing would be an annual task handled by external auditors. As industry veterans know, transaction auditing should occur at least monthly, ideally aided by technology.
To limit risk and user confusion/frustration, it is better to take the time to address program details prior to implementation.
About the 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…