Businesses are incorporating Purchase cards into their business models to manage their working capital. Due to their boosted efficiency and vast variety of benefits, Purchase Cards, also known as P-Cards or Procurement Cards, have become the most widely used tool for both - payment and procurement.
Purchase cards are a great way to replace paper-based invoices and manual processes. This helps businesses to operate more efficiently by cutting operating costs, automating expense reconciliation processes, and providing excellent insight into working capital in financial management.
If you have gone through the above stanza carefully, then you must have noticed a term, and your mind must be pushing to know what is working capital management? Well, it is a process to handle the business assets and liability in an effective way to enhance the business. Most of the time, it has been observed that improper working capital management leads to huge debt, and as a result, a company faces a major financial problem.
Now, you are well versed with working capital management, and it's time to have a look at its objectives. This business strategy comprises many elements in its basket, and one such is the purchase cards.
A business can have a couple of compelling reasons when it comes to switching to purchase cards. Depending upon what they're aiming to accomplish, one reason could be to improvise their P2P (Procure to Pay) process and make it more flawless whilst bettering their procurement. Another reason to switch to purchase cards could be to improve working capital. However, it is not uncommon for businesses to want both!
Apart from simplifying the payment procedure, purchase cards also help decipher the spend pattern and devise strategies accordingly. The amount of data that can be collected is impressive and very helpful since a large chunk of vendor information is accessible through each transaction and thus act as a smart digital B2B payments mode.
Another hidden treasure is a reduced transaction fee when it comes to working capital benefits. Due to different stages being involved, the traditional P2P transaction is a slow, expensive, and time-consuming process that impacts the business. After knowing about the objective of working capital management, you can step ahead with its elements to boost your business.
With time, most of the things in the business changed just because of smooth running and ultimate output. In the same line, working capital management act and in modern-day, it is very much significant.
Purchase cards have recently gained popularity due to the ease of implementation. Each business has its own individual reason to adapt to cards and with different demands come different expectations, be it to stay ahead in current, ever changing markets or for the ease of processing and handling increased volumes. Owing to all these key features, payment efficiency is at an all-time high.
Countries advancing (such as India and Australia) in electronic payments are recent hotspots for purchase cards being utilized for digital B2B payments. Countries such as those in Europe that have already found their comfort in electronic transactions are competing to increase their working capital.
In terms of increasing working capital, paying with credit is a luxury that helps businesses stay afloat while reducing the risk substantially and ensuring the suppliers get paid in a timely manner. It acts as working capital loans that give businesses more freedom to invest back into the business itself while successfully eliminating the constant worry of settling invoices. Another outstanding feature is that suppliers and clients can mutually benefit from each other and assist each other in expanding.
Managing the cash flow in a company demands quite a juggling act! One needs to keep a perfect balance between finding credit, managing suppliers, monitoring your billing cycles and the flow of revenue.
Purchase cards offer you flexibility in billing cycles that could vary anywhere from 7 days to 50 days which enables you to collect the revenue as soon as you can and holding on to payments as long as possible. This solves your cash flow problem to a large extent.
Purchase cards provide flexibility to make desired purchases without forfeiting control. However, limitations can be implemented per transaction as per your need. You can also decide where or which supplier can be paid using the card.
This is just the beginning for purchase cards. The future holds extended benefits that will make this product an absolute essential for businesses.Moreover, this card also acts as an emergency credit line guarantee scheme. Thus, you don’t have to worry much more about the financial crunch in the business.
EnKash works closely in issuance of Purchase Cards across business segments and company sizes. It also provides the necessary payable management platform for usage of such cards. For more information, visit www.enkash.com.
And if you want to see the magic of the EnKash Purchase Card and avail of awesome rewards and credits, see the short video!