In today's corporate world, technological advancements have revolutionized many areas of business, such as productivity, customer experience, and profitability. However, procurement is one aspect that has not kept up with the pace of innovation. While corporate credit cards continue to be the norm, they come with several drawbacks that can hinder growth and success.
Fortunately, there is a better solution - business expense cards, also known as purchase cards or P cards. This article will explore the difference between corporate credit cards and P cards, and how P cards can benefit hardware-centric, procurement-heavy companies. With customized expense limits, intuitive expense reports, and a centralized platform, P cards provide greater control over company spending while empowering employees to make necessary purchases.
Discover how P cards can transform your procurement process and help your business achieve controlled financial growth.
What is a business expenses card?
When you’re looking for purchasing cards for business, you probably focus mainly on traditional corporate credit cards. Another option, though, is a purchase card for employee expenses.
Business expenses cards are typically pre-paid cards issued to employees for business expenses. Employees can spend the amount that has been loaded onto the card, typically without the approval of a purchasing manager or other stakeholder.
Businesses can use P cards to gain a significantly higher level of control over company spending, while giving employees access to the purchasing power they need to deliver exceptional results.
What are P Cards?
If you’re wondering, “What is a P card,” don’t worry. A P card, or purchase card, is the same as an employee expense card. It offers the features and benefits we’ll outline below.
In some cases, P cards are virtual - each employee is assigned a virtual card that has all of the same characteristics of a physical card. These include a 16-digit card number, an expiration date, a CVV (3 digit code), and the cardholder’s name.
ControlHub integrates with virtual cards that are also dynamic, so they are useless to hackers who might capture the information. Each time the employee uses the card, the merchant is presented with different card data. This feature can help protect your company against fraudulent purchases.
What are the key features of P cards?
- Custom spending limits on each card - business expense cards can be loaded with a one-time spending amount, or can be used for recurrent purchases with a fixed amount that is available per billing cycle. This amount can typically be changed by authorized managers as an employee's needs and responsibilities change.
- Connections to a central platform, which enables easy changes and access to card usage data. ControlHub’s full-scale procurement platform makes it easy to provide employees with virtual purchasing cards to empower them, while gaining greater control over your company’s finances.
- An easy way to document purchases and payments - many cards and purchasing management platforms allow employees to upload snapshots of receipts from their smartphones.
There are several other nuances that make these cards excellent choices for companies that want to get away from the risks and drawbacks of traditional corporate credit cards. The most critical difference for company CEOs and CFOs, is that purchasing cards have a single owner and can be customized to fit that owner’s needs and responsibility level.
Compare that to traditional corporate credit cards, which get passed around frequently. With countless hands on each card, it can be incredibly difficult to track ownership of purchases. This dramatically increases your company’s exposure to rogue spending and fraudulent purchases.
What are the benefits of purchase cards?
If you are just starting to introduce the idea of purchase cards - especially virtual expense cards - it’s natural that you might notice some hesitation. New ideas and technology always seem a bit overwhelming to some executives and employees, and it can take some convincing to get them to try incorporating P cards into your company’s financial infrastructure.
Fortunately, there are several key benefits that make these cards excellent choices for companies that want to achieve controlled financial growth:
1. Simple access to company funds
The idea behind expense accounts is to enable employees to spend money when needed. Unfortunately, this “privilege” is typically reserved for a handful of executives and managers. Other employees, whose roles are just as essential to your company’s success, must seek approval after approval just to get access to a card for a one-time purchase.
This is a problem for everyone in the organization. The employee experiences frustration because they don’t have what they need to produce excellent results. Key stakeholders experience frustration because the company isn’t meeting performance benchmarks.
With a purchase card, every eligible employee has their own card. There’s no need to beg a manager for a card, only to be sent to three other people for their approval as well.
This reduces employees’ stress when making purchases, and removes the temptation to “do without,” just because it’s easier than trying to get access to a corporate card.
2. Customized expense limits
Each cardholder is a part of a team that has its own budget. A team manager controls the budget by assigning a pre-approved, customized spending limit to each card.
You can also require purchase approval for all purchases before the transactions actually take place. Alternatively, you can require approvals only on purchases that exceed a certain cost. With ControlHub, all of that is taken care of for you - your assigned team approvers will receive automatic notification when an employee initiates a purchase above a set cost.
While you can fully customize any employee’s one-time or recurring spending limit, you can also arrange spending limits by role. For example, a programmer might have a certain monthly limit for software access and other expenses, while an IT manager might have a higher budget to allow for additional costs required to effectively manage and support the team.
3. Automated, intuitive expense reports
When your employees rely on company credit cards to purchase items and services essential to their job duties, tracking purchases and matching them to employees or teams can be a nightmare.
Corporate cards are often passed around the office - even when company rules prohibit it - out of necessity. There are only a handful of cards, and many employees need them to purchase items for their roles.
This often means that questionable, duplicate, or excessive purchases cannot be effectively tracked. Without a clear picture of who is spending your company’s money and why, managing your business finances can be nearly impossible.
Even worse, employees often use their own money for purchases, and then are forced to use “expense reports” as a way of tracking their purchases and requesting reimbursement
It’s no secret, though, that these are horrible solutions. Employees despise them, because they simply take up too much of their time. No one wants to wade through a pile of receipts after a business trip and transfer that information to an expense report.
Expense cards eliminate the headaches of filling out expense reports, because they are simply no longer necessary.
When an employee uses a virtual purchasing card to pay for hardware, software licenses and other expenses, these purchases are automatically recorded in your company’s procurement platform.
Expenses paid for with physical employee expense cards are also automatically recorded and tracked within the platform. This means that, even if the employee is unable to use their virtual card for a purchase, their expense card purchases will still be available for you and your finance team to review.
Discover how simple procurement tracking can be with ControlHub’s fully automated platform.
Growing companies face a lot of “good problems to have,” like doing enough business to justify adding more employees and pursuing new opportunities.
The fact is, though, that “good problems” are still problems.
The more employees you have, the more your procurement needs will increase. Teams need the freedom to make essential purchases that allow them to achieve company goals and drive your organization to even greater success.
With increased procurement needs comes more complexity, which means greater potential for fraud, rogue spending, and other means of financial loss.
ControlHub’s sophisticated platform takes the guesswork out of all phases of procurement, from purchase requests, to approvals, to purchase order generation, to payment tracking. Come find out how easy procurement can be - connect with the experts at ControlHub today.
Learnings
Hardware-centric, procurement-heavy startups often struggle to keep up with technological advancements in other areas of business. Corporate credit cards, despite their limitations and drawbacks, continue to be the norm, hindering growth and success. However, business expense cards, also known as purchase cards or P cards, offer a better solution. This article explains the difference between corporate credit cards and P cards and how P cards can benefit startups in terms of procurement.
P cards offer several key features that make them an excellent choice for companies looking to achieve controlled financial growth. Firstly, P cards provide simple access to company funds, enabling eligible employees to spend money when needed without seeking approval from a manager. This reduces employee stress and removes the temptation to "do without" because it is easier than trying to get access to a corporate card.
Secondly, P cards allow for customized expense limits, which means that each cardholder is assigned a pre-approved spending limit that can be changed as needed. This allows team managers to control budgets effectively by arranging spending limits by role or assigning a fixed amount available per billing cycle. Purchase approval can be required for all purchases before the transactions take place or only for those exceeding a certain cost, which is automatically notified to team approvers.
Thirdly, P cards offer automated, intuitive expense reports. Purchases made with P cards are automatically recorded in the company's procurement platform, eliminating the need for employees to fill out expense reports manually. This makes it easier to track purchases and match them to employees or teams, reducing the potential for fraudulent purchases and increasing transparency in company spending.
Overall, P cards provide greater control over company spending while empowering employees to make necessary purchases. They are an excellent choice for startups looking to streamline their procurement process and achieve controlled financial growth. With a centralized platform, customized spending limits, and automated expense reports, P cards are an effective way to manage company spending and drive success.
