At its simplest, Purchase cards are commercial credit cards that allow companies to make business payments and manage business expenses. They are considered better, secure, and efficient to shorten the business payments cycle than a general long procurement process. Being a business owner, you must try a new angle on your business, i.e., Purchase Card, and this article covers most of the things related to purchasing cards.
With a streamlined procure-to-pay process, purchase cards are a more modern alternative to make business payments than Corporate Credit Card.
P-Cards provide a mechanism for authorized staff to make routine purchases without involving the accounts payable and purchasing staff. The major benefits of purchase cards are mounted around the key business pillars of efficiency, business promotion, process compliance and improvements, convenience, and cost savings.
Overall, for most businesses, purchase cards offer the best medium for business payments - simple, easy to use, and with some cash flow benefits, too. What makes purchase cards one of the most sorted financial instruments? Some of the following benefits are listed below.
Purchase or P-Cards help in faster payment to vendors and elimination of the need for manual interventions. It also smoothens the gem procurement process and thus gives a push to the company’s growth.
P-Cards can effectively transform the traditional, manual, paper-based procurement & accounts payable processes into swifter and seamless payment processes. In addition to the best use of technology, they provide better control levels and spend visibility, generating cost savings.
The finance and purchasing team have to no longer go through the tiresome manual data entry and paper receipts and trails. Purchase cards are the smart alternatives that eliminate the need for purchase orders (POs). They're fast, efficient, and even save the company money. Most effective P-card programs come with built-in approval flows, which not only helps in better control and visibility but also fastens the entire gem procurement process.
In comparison to Corporate Credit Card, Purchase card programs allow administrators to restrict usage of cards based on a variety of business rules, including spend restrictions per transaction and per time period. Also, restrictions can be set for particular types of businesses eligible for P-Card payments.
The purchasing or finance department has visibility on overall spending through EnKash P-cards. With individual logins and a built-in approval matrix for every team member, the financial controller or CFO can track every single payment, receipt, and approval. The managers are able to track just their own teams and the employees, just their own payments.
P-cards offer both buyers and suppliers many benefits, including better business expenses tracking, reducing fraud by setting credit limits on each card and setting designated Merchant Category Codes (MCCs) on vendor-specific cards to prevent unauthorized spending. Purchase Card create clear accountability and ownership of transactions and provide more information about buying habits than is usually available.
Don't you want the virtual manager to monitor all your business expenses? If yes then have a look at the easy incorporation of EnKash to your monitor.
With the different options for spending caps offered on various P-card programs, companies that use purchasing cards rarely go over budget. They can choose the card based on their spending requirements, including business promotion expenses. Limiting spending means no overspending, leading to cutting down on unnecessary card fees and interests.
Corporates can identify vendors who are looking for an early payment discount or agree on bill discounting. They can then use the purchase card to pay them the discounted amount or split the MDR (Merchant Discount Rate) charge between the two. This means 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.
The traditional gem procurement process can turn out to be costly, whether it is human resource cost or bearing the cost of printing documents to be sent to vendors/ contractors/ suppliers. Overall, payment processing cost needs to be curtailed, and p-cards offer the best alternate. Clearly, P-cards are a more sorted mode of payment, leading to more savings.
Purchase cards are used for both core and non-core business payments. The core business payments are payments that are essential to the business - that impact the main revenue source of the business. While it depends on the nature of the business, typically, critical vendor/supplier payments fall under this category.
Non-core payments are payments on secondary activities, which are not considered central to business operations. These typically include rental payments, GST payments, business promotion expenses, and even utility payments in the majority of cases. Globally, there are FinTech’s working to resolve acceptance challenges through their platforms, thereby making p-cards an integral part of the ecosystem.
Every finance team knows the constant hassle that comes with sharing a corporate credit card. With p-cards and the elimination of purchase orders, it can be a huge time saver. Every payment will not require multiple discussions, approvals, and paperwork between the employee and the finance team.
With easy and approved access to funds, purchase cards avoid several manuals, time-consuming processes that are unproductive. Such manual work is also generally error-prone, leading to a double edge sword of unproductive processes. With EnKash P-cards, the more man-hours saved, the better for the company.
In conclusion, the potential of purchase cards is potentially limitless.
EnKash Purchase Card acts as a complete solution that can save genuine time and money for busy procurement departments. It is an easy to implement, digital solution that enables monitoring and control through automation of the reconciliation process. P-card creates a more transparent, accountable, and flexible option for business expenses.
With multiple benefits aligned to the future of the digitalization and save business payments ecosystem, the P-card program is here to stay.
In India, EnKash works closely in issuance 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 enabled all types of business payments. However, if you are applying for business credit card, then Enkash is there for you.