The P-Card's Journey Upstream

First, a point of clarification: Ghost cards have nothing to do with Casper, or any other apparitions, friendly or not. What's more, they're not actually cards. The term “ghost card” refers to an account number employees can use to charge items they're purchasing for their companies, such as office supplies or cleaning services. Some companies assign an account number to all transactions with a specific supplier, while others have everyone in a department use a specific number.

For several years, the University of Nebraska at Lincoln has had ghost card programs in place with its travel agency, along with its providers of office and scientific supplies, says Kim Phelps, associate vice chancellor, business and finance. When a university employee calls the travel agency to arrange a trip, the cost is charged to the ghost card number residing in the system. The university employee must provide a valid accounting code to indicate that the transaction is legitimate. Moreover, “the card number is never involved in any part of the transaction that the user sees,” says Phelps, so he or she can't use it with other vendors. If the agency were to put through false charges, their actions would quickly be noticed, as all charges run through the system are reviewed either daily or weekly, depending on the vendor, by the university's department of e-commerce.

Previously, faculty members would pay for the trips themselves and file paperwork for reimbursement — a largely manual process. With the help of the ghost cards, the university has been able to reduce by two the number of accounts payable employees, says James Vogel, director of e-commerce. Annual spending on the ghost cards topped $10 million in 2007.

Ghost cards are just one of the ways in which purchasing card programs at many organizations are expanding and changing. The initial catalyst for many purchasing card programs — to provide visibility into and cut the cost of purchasing low-value items — still is important, says Andrew Bartolini, vice president of research with Aberdeen Group. How-ever, financial executives now want to streamline even more purchasing processes, ensure that more purchases take advantage of discounts with preferred suppliers, and boost the rebates their companies earn from the card issuers. Rebates for p-card purchases range from about 1 to 3 percent, says Amit Gupta, research analyst with Aberdeen.

To move more spending to their card programs, purchasing managers are expanding the range of purchases allowed via purchasing cards and raising the cards' dollar limits. “Over the past five or six months, the market has changed dramatically,” says Dennis Bauer, vice president of business-to-business payments with American Express. “Companies want to move purchasing cards up the food chain to larger suppliers.”