What is a procurement card, and how does it work?
A procurement card is defined as a type of business charge card that can be given to select employees so that they can make authorized purchases and payments for their companies. Also known as pcards or purchasing cards, are company charge cards that may be distributed to employees so that they can make purchases on behalf of their employers. These cards help to avoid lengthy processes and to minimize the risk of fraud.
The 2017 AFP Payments Fraud and Control Survey found that 74 percent of businesses were the victims of payments fraud. Among the victims, 75 percent experienced check fraud while 32 percent experienced commercial card fraud, including procurement card fraud. However, fraud can be prevented when the p-cards that are implemented by companies have controls and restrictions available to the businesses.
The procurement card definition, what is a p-card, and why p-cards are used
The definition of p-card and the procurement card definition are the same. These are cards that companies can give to specific employees so that they can make small purchases that are needed by their employers without having to submit requisition forms and to wait for purchase approvals, purchase orders, and checks.
The procurement card definition includes cards that may be restricted by employers to preapproved purchases from select merchants or vendors. Employers may incorporate these cards as a way to streamline their purchasing processes while also helping to minimize their risks of fraud.
What is the meaning of a pcard, and how can the cards help to prevent fraud?
Businesses that wonder what is a p-card can think about the transaction costs that are involved with making purchases while using traditional payment processes. The National Association of Purchasing Card Professionals (NAPCP) reports that the average transaction cost for a single purchase can range from $50 to $100, which means that the costs may exceed the value of small items that must be purchased.
P-cards are types of debit or charge cards that can be used instead of the traditional purchasing process. They cannot carry balances from month to month. The purchases that are made do not incur interest. Finally, business owners can restrict the cards to only work to make preapproved purchases from specific vendors, and they can turn the cards off when their employees are not at work or in between purchases.
Degree of control when using procurement cards
Some p-cards allow employers to implement substantial controls over when, where, and how the cards can be used. Employers may be able to restrict individual cards by merchant category codes and set daily or weekly spending limits on each card.
The p-cards also may be turned off or on remotely whenever a business owner chooses. P-cards also may not be used by employees to withdraw cash from their employers’ accounts. Business owners can log into their standard online dashboards 24 hours per day to see how the cards are being used by each employee to whom the cards have been issued.
Types of purchases that can be completed with procurement cards
One of the benefits of p-cards for businesses is the ability to restrict the types of purchases that can be completed with the individual p-cards. You can limit different cards to specific purchases according to the needs of your individual employees.
If an employee attempts to make an unauthorized purchase from a non-approved merchant, the purchase will be denied at the point of sale. You will be able to see that the employee attempted to make an unauthorized purchase, turn the card off, and wait to speak to the employee about what occurred.
How employees benefit from procurement cards
Employees who are given p-cards to use for business purchases are also able to benefit. Employees will not have to spend their own money for needed purchases and can instead use their company’s cards. This means that they will not have to wait for reimbursement requests to be processed.
Employees who are given cards can also enjoy greater productivity. They won’t have to wait for purchase that they need to perform their job duties to be approved and can instead make the purchase at the time it is needed. This can allow employees to attend to the important tasks of their jobs, helping them to feel more positive about their work.
How procurement cards allow you to get rid of expense reimbursement processes
The procurement card definition and the definition of p-card incorporate the ability to rid your business of expense reimbursement processes. Since your employees will be able to use the p-cards that you give to them to make purchases and payments for your business, there will be no need for them to spend their own money on business purchases.
Getting rid of expense reimbursement processes can help to limit your risk of fraud. Reimbursements are often targeted for fraud by employees who submit fraudulent reimbursement requests for personal purchases or who inflate the claimed amounts.
The importance of procurement cards for businesses
Procurement cards are important for businesses because they can help to streamline a company’s payments processes, save money, and increase the spending transparency. P-card purchase and payments data can be imported directly into the accounting software, allowing businesses to know exactly what has been spent at all times.
Employees can use their phones to take pictures of their receipts so that they can be uploaded with the transaction data. This helps businesses to save time that their employees might otherwise spend trying to track down lost or missing receipts. Finally, p-cards can help to make tax time and p-card reconciliations simple.
How procurement cards are created
The procurement card definition includes both plastic and virtual cards. Virtual procurement cards may be used by employees to make remote purchases over the internet or telephone. Plastic p-cards can be used to make in-person purchases from your preferred merchants.
To create procurement cards, you can request them from your card issuer from your online dashboard. If the cards are virtual, the numbers can be generated instantly, allowing the cards to be used within minutes. You can also create p-cards from your applications by using a procurement card API.
What is a procurement card API, and how does it work?
An application programming interface is a type of interface that is not computer-language specific and can be adapted by developers to be used with your proprietary applications. An API can then be called to instantly generate procurement cards when they are needed from within your programs.
You can also contact your card issuer to generate cards using its API through your online dashboard. The API will generate the random card numbers and CVV codes for you, and the numbers will be activated and ready to use within minutes for secure purchases.
How using procurement cards can automate AP processes and reduce headaches
When you issue pcards to your employees, the cards can help to automate the accounts payable processes at your company, reducing the potential of accounting headaches. The transaction information is automatically imported into the accounting software so that it will not need to be manually entered and you don’t have the risk of human error.
Adopting p-card policies and providing p-card training can minimize misuse of the cards and help your employees to identify fraud. You can also get rid of petty cash funds and the need to write checks so that p-card reconciliations with your accounts is straightforward.
What to look for when purchasing procurement cards
If your company is considering pcards to replace your traditional purchasing and payment processes, there are several features that you should look for. The cards that you choose should allow you to set tight controls over the types of spending that your employees can complete.
You should be able to restrict the cards by merchant category cards and set individual spending limits according to each of your employees’ jobs. You should also be able to choose when the cards will work and to turn them off remotely if you identify misuse or fraud. The cards should not charge interest, individual transaction fees, or high annual fees.
Where you can find procurement cards
You can find pcards by researching banks and card issuers online. You should limit your search to issuers that focus on providing solutions to businesses. When you have identified a few companies that offer pcards, you should then read reviews of them online.
You can read reviews from other businesses that have used the cards to get an idea of what your experience may be like. Sites such as Capterra and TrustPilot aggregate customer reviews. You can also read reviews of the cards by national publications such as Forbes so that you can identify companies that have achieved excellent reputations within the financial industry.
How the expense controls and management features from Bento for Business work
Bento for business offers business Visa debit cards and pcards. These expense management tools provide a robust solution to handling business spending. The cards let you restrict what your employees can purchase, where the cards can be used, how much they can spend, and when the cards will work.
For example, if you own a mattress store, you can give a pcard to your inventory manager with a monthly limit of $10,000. The manager can use the card to purchase wholesale mattresses from your chosen supplier. You can turn the card off in between purchases, and the employee will not be able to use the card to make purchases elsewhere.
Why you should consider Bento for Business
Bento for Business has earned a reputation as a top business debit card solutions provider. Since the cards are not credit cards, the purchases that your employees make will not incur interest or add to your debt.
You can order 10 cards for $29 per month, and there are larger packages available if you need more cards. Bento allows you to request a demo to see how the cards might work, and there is a free 60-day trial. To learn more about p-card policies, pcards, and p-card reconciliations, call 866.220.8455.
