Using Purchasing Cards to Streamline the Purchasing Process

Purchasing card (also known as procurement card or P-Card) programs provide an efficient, cost-effective method of purchasing and paying for small-dollar and high-volume purchases. Purchasing cards offer an alternative to the traditional purchasing process and can result in a significant reduction in the volume of purchase orders, invoices, petty-cash transactions, and checks processed. Purchasing cards can be used whenever a purchase order, check request, or petty cash would have been processed and with any vendor that accepts credit cards.

Purchasing card programs can provide significant benefits to governments who choose to use them.  Benefits of a Purchasing Card Program can include:

• Convenience (simplified purchasing and payment process)
• Efficient payment method
• Lower transaction costs
• Rebate revenue
• Improved purchasing data analytics
• Alternative to petty cash
• Immediate payment to vendors
• Emergency preparedness

Purchasing card programs overall benefit governments, but with any program implementation come some challenges:

• Approval process (ensure policy is set up effectively)
• Duplicate payments
• May shift reconciliation responsibility (addressed in the design of the program)
• Compliance (keeping card users accountable and properly trained)
• Complex spend analysis (reporting can be difficult – upfront discussion with vendor)
• Delays in recording activity (Process / ERP Integration)
• “Front Page” Risk - governments using credit cards (ensuring proper controls exist)

Governments need to maintain appropriate controls, in accordance with the purchasing policy, to ensure the ongoing success of a purchasing card program. Governments should also adhere to any state or local laws in place regarding purchasing card use. This should be done through the development of a Purchasing Card Program that should include the following elements:

• Defining the scope of the program (usually for small dollar, high-volume purchasing, and possibly travel)
• Having a Purchasing Card Policy and ensuring that it conforms to the entity’s overall procurement policy
• Developing a P-Cards procedures manual that also addresses fraud prevention
• Implementing a training program (include a training manual) 
• Developing a process for selecting and managing the right issuer/ card provider (Competitive RFP Process)