In the wake of the COVID-19 pandemic, businesses have been forced to adapt and update their processes, and finance and purchasing teams are no exception. While these teams have been slow to change in the past, the burden of manual expense reports and paper receipts has created a new interest in updating purchasing processes.
This is where procurement cards, or P cards, come in. P cards are prepaid business credit cards issued to a specific employee, and they can be physical or virtual. They increase the speed and efficiency of purchases and expense tracking, and can even help companies save money and reduce their exposure to fraudulent card use.
In this blog post, we will explore the differences between P cards and traditional corporate credit cards, as well as the benefits of using P cards in a hardware-centric, procurement-heavy company. We will also discuss how P cards can be integrated with procurement software solutions like ControlHub to simplify and automate the procurement process, resulting in a more efficient and effective process overall.
What is a procurement card?
Procurement cards, or corporate purchasing cards, are simply prepaid business credit cards issued to a specific employee. In some cases, these are physical cards. In others, they can be virtual cards - these can be used to initiate online purchases without the security risk of having a physical card, or many, floating around the office.
What are P cards?
If you’re wondering, “What is a P card?,” don’t worry. It’s just another name for a purchasing card, which refers to a physical or virtual card assigned to an employee for job-related purchases. Employees can use these business purchasing cards to pay for physical items, event tickets, travel expenses, and other costs necessary for them to deliver exceptional results.
When leveraging procurement software solutions such as ControlHub, Purchasing cards, or P cards, are connected to the company purchase policies. This way, employees get purchasing power at work without skipping the formal purchase requisition and approval process. After a purchase request is approved, they simply use a physical or virtual credit card that is automatically generated - a concept they are already familiar with - to pay for purchases on the company’s behalf.
Purchase cards are considered far more efficient than typical corporate credit cards when handling either big or small business payments. Today’s P cards also offer benefits that traditional corporate credit cards don’t, such as embedded approval flows and purchasing company policies, which makes them an ideal choice for companies that are ready to thrive in the post-pandemic world.
What are the differences between P cards and corporate credit cards?
Purchasing cards for business (P cards) have quite a few similarities with traditional corporate credit cards - they have similar data (card number, expiration date, CVV) and can be used to purchase items online.
There are several differences, though, that make P cards an ideal choice for growth-minded business owners:
Access to company funds
In a traditional corporate scenario, only a handful of executives and upper-level managers have unfettered access to corporate cards. Any other employee who needs to make a purchase would need to ask for a card.
Typically, this involves a maddeningly long process that includes multiple approvers, manual requisition forms, and incalculable delays. Employees are often driven to pay for needed work items out of pocket, and then submit a reimbursement form later, simply because the requisition approval process is too cumbersome.
With P cards, which could be generated for a one-time or recurrent debit card for employees, there’s no need for employees to “jump through hoops.” They can simply use their physical or virtual cards to pay for their purchases, up to their customized spending limits, and complying with the embedded company purchasing policies. Then, they can simply wait for their items to arrive.
This means less work time lost, as well as happier employees who feel supported and empowered to do their best work. It also means no more reimbursement nightmares or mistakes.
Greater control over company spending
With traditional corporate cards, it’s no secret that they get passed around the office far more than executives and managers would care to admit.
An employee who doesn’t want to go through the formal approval process asks for a card from a manager or executive who doesn’t have time for approvals either. So the employee simply “borrows” the card and makes the purchase.
Unfortunately, when reconciliation time comes, accounting and finance staff have to waste countless hours trying to figure out who made the purchase (and why).
In a small company, this might not be a terribly complex issue to resolve. As a company grows, though, ambiguous purchase scenarios will become more frequent - increasing your company’s exposure to unnecessary and excessive purchases.
Business purchasing cards, or P cards, eliminate the confusion by providing real-time tracking for each employee’s purchases. Corporate purchasing cards can be assigned to every employee, so there’s no reason for anyone to borrow another’s card.
Virtual and physical P cards also integrate with all-in-one procurement platforms like ControlHub. These platforms give you complete access to spending activity for each employee and team, as well as spending trends and other data to help shape your financial plan moving forward.
Each employee and/or team can be assigned their own one-time or recurring spending limit, which can be updated by you or a team purchasing manager with just a few clicks.
Automated approval process
In a traditional corporate environment, the entire procurement process is cumbersome and subject to human error at every point along the way. Employees must complete and submit manual requisition forms, which often requires the employee to look up SKUs or other product codes. This manual process introduces the risk of error, which can cost your company time and money, as well as delaying completion of the employee’s work.
Employees submit paper requisition forms to purchasing managers, only to find out that these decision makers are on medical leave, parasailing in Bali, or just too busy to look at your request. Then they have to wait for weeks on end while explaining to their supervisors why they can’t complete their projects.
Life for the typical purchasing manager is little better. Most people in this role “inherited” it as an add-on to their core job duties, and have about as much patience for the corporate procurement system as employees do. They dread wading through requisition forms, and often ending up mass-approving requests just to clear them off their desks.
With purchasing cards, though, all of the “hard work” of the purchasing approval and fulfillment process is done for you. Because these cards integrate with procurement platforms like ControlHub, you can set up rules for each employee or team to maximize efficiency.
As an example, suppose Bruce is a shipping manager who needs to order a new taping machine to quickly secure product boxes. Instead of looking up product numbers in a catalog and filling out a manual requisition form, Bruce can access the website of his employer’s preferred vendor. There, he can choose his needed item and go through checkout using his business P card. With ControlHub, Bruce could import his shopping cart directly from Amazon Business, Mc-Master Carr, Digi-Key, Mouser Electronics in just one click.
If the amount of the purchase is below the “approval threshold” you have set for Bruce, the purchase will go through and be paid automatically. The vendor will then fulfill and ship the order, allowing Bruce to receive his new tape machine quickly so he can meet his job benchmarks.
On the other hand, if the purchase amount exceeds the approval threshold, the appropriate approver will be notified by email. The approver can then quickly review the purchase details and approve or deny the purchase with a single screen tap or mouse click.
Elimination of purchase order submission and tracking errors
Typically, once a purchasing manager or other approver has approved a purchase request, they are responsible for generating a purchase order to send to the vendor.
A purchase order is a formal request which includes the SKU or product code, description, and quantity of each requested item, as well as the price for each item, grand total, billing and shipping addresses, and other information relevant to the transaction. Each purchase order is assigned a unique purchase order number, which theoretically allows it to be tracked from request initiation to fulfillment.
Unfortunately, errors often occur between the employee’s requisition form and the purchase order. Transposed digits and incorrect pricing information can easily create fulfillment delays, leaving employees without the resources they need to fulfill their job duties.
Tracking manual purchase orders can also be incredibly difficult once the order has been placed. Paper forms can easily be lost, altered, or destroyed, creating bottlenecks that prevent your entire company from achieving its goals, mission, and vision.
With P cards integrated with a procurement platform like ControlHub, though, there’s no need to take up your purchasing manager’s time with manual purchase order tasks. When a purchase request is automatically or manually approved, a purchase order is automatically created and sent to the vendor for acceptance and fulfillment.
The platform automatically pulls product, billing, shipment, and other data from the requisition, which eliminates the risk of transpositional and other errors. By automating this task, you also free your purchasing manager to spend their time on more productive tasks.
ControlHub even tracks order fulfillment once a purchase order has been submitted - if there are delays, you’ll be able to find out and notify the purchaser immediately. This can help them develop alternate strategies to cope with any delays that might arise.
Robust expense tracking
Companies can only grow if they can balance spending with increased revenue. In a traditional setting, out of control spending can easily erode profits, leaving CEOs and shareholders alike wondering where all the money went.
With business purchasing cards, the mystery is solved. You can access automated spending reports with just a few screen taps or mouse clicks. Because all of your employees have P cards, you get a complete view of your spending, without wondering who is paying for what.
Hardware-centric startups, particularly those with procurement-heavy processes, can benefit from using procurement cards, or P cards. These prepaid business credit cards can be physical or virtual and are issued to specific employees for job-related purchases. P cards increase the speed and efficiency of purchases and expense tracking, and can even help companies save money and reduce their exposure to fraudulent card use.
P cards differ from traditional corporate credit cards in several ways, such as providing greater access to company funds, eliminating the need for purchase order submission and tracking, and providing real-time tracking for each employee’s purchases. They also offer automated approval processes, which can significantly reduce human error and speed up the purchasing approval and fulfillment process.
One of the most significant benefits of using P cards is the ability to integrate them with procurement software solutions like ControlHub. This can simplify and automate the procurement process, resulting in a more efficient and effective process overall. With P cards connected to company purchase policies, employees can get purchasing power at work without skipping the formal purchase requisition and approval process.
Overall, P cards offer an effective alternative to traditional corporate credit cards and can help hardware-centric startups streamline their procurement processes. By embracing new technology and replacing outdated procurement processes, companies can save time and money, capitalize on new opportunities, and thrive in the post-pandemic world.