When P-Cards are NOT the Best Option: A Real-life Example

Purchasing Card, Virtual Card, or other payment method? A company for which I did some consulting work was initially planning to adopt P-Cards for certain orders under $2,000. After all, this is where P-Cards traditionally excel. However, a review of the facts revealed otherwise in this case. My ultimate recommendation to them was to back away from their P-Card plan and instead consider Virtual Cards. Keep reading to see why and how this case might align with circumstances within your organization. 

The Situation

The company thought it was spending too much time on low-dollar purchases. Specifically, buying departments had too many invoices to approve and, subsequently, accounts payable had too many invoices to pay. It sounded like a great P-Card opportunity until they mapped out the related purchase-to-pay (P2P) process for these orders. The purchases in question utilized an eInvoicing model for which the suppliers, in conjunction with invoice submission, electronically provided various order details requested by the company. The P2P process was quite slick. The main drawback was the invoice volume; orders under $2,000 comprised approximately 55% of the activity.

Changing to a P-Card process would have actually complicated everything, negating the benefits of P-Card usage. They had cost analyses to prove it. Ironically, the company had a separate P2P process (not their eInvoicing model) that could have benefited from P-Card adoption.

A Better Solution

In their eInvoicing model, Virtual Card payments could have helped by retaining the existing process efficiencies, but providing a secure, electronic payment option. Low-dollar invoices could be consolidated into fewer payments for AP to make and tweaks to their invoice approval process could reduce the burden on buying departments.

Key Takeaways

When contemplating a change to your payment strategy, be sure to:

  • specifically identify the pain points you are trying to solve
  • revisit your P2P requirements, as perhaps some simple tweaks could resolve the pain points
  • document today’s P2P process cost and what it might be after implementing a particular change
  • research various options before making any decisions
Every new payment strategy plan deserves another look before pursuing. You might find that a Plan B would be better. 

Every new payment strategy plan deserves another look before pursuing. You might find that a Plan B would be better. 



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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

Putting cardholders at ease.

There are many, many ways to improve a Purchasing Card program, but one answer is ensure the cards are easy to use. Satisfied cardholders (and managers) translate into support that can move your program to the next level. Below are three elements to assess in an effort to determine whether your program is causing unnecessary pain. 

Purchase-to-Pay Process

Consider the basis of P-Cards and the reasons your organization pursued a program. P-Cards are intended to simplify the purchase-to-pay (P2P) process, resulting in cost savings and efficiencies. Using a card to purchase needed business goods and services should be the quickest and easiest option. If it isn’t, identify the pain points. For example, are cardholders required to obtain pre-purchase approval for every purchase? This creates more work and slows the process down. Does it really add value, especially for low-dollar purchases?

Allowed and Prohibited Purchases

Do your program policies center on everything cardholders should not purchase? I have seen policies that consume an entire page outlining what is prohibited, but, for allowed purchases, there is only a brief mention of the card’s per-purchase limit. This is discouraging. No one will want to use their card and, given all the restrictions, they might be afraid of making a mistake.

First, it might be time for your organization to expand allowable purchases and/or limits. However, either way, make it enticing to use the card by describing the benefits. Be specific about the targeted purchases, helping cardholders easily see what they can and should do. 

Technology

Manual tasks can be painful. Ensure cardholders and managers have access to technology to help them more efficiently execute their responsibilities. Technology goes beyond transaction review functionality, but some organizations still rely on paper statements (yes, it is true). Most technology solutions from the card issuers include a mobile option especially useful to managers who need to approve transactions on the go. Also explore whether receipt imaging is available to improve how supporting transaction documentation is handled.  

Obtain Feedback

Ease of use depends on the eye of the beholder. See if your assessment aligns with that of program participants. Select a limited number, but diverse group, of cardholders and managers. Invite their feedback, sharing your goal to enhance ease of card use. Then prioritize what to improve first.


Help is Available

If you need assistance with evaluating your program improvement opportunities, please submit a contact form. Recharged Education can help!


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

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