Inactive cardholders can hinder your game plan.

Got idle cardholders? There is a risk to having unused cards laying around who knows where. In addition, if your rebate incentives are impacted by average net spend per card, inactive and under-utilized cards will drag your program down. Reviewing and addressing inactive cardholders at least annually is a best practice that contributes to optimal program health. However, there are also things you can build into your program design to ward off issues in advance. Following are suggestions for both pieces.

Program Design Elements   

Determine your stance on “backup” cardholders. Does each department really need one or more cardholders on standby? If a backup is called upon to use their card, they will actually remember the card program policies and procedures? Instead of having backups throughout your organization, could a designated department like purchasing or AP fulfill a backup role?

Define within your policies and procedures what “inactive” means; for example, a P-Card without transactions for nine consecutive months or fewer than three transactions during the fiscal year.

Add a stipulation to your internal agreement that your organization reserves the right to close inactive cards.

Ensure the card program manager/administrator (PM/PA) receives notifications from HR about employee status changes that could warrant closing their card account. This will assist your proactive efforts in managing cardholders.

Document the process the PM/PA should follow as part of the annual review (see next section for suggestions). For the sake of consistency, you could even prepare a template to use when contacting inactive cardholders. Also decide if a department manager can overrule any recommendations to close an inactive account.

Take steps to help make all cardholders active. (Photo by  Mpho Mojapelo  on  Unsplash )

Take steps to help make all cardholders active. (Photo by Mpho Mojapelo on Unsplash)

The Annual Review

Do not automatically close inactive accounts. First figure out what is going on and then take appropriate action; following is a suggested process. 

  1. Generate a report, by department or by manager, of cardholder activity.
  2. Identify the cardholders who meet your criteria for “inactive.”
  3. Review the department overall to see if their card performance meets predefined goals or expectations.
  4. Contact the cardholder and/or manager to further research why the cardholder is inactive. Does their role involve making purchases or paying bills?
  5. Make a determination about how to address the inactive cardholder(s). If their department is performing well as a result of other cardholders, then the inactive card account might not be needed. If the department is under-performing from a card perspective, then take a more holistic approach. Do their cards need higher limits to accommodate their purchasing needs? Would additional training be of benefit?
  6. Retain documentation related to the decision.

See 15 other annual tasks for card program fitness


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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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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