If there is one thing that everybody can agree on, it's that corporate purchasing can be a pain in the neck. After all, the procurement process can get very clumsy, especially for small purchases like office supplies or recurring purchases like subscriptions.
For many companies, common solutions include having a corporate card or asking employees to submit an expense report. However, this isn't as easy as it sounds. Corporate cards are only held by a few employees, and they are rife with fraud. On the other hand, reimbursing employees for business expenses can be cumbersome. Not only does an employee have to worry about not getting paid before their card payment is due, but the paperwork can be frustrating.
Fortunately, there is a solution. Specifically, a procurement card (or P-card) can provide a practical solution. Employees can use a P-card similarly to a corporate card, but there are more controls. Let's look at the difference between a P-card and a corporate card.
Each P-card has a spending limit
While it's certainly true that a corporate card often has a credit limit, this limit is account-based not user-based. Therefore, each person who has corporate card access is using the same credit line. On the other hand, each P-card has its own spending limit. This way, no employee can go over their limit without management approval. In addition, some of these cards require management approval for almost every purchase, rather than holders being able to spend at will. P-cards are a great way to avoid using a purchase order for everything.
Management can monitor every P-card transaction
With a purchasing card, managers and finance teams have total control over employee spending. In addition, because more employees can have a P-card, each of these cards should be issued in the employee’s name. This way, the finance department will immediately see who spent money on what, and which budget it should fall under. This provides the ultimate in both accountability and flexibility.
It is easy to enforce a purchasing card policy
Because of the real-time control over each employee card, the procurement and finance departments don't need a clumsy one-size-fits-all policy. Rather, they can issue parameters specific to each employee and adjust as necessary. Similarly, to accommodate software subscriptions and similar recurring expenses, your procurement team can issue a virtual card. These cards are linked to the main one but have a different number. This way, if your vendor gets hacked the card information will be useless.
Are you ready to get started with purchasing cards? If so, check out ControlHub's comprehensive purchasing solution. Our suite of tools includes purchasing card issuance and tracking.