You have P-Card policies and procedures (P&P) and probably separate P&P for other payment options. How do they fit together? Do you have a cohesive payments policy or similar directive? It’s easy to get caught up in the pieces of daily operations and forget about the whole, but doing so risks inefficiencies and duplication. Take the following four actions to regain a broad perspective and implement a mix of options that best support your organization’s goals.
Understand the Options, Including New Ones
The payment piece is just one part. Consider the entire purchase-to-pay (P2P) process for different options. Every organization makes low-dollar purchases that benefit from a streamlined P-Card P2P process. Beyond that niche, there is more complexity. How (and whether) ePayables, for example, fit into a payment strategy varies by end-user.
Develop Criteria for Segmenting Spend and Suppliers
What is your dollar threshold for P-Card? Could it be higher to optimize P-Card benefits? Supplier usage is another factor. Avoid cluttering AP’s master supplier file with suppliers that you use only once or twice per year. Also determine when an invoice-based process, allowing you to review before you pay, is truly needed. These purchases are better suited for ePayables or ACH.
Establish a Clear Payments Policy
Mandate P-Card usage for purchases under a certain dollar threshold. (See related blog post about enforcing such a policy to increase total annual spend.) Specify when to use a different process/payment method. Relay that checks are only used as last resort due to the process cost and level of risk. The policy could include a decision matrix to direct employees to the right path. For example, begin with a question about the dollar amount of the purchase: If under $x, then use P-Card... The policy could also include an alphabetical list of purchase categories (goods and services) with a corresponding note about how to purchase.
Do not just train cardholders on the organization’s payment strategy and procurement policies. Many other employees are involved with purchases. Train management, budget reps, and others as applicable based on their job duties. Learn more about training and see a related blog post about promoting the card program...
To help you with the planning process, I have started to add content related to ePayables. These solutions should complement, not replace, P-Cards.
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…