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Supercharge your business with a Purchase Card

Enable all core and non-core business payments through P Card More and more businesses have started utilizing Purchase cards for their business payments. There is an increasing trend seen in the industry with growing spends happening on P-cards. The businesses are startled by the increasing use cases provided by fintechs nowadays. Banks have also realized that P-cards are the best instrument in cases of utilizing credit limits as it provides complete visibility on usage of those limits. Also, considering travel & entertainment has taken a toll on banks' commercial card portfolio, banks are pushing purchase card based limits to businesses. Purchasing cards are commercial cards that companies can use to make B2B payments. A purchase card (also simply referred to as P-cards, or even a corporate card) is generally used for department-specific purchases. The employees may be given a department, office location wise or a card with their specific names on it. A P-card is also available in the virtual format as a virtual card. In either of the cases, each P-card is associated with a master account - the details and control of which are given to the finance or department head, giving them compute control and accountability. Lately, purchase cards have been all the rage. The Indian ecosystem has seen a surge in demand because it fits well into the requirement of the businesses. Purchasing cards are now preferred by next-generation and rapidly growing companies who want to cut their payment fees and the costs of sending payments. Overall, this increase in demand for a P-card is also due to the increased adoption of digital payment options across buyers and sellers across industries.

Major Benefits of A Purchase Card Program

A P-card program takes over the traditional procure-to-pay process which includes the purchase order creation, invoice and payment process and mapping the 3 of them for reconciliation. The entire process involved a lot of manual work, is time consuming and is error-prone. Also, the entire process entails extra cost due to unnecessary man hours and paperwork trail.

A P-card simplifies the entire process and makes it error-free, and saves the company money. It is believed that with a purchase card, enterprises can save from 55% to 80% of the traditional process cost

Overall, P-cards provide a medium for the enterprise to
  • Streamline and simplify the procure-to-pay process,
  • Procure products and services on time,
  • Save on reduce transaction costs, among other benefits
  • Gain complete control with real time tracking of expenses
P-cards also benefit suppliers with benefits that outweigh the costs related to card acceptance. These include
  • Estimating cost of invoice creation and other operational expenses.
  • Faster payments receipt leading to improved cash flow.
  • Audit proof reconciliation
  • Saving on time with automation of processes

Other than providing the above-mentioned benefits, let us see how a purchase card fits into the new-age enterprise's financial requirement and helps the overall ecosystem

A catalyst to acceptance of different type of payments

Traditional businesses use to suffer a lot of challenges while doing business payments- the limited instruments available, different portals and platforms to pay different payments, and the limited acceptance of instruments to pay. In recent times, the instruments have increased, new platforms have come into picture and the acceptance of the digital instruments for payments have increased. Platforms like EnKash are a comprehensive and one-stop platform, where all core & non-core business payments are accepted through a purchase card. Offering multiple billing and online payment options increases the overall user experience and satisfaction levels. Not only a p-card used in platforms creates convenient ways to accept payments, it also reduces the time it takes in the transaction. Many vendors save time accepting payments through such an arrangement The core of a purchase card is business payments. Whether through a physical format or through a virtual card (digital), these can be used for various payments, including but not limited to utility, rental and vendor payments. Given an easier onboarding and the option of helping businesses transact with a list of registered beneficiaries already approved in the system, the purchase cards make transactions swifter than ever before.

Optimising the early payment discount benefit

Early payment solutions for B2B customers have gained acceptance as an effective, efficient solution to sluggish supplier payments. They act as a silver lining to the increased cases of delayed and late invoice payment problems currently in the ecosystem. Early payment discounts can be a win-win for both the buyer and the supplier. Businesses get incentivized to pay before time, and vendors get paid quicker than agreed upon. Based on a mutual agreement, the enterprise can use their purchase card to pay the vendor the discounted amount, or split the MDR (Merchant Discount Rate) charge between the two. In such a scenario, the corporate can not only save on the charge but also avail (interest free, in case the entire charge is borne by the vendor) credit period for the same. Bill discounting thus becomes an efficient way to quickly raise working capital for the business and p-cards become a more important aspect to the modern ecosystem, where working capital management is an important concern for any enterprise. Clearly, purchase cards act as a cost saviour for corporates who can smartly use the instrument to their benefit.

Driving credit line optimization

Purchase cards program can help in credit line optimization for the enterprise by, firstly, helping them improve working capital management through early payment discounting as already mentioned. Secondly, the purchase card program gives the option to the user to split the credit allocated into multiple cards with different credit lines and billing cycle. Example, a INR 40 cr limit (for 30+15 days, billing cycle starters 1st of the month) can be split into 4-5 cards of different credit limits (which add to INR 40 crores) and billing cycles of 5th, 10th, 15, and 20th of the month, thereby helping increase the time period for which the credit line is allocated and then utilized. Purchase cards offer an essential optimization approach to extend the credit period available to pay back the credit.

In Summary

Purchasing cards are an essential instrument in the modern-day financial ecosystem to help businesses do B2B payments. From convenience, control to saving on cost of payments; p-cards help enterprises streamline their payment processes. It is a holistic solution that creates more transparency, accountability and flexibility as a B2B payment option. With the above-mentioned benefits, the true power of a purchase card program can bring a lot of business and operational efficiencies to any enterprise. Fintechs like EnKash work closely in issuance and acceptance of Purchase Cards across business segments and company sizes. It has created a world class P-card acceptance program which provides seamless onboarding of thousands of validated suppliers in a few minutes and enables all types of business payments.

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