5 Reasons Your Business Should Use Purchasing Cards
Purchasing cards (p-cards) are a type of commercial credit card that allow a company’s employees make payments for goods and services without using a traditional, paper-based purchasing process. P-cards are becoming increasingly popular among corporations and rapidly growing businesses. According to the 2017 NAPCP benchmark survey report, the average annual rate of p-card use is predicted to grow 10.5% per year in the next couple of years. This will drive market spending to $478 billion by 2021 in the U.S. and Canada alone.
The increasing popularity of p-cards is due to a number of benefits they bring, such as efficiency, accuracy, control, security and even profitability. Here’s a breakdown of each:
Many companies see efficiency as the biggest benefit of using p-cards rather than a traditional purchasing process. With the traditional process, which consists of using personal credit cards and filing expense reports, a company’s accounting department must manually submit each transaction and receipt employees submit.
Issuing p-cards greatly reduces the amount of manual organization and review companies must do to track their employees’ transactions. This is because p-cards are integrated within their existing expense management systems, which is made up of many general ledgers (GLs) – or categories of expenses – such as travel, office supplies, meals with prospective clients, etc. Each time a transaction is made, it is automatically factored into a GL, reducing the amount of time and effort needed to organize expenses.
In addition to being a faster and more efficient alternative, p-cards also leave less room for accounting errors. While p-card transactions are automatically filed under their GLs, transactions made with the traditional process must be entered manually, which sometimes results in submitting the wrong transaction amount or filing a transaction under the wrong GL. Having an accurate report of transactions is important in ensuring you detect problem spending areas and stay within budgets.
The business’s accounting team can place limits and restrictions on how and where employees use their p-cards. For example, they can place dollar limits on how much an employee or department can spend and select which types of businesses employees can make purchases from. Such limits and restrictions minimize the possibility of employee misuse that companies are more vulnerable to with a traditional purchasing process.
Because p-cards are set up to block transactions from unauthorized merchants, they offer more protection from fraud. Additionally, companies receive reports on all transactions made with p-cards, which provides insight into how money was spent and if any suspicious charges were made.
Not only is the traditional method of filing expense reports and submitting print receipts a hassle for employees, it’s also more expensive for the employer. The manual component of handling transactions in traditional processes requires more of an employee’s time to sort through piles of expense reports and receipts. Implementing p-cards means less time and work organizing expenses, and therefore, an opportunity for your business to save on internal costs.
Whether you manage the finances of large a corporation or a mid-market company, implementing p-cards can help streamline and improve the accuracy and security of your employees’ transactions. Contact the Bankers Trust Treasury Management team to learn how to get started.