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.

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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…

Internal Fraud to Result in Prison Time

False mileage reports, false expense reimbursement requests, and personal use of the company card comprise the crimes committed by former Allina Health vice president, David M. Johnson. Following his guilty plea to four counts of theft by swindle, he will be sentenced in June to nearly four years of prison time. I first wrote about this case in February (link provided below), but additional information has since emerged. Keep reading to see what he did and how it was caught more than 10 years after it started. Would your organization have uncovered a fraud like this sooner?

What Happened

It appears Johnson’s embezzlement activity started in 2004 and involved approximately $775,000. The scary part is, it was not uncovered by Allina until 2017 and an investigation ensued. Due to a five-year statute of limitations in Minnesota, his guilty plea “only” pertains to around $417,000. The criminal complaint by Hennepin County in Minnesota provides some interesting details that should serve as warning signs to other organizations.  

False Mileage Reports

At one point, Johnson was one of the top two employees receiving the highest mileage reimbursements. As such, Allina informed him of this status and reminded him of the option to use a company car instead; he declined without giving a reason. 

Things began to unravel when an employee noticed Johnson’s reports were “disproportionate to other Allina employees.” Subsequent research showed conflicts between Johnson’s calendar and usage of his company ID card (for building and parking ramp access), and his purported trips/external meetings. Further, individuals at the external sites he supposedly visited denied Johnson was there on the dates in question. 

False Expense Reimbursement Requests

Johnson conducted various schemes to defraud Allina. One involved submitting copies of personal checks (and false invoices) he claimed to have paid to a particular printing company. He was compensated more than $300,000 over the years. The investigation revealed none of the checks were ever issued to said vendor and, in fact, the printing company had gone out of business in 2000.

Card Fraud

Johnson used his company credit card to make personal purchases of season tickets to multiple sports teams (e.g., Minnesota Vikings). He even convinced the respective organizations to split up the ticket costs into smaller charges in order to circumvent his card limits. I have to wonder who was responsible for reviewing and approving his card transactions! Taking his fraud a step further, he sometimes sold these tickets to colleagues.

Additional Resources

Tips to Glean from the Case

To name just a few:

  • Periodically audit mileage claims to ensure employees have taken the trips in question.
  • Enforce a policy concerning when a company car should be used.
  • Do not reimburse employees for invoices pertaining to non-travel goods and services.
  • Pay attention to vendor spend. Conduct research when the collective dollar total and/or purchase frequency exceeds certain thresholds.
  • Ensure appropriate oversight of ALL cardholders’ activity.
  • Establish an effective auditing strategy for Commercial Cards.

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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…

Payments to the Card Issuer: Speed Up or Slow Down?

Has your organization made a thoughtful decision about the timing of payments to your card issuer? Does this deserve another look? There is more to it than not being late. For many organizations, revenue share (rebate) incentives are impacted by the speed of pay, also known as file turn. Even if this is not part of your contract, have you worked with your treasury/finance department to evaluate the benefit of paying the issuer quickly against the value of holding on to your cash longer? A recent survey by AP Now reveals the majority of organizations pay their Commercial Card issuer on a monthly basis soon after the cycle ends, but this is not the only option, as shown below. Nearly a quarter of the survey respondents wait as long as possible. Only 7% make payments more than monthly to increase their rebate.

What to Do

While every organization should ensure on-time payments to its card issuer, it is a best practice to identify the ideal timing to support your organization’s needs and goals. 

Review your contract to determine if speed of pay/file turn is part of the rebate calculation. If yes, where does your organization stand today? What would your rebate look like if your organization paid the issuer faster or more frequently? Evaluate different scenarios; for example, right after the cycle ends each month, twice per month, weekly, etc. Present your analysis to your management.

Regardless of your rebate incentives, consult with your treasury/finance team to determine the best payment strategy for your organization’s cash flow and overall financial position. Their opinion may also depend on interest rates, which can fluctuate, so it is worthwhile to revisit this topic from time to time.

As an added bonus, having a discussion with treasury/finance might lead to Commercial Card program expansion, such as the adoption of Virtual Cards to help extend float.

My Experience

I was fortunate to have worked for the Federal Reserve Bank. We could pursue the best possible rebate tier for speed of pay since cash flow was not an issue. However, to make this happen, I still had to figure out the right payment timing, which involved various calculations that took into account an average transaction age.

Finally, do not allow payments to your issuer to be delayed by cardholders’ reconciliation of transactions, which should be a separate process. Since your organization is required to pay in full by a certain date, waiting for cardholders to reconcile does not add value. The AP Practices Survey by AP Now shows that, unfortunately, 30% do wait. 

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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…