For decades, companies used corporate cards to enable employee transactions. The typical corporate card account is now more vulnerable to theft, misuse, and overspending as the world has changed. Fortunately, organisations can better manage modest purchases. Purchasing cards and procurement programmes are popular. Which is best for businesses that need to speed up supply orders and empower staff?
This article compares p-cards with procurement systems and details their advantages:
- Differentiating p-cards from corporate cards
- How procurement platforms enable supply buying
- Which option helps employees order supplies best?
What are Purchase cards?
Employees can use a company’s debit or credit purchasing card to order products and services. P-cards, or procurement cards, replace employee purchasing processes including purchase requisitions and expensing. P-cards are appropriate for low-dollar business expenses that don’t require procurement and multi-department approval.
Purchasing cards are used for employee-led procurement and cost control. Traditional purchase processing may cost more than the item’s monetary value for tiny daily transactions, hindering expenditure optimisation. A P-card eliminates this inefficiency.
What’s the difference between P-cards and corporate cards?
Both purchasing cards and corporate cards are issued to employees for company purchases, although they serve different purposes. P-cards enhance user experience and organisational control. Let’s compare their main differences:
Company cards
Some employees, mainly CEOs, use these omnipresent professional tools instead of spending personal funds and filing expense reports. Features of corporate cards include:
- Credit cards linked to a business account. Finance heads or CFOs order user cards for employees and pay card balances at the end of the billing cycle.
- Spending controls are usually absent. Purchase whatever you need without supervision. The card administrator must negotiate a transaction limit with the issuer.
- Employee reporting for month-end charge reconciliation is required.
Buying cards
These prepaid expense management cards can be given to all employees. Purchase cards do not have credit limits or revolving accounts. A few benefits of P-cards:
- Setting spending limitations or category restrictions with automatic approvals controls spending as it happens.
- Users receive cards directly from Finance. Physical or virtual cards can be issued. Cards can be used to order supplies and merchandise without a PO.
- Employee reporting at the end of the billing cycle is eliminated.
Why use a p-card?
While avoiding many of the difficulties of corporate credit card programmes, p-card programmes provide the same financial access. A card user’s procurement or purchase goals determine p-card rewards. They work well for managing staff travel with the convenience of a POS system.
Eliminates expensing: Using p-card transactions for stakeholder purchases lets employees buy what they need without using personal finances for workplace necessities. This simplifies minor orders, subscriptions, and company-funded travel.
Spending control: P-cards let finance set dynamic spending limits, unlike corporate credit cards. Employee spending expectations are set and corporate card fraud is eliminated.
Visibility: Purchasing cards show employee transactions. This enables tight financial control and eliminates month-end guesswork and reporting. It enables reporting and cost analysis.
User-controlled restrictions: Procurement cards let finance create and adjust spending limits online, unlike corporate cards, which need a call to the card provider.
Reduced invoice processing: Accounts payable might skip invoice approval, reconciliation, and payment since consumers and suppliers make purchases directly.
Bad things about buying supplies with cards
Despite being better than corporate credit cards, purchasing cards have downsides for everyday, internet, and supply orders.
User administration: Purchasing cards often require clearance. P-cards remove invoice processing, although high-dollar, single-transaction transactions may require human intervention.
Slower procurement cycle: Purchases that exceed pre-approved restrictions must be released by a department head before payment is made, slowing the procurement processes. This can delay simple purchases.
Lack of integration: Financial reporting tools and card processing systems may not integrate with purchasing cards. This may need workarounds or alternative payment methods.
Lack of supplier control: Unless severe controls are implemented in advance, customers can buy from any supplier. Using unknown providers for purchases diminishes strategic sourcing and increases risk.
Alternative p-card: How do procurement platforms work?
A purchasing platform centralises the process and improves strategic sourcing while implementing many of the same safeguards as a purchasing card. It also provides better visibility and reporting than a purchasing card.
Procurement platforms let your finance team perform various things:
- Allow all employees to buy supplies and products without cards or authorization.
- Dynamically regulate cardholder, department, project, spend category, and dollar value transactions.
- Always buy from preferred vendors. Finance can gain volume discounts and avoid risk by using pre-approved and contracted suppliers.
Which is better: P-card or purchasing platform?
A purchasing platform like Order.co has several advantages over a purchasing card for managing supplies and goods orders.
No card management: Time-consuming and risky card (and virtual card) administration. A procurement platform eliminates the need to monitor user cards, replace lost or stolen cards, or approve purchases.
Centralised ordering: All orders are processed centrally, so employees can acquire what they need within company norms.
Supplier controls: Supplier curation ensures all purchases are from approved providers. Volume pricing and risk management maximise savings.
Rich reporting and visualisation: Centralised supplier and purchase data provides real-time purchasing information. Admins may visualise department, location, role, and project data for data-driven choices.
Support for numerous locations: Procurement systems may streamline purchases and aggregate orders across several sites to optimise price and logistics, unlike purchasing cards.
Clearance automation: Dynamic controls and preferred vendors allow employees to acquire supplies without management clearance.
Payment integration: Procurement platforms automate, integrate, and consolidate payments. This improves supplier relations and early payment discounts across locations while saving accounting and finance teams hours.
