What is a p card?
What is a p card? A traditional p card is often just a payment account number or card that a boss gives to a worker. They’re also known as purchasing cards or procurement cards.
Using purchasing cards lets the worker make company purchases without having to foot the bill and ask for reimbursement later. With cards that don’t exist in card form, the employer gets the benefit of knowing that their team members won’t go on payment frenzies.
While this system of checks and balances may seem okay, it’s not quite perfect. The Association for Financial Professionals’ 2017 Payments Fraud and Control Survey found that 27 percent of fraud-struck enterprises in 2016 got taken by schemes that involved their own commercial or corporate payment cards.
How companies transform raw materials and resources into goods and services is up to their leaders, stakeholders, and markets. What’s not up for debate is the fact that money greases the gears. Cultivating an understanding of what a p card is and devising a smart p card policy can help you handle businesses finances more efficiently.
What will happen with the future of p cards? Some providers are establishing standards that are changing the game.
What are p card programs?
Companies take many steps to reduce their general payment fraud risks, and using a P card is no different. One common tactic for working with purchasing cards involves starting a P card program. These initiatives might involve steps like
- Appointing accountable administrators who disburse P cards and enforce organizational procurement rules
- Writing a card usage policy
- Instituting accounting practices or creating custom payment monitoring software systems
What kinds of P card processes do many businesses follow? Unfortunately, lots of companies are behind the times. These firms go through an elaborate maze of confusing procedures every time someone wants to complete a major purchase.
The employee must fill out a requisitioning form and receive approval before making the acquisition. While it’s wise to control what people can do with company cash, the traditional procure-to-pay p card process is not as efficient as it could be.
What is a corporate p card?
A corporate card is a card that companies give employees for travel and entertainment expenses. It’s also known as a travel card, and corporate p cards fulfill the same roles. Although the two types of cards were traditionally distinct, modern payment systems are bringing them closer together.
Why use a p card?
Switching to P cards carries real benefits. For instance, the gains you realize by not having to go through a complicated requisitioning dance include a monetary value. Experts say that companies save $63 per purchase in the time and effort they conserve.
P cards are a breeze to manage. In addition to setting a company-wide p card policy, a firm can use its p card application dashboard to enforce desired behaviors. For instance, many apps support daily, weekly and monthly spending limits.
Who uses procurement cards?
Payment cards serve an interestingly diverse range of purposes. Here are a few examples of what a p card is good for:
- A manufacturing startup wants its supply drivers to inspect raw materials for quality before accepting and loading them. It gives specific employees p cards so that they can authorize payments when they confirm the goods.
- A retail franchise owner wants her store managers to get their office supplies without bothering her. Giving each manager a p card is the ideal way to make routine tasks easier.
- A service company’s accounting department is overwhelmed by the need to reimburse team members who pay for parts when they fulfill in-home repair appointments. The firm distributes p cards and programs them to approve only certain purchases. The company’s clients get the parts they need, and the enterprise never has to worry about whether its staff members are making frivolous p card payments.
What’s the difference between a p card and a credit card?
Credit cards use revolving credit lines. When you swipe, the credit card company pays the bill with its reserve funds and doesn’t charge your credit line until the end of the month. Along the way, the provider tacks on a healthy slice of interest. You’re also likely to pay ATM, overdraft, processing transaction, and annual fees.
Prepaid purchasing cards are reloadable, so they only have access to the funds you preload into your account. This behavior is usually less than what you’d get with a high-limit credit card, but a procurement card gives you a huge advantage: You’re not running up a bunch of incidental charges or exposing your company to the risk of earning credit report strikes.
Remember that using a P card is an excellent way to foster safe habits. You don’t have to wait until you receive a bill in a month or two to root out fraudulent activity. Instant reports magically pop up on your phone via a secure p card app.
P card best practices all companies should know
Want to use p cards as securely as possible? Try implementing the following standards at your organization:
- Establish usage rules early, and educate your staff thoroughly with a rigorous p card training program. Lack of knowledge shouldn’t be an excuse for spending misallocations or other bad behaviors.
- Don’t depend on people to follow the guidelines. Use real-time controls to establish hard spending limits for each card account, such as daily or monthly p card payment volume restrictions.
- Preload individual cards with just enough money to fund the purchases that workers need to make, and program the system to add more on a set schedule. It only takes a few seconds to provide funding on demand, so err on the side of caution.
- Appoint a program manager and stakeholders to create key performance indicators, or KPIs. Use these standards to gauge your procurement card program in practical money terms.
The advantages of purchase cards
Are the rewards of using purchase cards worth the hassles of p card training and program oversight? A quick look at the benefits may make the hurdles seem less lofty.
Upgrading your procurement or P card process to leverage modern payment tools can make it much simpler to do business consistently. Using a p card is also a great option for streamlining transactions. This trait makes the card easier to work with the merchants and partners that link you to essential supply streams.
Automate parts of your accounts payable department with p cards
Moving to a new payment system could lower your accountant’s stress levels. Because a p card is designed to take advantage of existing payment networks and secure data communications, you can use one to automate essential business activities. For instance, many p card application programming interfaces, or APIs, let you create custom apps and native software integrations tailor-made to complement existing business tools.
Traditional p cards compared to business debit cards
What are the drawbacks of using a p card program? Traditional p card reconciliation is a lot of work. For instance, before even trying to match card transactions with receipts, merchants, purchases or job requests, accountants must process and sanitize piles of records.
Using a business debit card might make things simpler. For instance, the woes of p card reconciliation become non-events when you get spending reports that enter your accounting systems automatically. In addition to nixing annual fees, business debit cards may also include more anti-fraud controls than some standard p cards.
What to look for when choosing a business debit card
You now know what a p card is. But how can you choose the right one? The best p cards don’t rely on showy offers or rewards. Instead, they focus on providing genuinely useful features that compliment your purchasing card programs.
A Bento for Business Visa debit card behaves similarly to the best p card programs. Bento cards pack everything you need to pay more securely. FDIC insured for up to $250,000 and secured by 256-bit SSL encryption, it’s the favored tool of merchants, manufacturers, retailers and startups that want to make their presences known without exposing themselves to risk.
As an employer, you need the power to control exactly how your team spends cash on your behalf. With us, you don’t have to hold back — Whether you want to restrict purchases by item categories or vendor locations, we make it simple to set rules that get the job done. Best of all, you get to run the company from your smartphone.
Still wondering what a p card alternative is going to do for your enterprise? Try Bento for Business Visa debit cards free for 60 days at no cost to you. Learn how a business Visa debit card is going to drive your growth by calling us at 866-220-8455.
- The benefits of a reloadable debit Visa card for businesses
- What is a procurement card?
- Why a purchasing card program can be a good idea for businesses
- How a Visa business debit card can help your firm’s growth
- Choosing the right Visa reloadable prepaid card
- Benefits of a Visa card for business