person holding card and receipts

What are P-Cards?

P-Cards go by many names, such as Purchasing Cards, Procurement Cards, ProCards, or Payment Cards, yet whatever you or your company calls them, P-Cards offer the same arrangements and benefits.

P-Cards are issued to individual employees or departments to make work-related purchases on behalf of their employer, called the cardholder. The employee is not responsible for the purchased amount, instead, it is attached to the company’s account.

Benefits of P-Cards for Cardholders

P-cards are distributed by the employer to the designated employee for a variety of reasons, such as P-Cards can be used by office managers to purchase office supplies or by salespeople when attending local events. They are widely used by different companies and industries because they offer significant value for the employer and the employees. Below are the benefits of using P-Cards for your business.

1. Lower Transaction Costs

When processing using the traditional procure-to-pay method, the transaction costs averaged between $50-$200 per transaction. Not only does this fee add up extremely quickly when there are multiple or even dozens of transactions processed per week or month, oftentimes the single transaction costs can outweigh the actual cost of the purchased item.

For example, if the office manager needs to purchase a new keyboard or whiteboard markers for the office, it is a relatively inexpensive purchase. Yet, the transaction fee can ultimately cost more than the actual item purchased.

According to the NAPCP, using a P-Card has a typical savings of $63 per transaction. And over numerous transaction processes each year, that is a tremendous amount of money saved just by simply using P-Cards.

2. Increase Cashflow

The process of using P-Cards as compared to traditional methods also streamlines the transactions process. The employee can make the purchase directly from the supplier which not only increases the internal process but improves the transaction for the supplier. They do not need to wait for invoices to be completed, instead, the payment is instantaneously completed and the supplier can quickly process and provide the purchase.

3. Day-to-day Efficiencies

Since it does not require forms to be completed, submitted, and then approved before a transaction can be made, it shortens the time between needing the product, making the purchase, and receiving the item. This also saves the manual time employees spend completing these tasks which allocates more time back into their daily productivity.

4. Manage Spending

A P-Card enables the employer to predetermine a spending limit for each card to control how much the employee or department can spend. It safeguards the employer to ensure the card is not overused and instead stays within budget. Furthermore, the purchases for each card can be checked and reviewed by the employer so they are able to understand how the money is being spent.

5. Track Purchases

In addition to regulating the spending amount for each P-Card, you can further track spending by different departments. A purchasing card can be associated with each department in order to manage and collect all purchases through a single card. Furthermore, your company can use a different merchant category code for different departments to restrict unnecessary purchases.

Benefits of Accepting P-Cards

While the above section discusses why your business should use P-Cards to manage and track internal spending, the next step is to discuss the benefits of your business accepting P-Cards.

Since P-Cards are issued by the business, the card itself has a high number of attached data fields. For example, personal debit or credit cards have very few data fields that can be collected during a transaction simply because there is not that much information attached to the card. A personal card processed as a B2C transaction, called Level 1 processing, has significantly less data that can be collected by the business, such as credit card number, expiration date, billing address, and zip code. In comparison, a P-Card processed as a B2B transaction, called Level 3 process, is able to collect all the additional data fields the card has available, such as freight amount, duty amount, product/service ID, product/service description, quantity, item amount, unit of measure, etc.

Since a P-Card has the capabilities to be processed as a Level 3 B2B transaction then it increases the amount of information the business can collect which ultimately lowers your payment processing fees. With more information, it equates to a lower risk. It is more difficult to be at risk for fraudulent activity when you know more about the cardholder, therefore the less risk associated with a transaction then the fewer fees attached.

Evolve Payment can maximize your payment processing to ensure each transaction is processed at the correct level. Therefore, when your business accepts a P-Card it is automatically processed at Level 3 because the system will immediately collect the necessary data fields from the card during the transaction that will qualify it for lower fees. Evolve Payment supports the processing automation of payments that recognizes and responds appropriately to each transaction that will negate unnecessary fees and save your company a significant amount of money.

Many businesses are not processing P-Cards correctly, therefore causing the business to pay high fees that otherwise could be eliminated if they processed P-Cards at the correct level. Is your business payment processing systems set up to process P-Cards at the optimal level?

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