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:
Control spend, boost efficiency, and earn up to 1.25% cashback with Rho.
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.
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.
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:
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.
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.
Here are a few important distinctions between P-cards and what you might expect from a legacy corporate credit card issuers like American Express
Here are a few important differences between P-cards and corporate credit cards:
Purchase cards have become an invaluable spend management tool to organization because they offer several business-critical benefits.
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.
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.
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.
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.
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.
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.
However, P-cards aren’t without their administrative challenges.
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.
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.
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.
There are a few steps you can take to manage a procurement card program effectively.
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.
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.
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.
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!
There are some must-haves and nice-to-have features you should look for in a P-card provider.
At the very least, an effective P-card solution should provide:
The Rho Budgets feature helps finance teams establish better visibility over how company spending is tracking against pre-set budgets.
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.
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!
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.
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.
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.
If you are a business looking for a P-card solution, here are a few good options to get you started.
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.
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.
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.
Small businesses that need a simple solution but can accept certain spend control tradeoffs.
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.
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.
Growth businesses that are looking for a modern P-card solution and have budget they can dedicate to paying for advanced spend management features.
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.
No, but the Rho Corporate Card’s configurable spend controls and restrictions allow you to use Rho cards as effective P-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.
Banking services provided and cards issued by Webster Bank, N.A., Member FDIC. All Rights reserved. © 2019-2024 Under Technologies, Inc. DBA Rho Technologies. Rho is a trademark of Under Technologies, Inc. Rho is not a bank. Rho partners with FDIC-insured banks to offer banking products and services.
.png)
