When you steer clear of the dark side of rebates (the last blog topic), you can focus on how to best maximize your incentives. How is your P-Card program performing in this regard? Do you know the specifics of your rebate contract terms? Following are three common factors; see more on the related webpage.
Average Net Spend per Card
If your rebate calculation involves this metric (total spend divided by average number of cards), you can make the average higher/better by closing inactive or under-utilized cards. This is a simple administrative action that can also reduce risk. Regardless of rebate, addressing such cards is a best practice. Ensure your organization defines inactive as part of its policies (e.g., nine months of no activity) and has procedures for taking action. The internal agreement that employees sign prior to obtaining a card could also include a stipulation that your organization reserves the right to close inactive cards.
File Turn/Speed of Pay
How quickly do you pay your card issuer? If your rebate incentives reward quicker payments, then work with your treasury/finance department to evaluate the benefit of paying more quickly against the value of holding on to your cash longer. Do not allow payments to your issuer to be delayed by cardholders’ reconciliation of transactions, which should be a separate process.
Total Annual Spend
Last, but not least, maximize card spend to improve your rebate and, more importantly, increase process efficiencies and savings. You should have a policy stating that all purchases under a certain amount (e.g., $2,500) must be paid via P-Card if a supplier accepts it. Enforce it!
- Increase card limits and unblock MCC restrictions accordingly to support the policy.
- Educate employees about P-Cards and how they benefit your organization.
- Train procurement and accounts payable staffs to decline PO and check requests when a P-Card should be used.
- Quantify and report the missed opportunities, such as the lost process savings, to management.
Maximizing rebate incentives through good decisions, policies, and procedures is just one aspect of a successful P-Card program. Access additional tips from past blog posts and other complimentary education.
If your organization needs assistance with identifying improvement areas, consult with your card issuer and/or submit a contact form to Recharged Education to relay your needs.
About the Author
Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…