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Weighing in on P-cards: Issues and challenges

Posted: 22 Dec 2014     Print Version  Bookmark and Share

Keywords:P-card  procurement  purchase order 

Procurement cards, or P-cards, allow goods and services to be purchased without using a traditional procurement method for faster transactions and efficient use of resources. However, in spite of the advantages P-cards seem to offer, many organisations are still adamant about using P-cards, mainly because of the risks and issues involved.

In today's procurement scenario, when single-line solutions are being replaced by integrated technologies, it is worth analysing whether P-cards bring real benefits to organisations looking to adopt best-in-class practices.

When it comes to procurement, most organisations do not really differentiate transactions based on their value, so they are likely to use the same purchase order (PO) process for a $100 and a $1 million transaction. Procurement cards find relevance where they help executives consolidate invoices involving recurring transactions such as expenses for travel, stationery and maintenance into a single statement. This process, as opposed to conventional PO processing, brings significant savings in administration expenses. According to a First Data study, one P-card payment is equivalent to an average of 3.3 invoices in today's typical business environment.


P-cards have created a new business model by converting the accounts receivables into procurement card clients. (NAPCP)

P-cards can also strengthen e-procurement by streamlining payments. Transactions involving the cards can be easily integrated into the procurement chain. All transaction details such as product description, quantity, price, tax components and shipping charges are updated in the system automatically and much faster than the conventional PO processing methods. Savings can be even greater if the transactions are effectively integrated into an organization's key financial and accounting systems.

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