What is a P-card?

Everything you need to know about procurement card programs.
Author
Rho editorial team
Published
February 28, 2024
read time
1 minute
Reviewed by
Karen Mei
Updated
February 28, 2024

P-cards are a popular spend management tool businesses use to streamline the procurement accounts payable process. 

Read this blog post to learn more about P-card programs and when your business should consider implementing one. 

Key highlights: 

  • P-cards are business credit cards with spending controls that make procurement easier for employees and finance teams to manage.
  • The idea is that your employees spend valuable time on work, not a tedious procurement payment process. 
  • Rho Cards can be used effectively as a P-card solution thanks to spend limits, merchant and category restrictions, and other key features.

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What are P-cards?

P-cards, short for procurement or purchasing cards, are business-liable credit cards that make purchasing business expenses easier. 

P-cards are typically used for low-value business purchases. For example, a business might institute a rule where its corporate purchasing card program is solely used for non-travel business expenses below $5000. Another might use them for much higher amounts.

As such, P-cards typically have more defined controls and spend limits compared to legacy corporate card solutions. 

How P-cards work

The primary reason why businesses use P-cards is to bypass what can typically be an extensive purchasing process when employees are purchasing low-value, potentially high-volume expenditures. 

Say you’re a sales employee who wants to purchase 1,000 business cards. A P-card would make payment easy, especially compared to the lengthy process of filling out a one-time PO or requisition request for something you may not need to purchase again for another year! 

Imagine the administrative nightmare of having to fill out a procurement request form any time you needed new business cards. Now, while P-cards simplify procurement for employees, this means they must have strict spend controls to automatically enforce your company’s policies. 

As we will cover later in this post, it’s essential that you choose a solution that automates P-card transaction compliance reviews. 

What is procurement?

Procurement is the process businesses follow to obtain materials needed for the production of goods and services or the day-to-day work of employees. 

Once businesses reach a certain size or rely heavily on vendor sourcing from the get-go, they could have fairly complex procurement processes to ensure they can manufacture and deliver products to their customers. 

This could mean any of the following: 

  • Extensive approval processes to ensure P-card payments are compliant and spending is controlled
  • Cardholder procurement policies are comprehensively outlined in an expense policy, where you would also see rules for business travel spend and reimbursements
  • A dedicated procurement team is hired to manage vendors and sourcing while also identifying strategic opportunities for better service or pricing
  • Outsourcing procurement to procurement service providers like Tropic or SAP Ariba for teams without resources to build out a procurement function in-house

Who within a company uses P-cards?

The answer to this question depends on the company you examine and its expense management processes and policies. Some businesses prefer to manage procurement centrally by only granting P-cards to a few cardholders. 

Others use modern solutions like Rho that make it easy to distribute corporate charge cards to employees directly with strict employee spending controls and merchant restrictions that automatically track expenses and enforce policy compliance.

Compare payment methods: P-cards vs corporate credit cards vs company debit cards

  P-Cards Traditional Corporate Credit Cards Traditional Company Debit Cards
Primary Purpose Primarily for low-value purchases (generally less than $5000). Used for all types of business expenses, good for larger purchases or travel expenses. Used for all types of business expenses but limited to the funds available in the account.
Liability Business is liable unless used by an employee for personal reasons. Business is liable unless used by an employee for personal reasons. Business is liable unless used by an employee for personal reasons.
Payment Charge card balance paid off daily or monthly depending on terms. Charge card balance paid off daily or monthly depending on terms. Funds deducted directly from business account at the time of transaction.
Spending Limit Typically lower spend limits to enforce effective procurement policies. Can depend on a company’s expense policy. Based on funds available in business account.
Credit Impact Used more for convenience than credit building Can help build business credit Does not contribute to business credit history
Cardholder Access Depends on the organization. Some are managed centrally while others are distributed to employees. Depends on the organization. Some are managed centrally while others are distributed to employees. Typically 1-2 cardholders max, limited to owner or C-Suite access.
Other Important Distinctions Streamlines procurement process Used for cash flow management purposes. May also come with additional perks like cashback or point-based rewards and perks Similar to ACH transactions, debits are made to the bank balance of an account.

P-card use cases

P-Card administrators can restrict usage to a certain dollar threshold or to a list of pre-approved merchants, which is why P-Cards are typically used for goods and services instead of travel.

P-card vs corporate credit cards

Here are a few important distinctions between P-cards and what you might expect from a legacy corporate credit card issuers like American Express 

  • Focus on procurement streamlining: P-cards are used primarily to simplify procurement, while corporate credit cards have a wider range of use cases, including employee travel.
  • More spend control: Certain P-card brands provide technology that effectively restricts how P-cards can be used, helping your finance or procurement team maintain compliance. Legacy corporate cards often lack these controls. 
  • Accounting automation: The right P-card will have accounting software integrations or easy-to-use CSV exports, making transaction reconciliation easier when closing the books. 
  • Cash flow management: While P-cards make procurement facilitation easier, corporate credit cards often play a bigger role in cash flow management thanks to high spending limits and flexible payment terms. That will certainly come in handy as you prepare your balance sheet.
  • Limited rewards: The objective of a P-card is not to maximize cashback or other rewards, whereas traditional corporate cards often provide these bonuses for every dollar spent. 

P-card vs. company debit card 

Here are a few important differences between P-cards and corporate credit cards:

  • Credit vs debit: P-cards are a type of corporate charge card, which means the business must pay that amount back within a certain time frame. Corporate debit cards draw from your account balance. 
  • Cash flow management: With a debit card, funds used are drawn from your bank account, providing zero float when paying vendor invoices that you could otherwise access using a P-card or corporate credit card solution.
  • Limited cardholder access: Since debit cards can be used to directly access company funds, access to these cards is likely limited to the business owners or C-suite. 

Benefits of using P-cards

Purchase cards have become an invaluable spend management tool to organization because they offer several business-critical benefits. 

1. Operational savings and ease of use

Aside from the chance to identify savings, which we’ll cover further down, P-cards are a time-effective way for your employees to purchase goods they need to complete their jobs. 

Think of the hours saved when an employee end-user can use a Mastercard or Visa-powered P-card to purchase supplies versus filling out requisition forms and purchase orders or sending several emails. 

The time saved using a P-card can be dedicated to more strategic work. Plus, you have the assurance that headcount dollars are going to high-impact work, not administrative processes.

2. Detailed spend data visibility

An effective P-card spend management solution can provide detailed line-item, transaction-level, or vendor data that helps your procurement and finance teams evaluate how budgets are spent and potential cost savings opportunities. 

For example, if your procurement team sees that several departments have purchased goods from a specific vendor using P-cards, they may see an opportunity to negotiate a contract with that supplier for discounts or enhanced service instead. 

3. Reduced vendor management record management

The vendor management process for your accounts payable can be quite time-consuming. Instead of having to keep track of changes in vendor payment details, your P-card’s issuing bank is responsible for doing so. 

For many businesses interacting with vendors that accept card payments, this is a major reason why P-cards can be a preferred payment method instead of manually updating vendor details. 

4. Enhanced transparency and control

Since P-cards have a narrow application and are meant to ease the administrative burden of procurement processing for your employees, you need strict controls to ensure reduced friction doesn’t translate to higher spending. 

This is why many P-card solutions and P-card alternatives come equipped with strict spend limits and controls that limit spending and alert teams when non-compliant transactions occur. 

5. Integrated reporting and simplified reconciliation 

A P-card may simplify your procurement processes, but you don’t want to sacrifice any speed at the month-end close. 

The right solution will either offer integrations with your accounting software –  so that transaction reconciliation occurs accurately in real-time – or formatted CSV exports.

6. Improved vendor relationships 

Vendors love getting pain on time and conveniently. As you evaluate your P-card spending, you may identify an opportunity to work with a vendor to develop a contract that makes them the preferred supplier in exchange for discounts or higher service levels. 

Challenges associated with using P-cards

However, P-cards aren’t without their administrative challenges. 

1. Managing expense policy compliance and preventing misuse

Enforcing your expense policy could be an administrative challenge if your P-card solution lacks automated spend controls. 

For example, Rho corporate cards can be configured with category restrictions that could prevent employees from using them for things like gift cards, alcohol, or items greater than a certain amount. 

2. A company’s culture may not value modern technology solutions

Some businesses accept the administrative tradeoff that comes with manual procurement processes because they provide a feeling of control and oversight. 

However, modern spend solutions like Rho have made it so businesses can maintain control over spending that requires their attention and automatically enforce a company’s expense policy without significant oversight. 

3. Sudden policy changes from vendors 

This isn’t specific to P-cards versus all corporate credit card offerings, but just because vendors accept credit card payments today doesn’t mean that they will tomorrow. 

This is where the value of an integrated business banking platform like Rho comes in. You can schedule fee-free Same Day ACHs payments to your vendors that don’t accept corporate credit card payments easily. 

How to manage your company's P-cards

There are a few steps you can take to manage a procurement card program effectively. 

1. Establish a clear expense policy

A company expense policy governs what spending is considered acceptable, including how employees should use corporate credit cards or P-cards. 

Distributing an expense policy to your employees can help prevent problems from happening before a single swipe happens. Even better, modern expense management solutions like Rho can automate this process for you. 

Read our recent blog post on how to build an expense policy if you don’t already have one. 

2. Create individual cards for each employee

While some businesses that use P-cards manage them centrally (i.e. 1-2 P-cards managed at a time), administering virtual or physical P-cards to every employee can significantly reduce your team’s administrative workload. 

Worried that employees will misuse these cards? Modern solutions like Rho make it easy to enforce your expense policy with strict spend limits and restrictions. 

Still prefer to manage the cards separately and share payment information (like card number) safely and securely? Rho offers secured card data sharing as one of our many corporate credit card fraud prevention features.

3. Automate as much accounting and tracking as possible

You don’t want any administrative time savings getting reduced because your P-card solution doesn’t have a way to eliminate manual data entry at month end close. 

Be sure to evaluate different accounting system integrations that providers offer. For example, Rho has integrations with QuickBooks Online, NetSuite, Sage Intacct, and Microsoft Dynamics 365 Business Central - as well as CSV exports. 

4. Incorporate training and education to get employees familiar with the solution

Especially for businesses with more traditional, manual finance processes, you want to make sure you are introducing new technologies in a way that helps employees easily understand how to use them. 

Hold training sessions and identify quick-win opportunities that allow you to test as you implement the solution. Rho client support specialists always happen to collaborate on employee training sessions with our clients! 

How to choose a P-card provider

There are some must-haves and nice-to-have features you should look for in a P-card provider.

Table-stake features 

At the very least, an effective P-card solution should provide: 

  • The ability to generate multiple physical cards and virtual cards for employees
  • Transaction tracking so your procurement or finance team can see spend in real-time
  • Integration with your accounting software or CSV export functionality

Detailed, real-time budget reporting for easier tracking

The Rho Budgets feature helps finance teams establish better visibility over how company spending is tracking against pre-set budgets.

Built-in spend management to make accounting easier

A holistic spend management solution – inclusive of procurement spend, T&E spend, and accounts payable processing – helps connect all of your spend data together for a more complete picture of your company expenditures. 

Look for a platform that provides P-cards or corporate credit card solutions integrated with accounts payable automation to establish better visibility over organizational spending. 

Digitized receipt matching to make tax time simpler

You want a P-card with a sleek user interface that makes receipt management easy for employees. 

Note: With the Rho app, available for iOS and Android devices, your employees can take a picture of their receipts and reply by SMS to upload them immediately. This is much easier compared to having them fill out expense reports. It will also help you eliminate late receipts!

Sharing virtual card details safely and securely

With the rise of virtual corporate credit card solutions, it’s essential that you can easily share card details with vendors and employees in a secure fashion. That means sharing secure card data, not relying on Slack or pictures sent over email, which could increase your risk of fraud.

Integrated business banking solutions

As discussed earlier in this post, some vendors don’t accept card payments. In those cases, you want a modern business banking solution that allows you to easily send ACH and wires to such vendors without costs adding up due to fees. 

Strong customer support 

As digital technology improves, it’s equally important that customer support teams are responsive to the needs of their customers. 

Here’s a quick test: Try to call the customer support phone line (if they have one) and see how long it takes for them to answer. 

The best P-card providers

If you are a business looking for a P-card solution, here are a few good options to get you started. 

1. Rho Corporate Card

First and foremost, the Rho Corporate Card is not a P-card, technically. However, the strict spend controls and restrictions our platform offers make it so you can use Rho cards as effective P-cards. 

Features 

  • Pre-set card limits: Define spending limits with Rho to prevent unauthorized expenses.
  • Physical and virtual cards: Generate unlimited cards with strict controls that can be used online or in-person (e.g. with a point-of-sale terminal)
  • Fixed amount cards: You can generate Rho cards with fixed spend amounts, like a prepaid card. 
  • Single-use cards: Generate single-use Rho Cards that can’t be used after one transaction.
  • Merchant- and Category-level controls: Restrict Rho Cards from being used at specific vendor merchants or with specific categories of goods. 
  • Custom active dates: Set specific active dates for Rho's virtual cards to manage contractor and temporary expenses.
  • Automated approvals: Streamline expense processes with Rho's automated approval workflows.
  • Secure card data sharing: Securely share card numbers and account details using Rho.

Integrations 

  • QuickBooks Online
  • NetSuite
  • Sage Intacct
  • Microsoft Dynamics 365 Business Central 
  • CSV exports 

Best for

Growth companies have outgrown traditional corporate credit card and P-card solution providers and want a platform that can scale with their needs and keep spending compliant. 

Learn why Rho’s underwriting model makes it a strong fit for growth-oriented companies compared to legacy providers like American Express or fintechs like Ramp. 

2. JP Morgan Procurement Cards

JP Morgan Chase is a financial services company, not a technology company, so while they do provide P-cards, they have limited feature availability compared to Rho. 

Features

  • Virtual cards: JP Morgan Chase does offer virtual corporate credit cards.
  • Some card control features: Using the PaymentNet platform, clients can add some level of customization to controls with specific cards. 
  • Downloadable credit card statements: So you can cross-check transactions with your general ledger.

Integrations 

  • QuickBooks Online

Best for 

Small businesses that need a simple solution but can accept certain spend control tradeoffs. 

3. Ramp Corporate Card

The Ramp Corporate Card is another modern corporate credit card solution that can be used effectively as a P-card. Read more about Ramp competitors in our blog post on the topic.

Features

  • Spend controls
  • Accounting integrations (limited to Ramp Plus and Ramp Enterprise plans)

Integrations 

  • QuickBooks Online
  • NetSuite 
  • Sage Intacct
  • Xero

Note that many accounting integrations with Ramp are now only available to customers with Ramp Plus or Ramp Enteprise plans. All Rho spend management features have zero platform fees.

Read more about Ramp vs Brex vs Rho in our latest post. 

Best for

Growth businesses that are looking for a modern P-card solution and have budget they can dedicate to paying for advanced spend management features. 

FAQs: P-cards

Are P-cards corporate credit cards?

P-cards differ slightly from traditional corporate credit cards, primarily because they are used solely for procurement. Corporate credit cards can be used for other expenses like travel. 

Does Rho offer P-cards?

No, but the Rho Corporate Card’s configurable spend controls and restrictions allow you to use Rho cards as effective P-cards. 

Wrap-up: Manage procurement with ease using Rho corporate cards

Interested in trying a P-card for your business? Rho is helping thousands of businesses simplify and streamline their spend management processes, so they can spend fewer hours on administrative busy work and more time on strategy. 

Interested in how the Rho Corporate Card can serve your P-card needs and help you analyze your spending in real-time without needing time-intensive expense reports?

Sign up to demo our platform to see how Rho Corporate Cards can serve your organization today! 

Competitive data was collected as of February 26th, and is subject to change or update.

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