What is a purchasing credit card?
What is a purchasing credit card? It is a type of commercial card that businesses can use to make payments using the credit card infrastructure. P-cards are used by businesses for low-value services and goods.
When companies use p-cards, it helps to lower the otherwise high transaction costs that would otherwise be associated with making low-value purchases. In some cases, the transaction costs might exceed the value of the item being purchased when traditional purchase approval processes are used. Other terms for these types of cards include procurement cards, p-cards, and pcards. These cards can either be plastic or virtual cards such as ghost cards.
The difference between a purchasing credit card and purchasing debit card
A pcard may be a credit card or a purchasing debit card. A pcard that is a credit card will charge the cost of goods and services to the pcard account. The card issuer will require that the balance on the cards is paid in full each month.
A purchasing debit card can also be used to pay for goods and services. However, instead of acting like a charge card, a purchasing debit card immediately debits the transaction costs from the company’s deposit account. Some businesses prefer to use purchasing debit cards because they can know exactly where their finances are at any given time.
The importance of having good policies with a purchasing credit card program
For any purchasing credit card program, it is vital for businesses to have good expense management policies in place. The policies should address the allowed uses of the cards as well as the types of purchases that are not authorized.
Businesses should also train their employees on their expense management policies so that they understand the expectations of their employers. A well-written expense policy can help to reduce business expenses because it can help to prevent employee spending errors.
How p-cards automatically record data
A purchasing card vs credit card automatically records data about every transaction at the time that it is made. The transaction data imports electronically into the company’s accounting software. Employees are able to take pictures of the receipts so that they can be transmitted electronically as well.
This makes it simple for businesses to reconcile their statements automatically. P-cards can also allow businesses to greatly reduce invoices. It will be unnecessary for suppliers to invoice the company for goods and services that are paid for with p-cards. Getting rid of paper invoices can help businesses cut some of the overhead that they have with accounting.
Information that is recorded when using a purchasing card for business
When comparing a purchasing card vs credit card, p-cards can record much more information. P-cards have built-in expense management controls, and business owners are able to set limitations on the cards. You can limit where the cards can be used, how much can be spent each day or week, when the cards will work, and the categories of spending that can occur.
P-cards also allow business owners to see the spending that occurs in real time from their online dashboards. You are able to see the spending on any individual card by clicking on an employee. You can also look back at purchases easily. Finally, using p-cards can allow you to get rid of expense reimbursements because they will no longer be needed.
Other card options
There are a number of card options that are in the same family as p-cards, including commercial cards, corporate cards, fleet cards, and business prepaid cards. A commercial card is a credit card that companies give to their employees to use for expenses.
Corporate cards are another type of business card that is generally used by large companies. They are credit cards that may be in the company’s name or in the names of the employees. Corporate cards are often used for travel and entertainment expenses.
Fleet cards are fuel cards that are distributed to employees who drive for their jobs. The cards are used to pay for fuel expenses and vehicle repairs and can help companies to keep their transportation costs in check. Finally, business prepaid cards are cards that businesses purchase in specific amounts. The purchase price of the card serves as its spending limit. Businesses use these as another method to keep their expenses under control.
Benefits of p-cards for employees
When you compare a credit card vs purchasing card, several benefits of p-cards emerge for employees. Employees who use credit cards must keep receipts and submit expense reports to detail their spending. P-cards are preferred by most employees because they do not have to keep receipts or spend time with expense tracking.
P-cards also allow employees to avoid having to deal with cash or checks. They also let employees avoid having to spend their own money and then wait to be reimbursed at the employer’s convenience.
What is the NAPCP?
The NAPCP is a membership organization of professionals in the payments industry. The NAPCP has been around for more than 20 years and is dedicated to advancing the payments industry.
If you are in the payments space, the NAPCP is a great resource of which you should be aware. They offer credible, researched information and are highly trusted.
What are virtual cards?
Virtual cards are not made out of plastic. They are random 16-digit card numbers and CVV codes that can be used to make purchases and payments in the same manner as credit or debit cards.
However, these numbers only represent an underly credit or deposit account and cannot be used to withdraw funds or to access your information. This makes virtual cards a secure method of making payments online or via telephone.
Virtual cards can be generated with a virtual card API. P-card APIs are application programming interfaces that developers are able to integrate with your existing programs. You can create cards with a website or an application on your phone. They are an interface that the card issuer has built around the purchasing card API.
Benefits of using a p-card system
There are numerous benefits of using a p-card system at your business, including the following:
- Enhanced controls
- Improved reporting capabilities
- Can be assigned to individual employees or to individual suppliers
- Streamlines the payments process
- Reduces internal costs involved with high-volume, low-value purchases
- Gets rid of reimbursements and petty cash
History of purchasing cards
P-cards were first introduced during the late 1980s. The first p-card was developed for the use of the General Services Administration and was intended to be used for maintenance, repair, operations, and business supplies.
Broader acceptance of p-cards began in the 1990s. Since that time, an increasing number of businesses have adopted and implemented business purchasing card programs. P-cards serve as a central payment system for businesses that use them.
The difference between purchasing and procurement tasks
Many people use the terms purchasing and procurement interchangeably, but there are differences between the two. Procurement includes all of the processes and activities that are involved in procuring services and goods. It also includes activities such as research and is much broader than purchasing.
Purchasing refers to a process to acquire goods or services and is only a component of procurement. In general, purchasing refers to the process of requisition forms, requisition approvals, creating purchase orders, and receiving goods.
How to implement a purchasing card program
Implementing a purchasing card program involves much more than simply adding p-cards to your existing accounts payable system. You should instead start by researching the procure-to-pay systems that are in current use and determine what the cost savings would be from the implementation of a p-card program. You will also want to determine how accounts payable will be affected if you move a specific percentage of transactions to the p-card program.
You should then prepare a business case that includes the savings and benefits that you anticipate. The business case should include risks and controls and the identification of resources. Next, you will want to develop the program together with the expense policies that you will use with the cards. The final step should be to enter into a pilot phase with a few trusted employees before you bring more people on board and switch over your AP processes.
What to look for when choosing a p-card program
When you are choosing a p-card program, you will want to look for cards that have the types of features that can help you to manage your expenses during the procure-to-pay process. A card that lets you restrict the uses by time, location, amount, and the category is important.
Some of the best p-cards allow you to set individual spending limits according to the needs of your employees. These cards also let you set spending limits by the day or week and to turn them off or on at a moment’s notice. P-cards that can be restricted so that they can only be used to make purchases from specific vendors or to be restricted from being able to purchase items in restricted categories.
Benefits and features of p-cards
Bento for Business Visa debit cards can function like purchasing cards and offer multiple benefits to companies. Businesses have the ability to control and restrict spending on the cards. Business owners can restrict the cards to only work to make purchases from a preferred list of suppliers. They can restrict categories of purchases by using merchant category codes and can set total and daily spending limits on individual cards.
Since the cards are not credit cards, they do not require credit checks. Purchases will not add to a business’s level of debt because the transactions are subtracted from the business’s deposit account. The business debit cards have earned mentions in leading national publications including the Wall Street Journal, Forbes, Inc., Fortune, and the Los Angeles Times. The company has also received hundreds of positive reviews from its customers on Capterra. To learn more about purchasing cards and their benefits, call us at 866.220.8455.