Do you keep buying business essentials online for your clients? Don’t you want to share your credit card credentials with employees? Are you tired of keeping a record of business expenses? Are you looking for a one-stop solution for all your online purchases? Looking for a smart card that is secure enough, can give you credits, and works like a gift card? If all your answers are YES, the Purchase Card is the best solution.
It will work like a single virtual card that can be easily accessible by your employees without sharing highly secured financial information. Using a P-Card, you can enable all core and non-core business payments through a P-Card or Purchase Card. More and more businesses have started utilizing Purchase cards for their business payments.
There is an increment seen in the industry, with growing spending on P-cards. Businesses are startled by the increasing use cases provided by fintech nowadays. Banks have also realized that the Indian virtual credit card, also known as a gift card or purchase card, is the best instrument in cases of utilizing credit limits as it provides complete visibility on the usage of those limits. Also, considering travel & entertainment have taken a toll on banks’ commercial card portfolio, banks are purchasing card-based limits to businesses.
What Is Purchase Card Or Gift Card Wallet?
Purchase cards are commercial cards that companies can use to make B2B payments. A purchase card (also simply referred to as a P-card, gift card, or even a corporate card) is generally used for department-specific purchases. The employees may be given a department, office location, or business expenses card with their specific names on it. A credit line P-card is also available in the virtual format as a virtual card.
In either of the cases, each virtual credit card in India 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 requirements of 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 card pay through virtual business cards. As the card is loaded with credit card bill payment offers, it has been a faster and more reliable payment option for business people. Also, the demand for virtual credit cards in India is consistently increasing 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 involves 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 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 reduced 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 the cost of invoice creation and other operational expenses.
- Faster payment receipts lead to improved cash flow.
- Audit proof reconciliation
- Saving time with the automation of processes
So far, we have seen the above-mentioned credit line benefits, gift card wallet meaning, and all the details about the Purchase Card. Now, let us see how a purchase card fits the new-age enterprise’s financial requirement and helps the overall ecosystem!
Business Expenses Purchase Card: A Catalyst To Acceptance Of All Payments Modes
Traditional businesses used to suffer a lot of challenges while making business payments. A few common problems include:
- The limited instruments available
- Different portals and platforms to pay different payments
- Limited acceptance of instruments to pay.
In recent times, the instruments have increased, new platforms have come into the picture and the acceptance of digital instruments for payments has 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 does a P-card used in platforms create convenient ways to accept payments, but 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 a virtual card (digital), these can be used for various payments, including but not limited to utility, rental, and vendor payments.
Given 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.
Optimizing 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 its 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) a 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 of the modern ecosystem, where working capital management is an important concern for any enterprise. Purchase cards act as a cost savior for corporates who can smartly use the instrument to their benefit.
Driving credit line optimization
Purchase card programs 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, virtual credit cards in India give the option to the user to split the credit allocated into multiple cards with different credit lines and billing cycles.
For Example, an 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 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 make B2B payments. From convenience, and control to saving on the 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 works closely in the issuance and acceptance of Purchase Cards across business segments and company sizes.
It has created a world-class P-card acceptance program that provides seamless onboarding of thousands of validated suppliers in a few minutes and enables all types of business payments. Here is a glimpse of the EnKash Purchase Card to easily incorporate with your business to increase productivity.
