4 Reasons Organizations Resist Virtual Cards

There are at least four reasons why some organizations have not yet adopted Virtual Cards or, more broadly, an electronic accounts payable (EAP) solution. Do any of the following pertain to your organization? Revisit the reasons for their decision and ensure they had the right information first. You might be able to reopen the case.

1. Few Regularly Used Suppliers

A common target for Virtual Card usage is regularly used suppliers. This list might be short for some organizations, thereby a Virtual Card program may not be the best fit. For example, one end-user told me they do not use Virtual Cards because, as a research laboratory, their suppliers were always changing due to their always evolving purchasing needs. They found that traditional Purchasing Cards worked best. This is a valid reason. However, for other organizations, there are few regularly used suppliers because no one has pursued strategic sourcing. Besides not gaining the benefits of a Virtual Card program, they are potentially losing out on cost reductions that can be obtained through negotiated pricing.

2. Too Hard to Convert Suppliers

Your organization might be under the impression—without concrete evidence to support it—that your suppliers will not accept Virtual Cards. Before casting Virtual Cards and other ePayables aside, work with your current Commercial Card provider (or even a provider who is trying to gain your business) to do a “supplier match.” You might be surprised at how many of your suppliers are already accepting Virtual Card payments from other customers. In addition, many providers offer supplier on-boarding services, with or without an extra fee, to make the process easier for you. It pays to explore provider options.

3. The ERP System Cannot Support It

In response to this excuse, I have to ask, “Are you sure?” ERP systems are more robust today than ever before and include many different payment choices (or you might be able to add one). Further, you might be able to apply a default payment type by supplier. To accommodate Virtual Cards, the “payment release” step of the accounts payable process may simply generate another output. Instead of just checks and an ACH file, there would be a Virtual Card file to upload to the provider. Talk with your ERP system vendor to learn more about the capabilities.

4. Organization Resistance to Change

This is the catch-all reason that, unfortunately, often prevails above logic. If decision makers reject a sound, factual business case for Virtual Cards, then there is not a lot you can do until there is a leadership change or shift in organization priorities. Wait for the right time to bring this up again and ensure your business case includes the fraud protection aspects of Virtual Cards/EAP. Read more about getting EAP in the door...

Open Fraud Survey

Speaking of fraud, I encourage you to participate in the current survey by AP Now, Newer & Less-commonly Occurring Payment Frauds. It digs into all sorts of frauds that your organization might be overlooking.

Two Upcoming Events

  1. July 24 Public Sector Virtual Symposium: Preparing Public Sector Auditors for Tomorrow’s Terrain
  2. July 25 Webinar: P-Card Fraud Prevention and Detection Best Practices 

Visit the Events page for more information.

 Separate the facts from the myths to ensure you are making a sound decision about Virtual Cards and other EAP solutions.

Separate the facts from the myths to ensure you are making a sound decision about Virtual Cards and other EAP solutions.



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About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

Topics Every P-Card P&P Manual Should Include

Even if your Purchasing Card policies and procedures (P&P) manual is current, it could be lacking in other ways, resulting in repeated questions and compliance issues. Have you evaluated the manual’s topics and related content recently? It might be missing key information. Yet, reviewing and updating P&P often fall to the bottom of someone’s to-do list. According to AP Now’s AP Practices Survey Results, fewer than 20% of respondents update their accounts payable P&P at least annually. I assume the same could be true for P-Card P&P. To help you gauge whether you are covering the right material, following are 12 broad topics along with example sub-topics for some.

Primary Topics

1. P-Card Overview

Relay what P-Cards are, why the organization has a program, what P-Cards are used for, etc.

2. Roles and Responsibilities

3. How to Obtain a P-Card

4. Card Security and Limits

Be sure to provide insight on common scams/external frauds and how to combat.

5. Card Usage

This broad category spans many sub-topics, such as:

  • Allowed and prohibited purchases, including parameters describing “necessary” versus “extravagant” business purchases
  • Preferred/approved vendors
  • Placing an order—the P-Card purchase-to-pay (P2P) process
  • Supporting documentation requirements
  • Returning an order and receiving credit
  • Accidental usage for a personal purchase
  • What constitutes card misuse/abuse

6. Transaction Declines

Explain why this might happen and what to do in response.

7. Transaction Reconcilement and Review

One relevant sub-topic is how cardholders should address a problematic transaction; see the previous blog post for tips

8. Ongoing Training Requirements

9. Card Expiration and Renewal

10. About Program Auditing 

While you do not need to give away any secrets, you do want program participants to know that transactions are monitored.

11. Card Cancellation

12. Reference Materials

Examples include a glossary, user guide for the P-Card technology, relevant forms, etc.

Concluding Thoughts

While it is nearly impossible within the P&P to address every unique situation that could arise, think about what you experience on a regular basis, such as frequently asked questions and common mistakes. Respond to these experiences by planning to make the related content clearer, more prominent, and easier to find. Taking the time to make your P&P more robust can pay off.

Additional Resources

See more content on P-Card policies and procedures from Recharged Education, including a related guide available for purchase for just $29.99.

For more information about AP Now’s AP Practices Survey Results referenced in the introduction above, visit http://www.ap-now.com/products/item142.cfm.

Two Upcoming Events

  1. July 24 Public Sector Virtual Symposium: Preparing Public Sector Auditors for Tomorrow’s Terrain
  2. July 25 Webinar: P-Card Fraud Prevention and Detection Best Practices (additional tips about P-Card P&P will be shared)

Visit the Events page for more information.



Subscribe to the Blog

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About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

What Card Transaction Disputes Might Be Telling You

Is a cardholder hiding something? Commercial Card transactions may be disputed for a variety of reasons, such as the charge represents an unauthorized purchase. While you want cardholders to be diligent in their transaction reviews, the dispute privilege can also be abused. On one end of the spectrum is the serious issue of so-called “friendly fraud” whereby the cardholder disputes a transaction through the card issuer that is actually a prohibited personal purchase they are trying to disguise. On the less serious side, a cardholder might jump the gun and dispute something that could be resolved by working directly with the offending vendor. As a card program manager, there are several things you can do to help combat such problems. See the action items below, as well as tips for what to include within your policies and procedures manual.

Action Items

  1. Verify with your card issuer the legitimate reasons for disputing a transaction, how to do so, and the allowed time frame (e.g., 60 days from the transaction date).
  2. Ensure the policies and procedures (P&P) adequately address this topic. Also cover this within cardholder training.
  3. Regularly review the disputes initiated/in progress to look for anything unusual, such as a high number in a particular month.
  4. Track the dispute history for your program to identify any trends by cardholder and/or by vendor. Names that keep popping up warrant further research and, as needed, appropriate action. “Friendly fraud” should be grounds for termination.

Your Policies & Procedures

Cardholders need to understand the importance of their review process and how to handle a problematic transaction. For example, your P&P could say:

As a cardholder, your transaction review/reconciliation process is critical to identifying possible fraud and vendor errors. Each transaction should accurately represent goods and/or services you have purchased and received, in accordance with the guidelines herein for allowed business purchases. To minimize risk to the organization, swiftly address any problematic transactions, as described below.

[Insert procedures for transaction review/reconciliation] 

The procedures should specify what constitutes a problematic transaction, such as the dispute reasons provided by your issuer, and what they should do about it. Unauthorized transactions typically justify using the card issuer’s dispute process right off the bat, but other issues, like a duplicate charge, can be corrected with a timely credit from the vendor. Help cardholders make the right decisions. Here is a sample decision matrix for the P&P:

Problematic Transaction Decision Matrix.PNG

If you are seeking more insight about how to strengthen your P&P manual, consider purchasing the related guide for $29.99.

July 25 Webinar: P-Card Fraud Prevention and Detection Best Practices

Check out this upcoming webinar, designed to help you maximize your fraud fighting efforts.

 Are cardholders disguising personal purchases by disputing the related transactions? Take a closer look at anyone who seems to abuse the dispute process.

Are cardholders disguising personal purchases by disputing the related transactions? Take a closer look at anyone who seems to abuse the dispute process.



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About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more