Upfront: Squeezing More Value From P-Cards

Procurement directors are finding increasingly sophisticated ways to improve their p-card program's performance.

Purchasing cards have been a mainstay of corporate procurement functions for more than a decade, but p-card programs have largely evolved independently of best practices and have rarely been deployed as a significant component of a comprehensive spend-management approach. These conclusions are the result of the Purchasing Card Benchmark Report: Best Tactics To Increase Program Growth, a survey of over 175 companies by the Aberdeen Group Inc. and the National Association of Purchasing Card Professionals. However, procurement directors are finding increasingly sophisticated ways to improve their p-card program's performance.

"A fresh approach can boost the value and significantly improve growth of p-card programs," says Jeff Pikulik, director, payments research, with the Aberdeen Group in Boston. "For too many users, setting and resetting program parameters and policy guidelines feels like progress, but greater business value and cost reduction possibilities remain locked in by paradigms of the original program scope." Actions that can improve p-card performance include enhancing integration with G/L and enterprise resource planning (ERP) systems and increasing the use of "ghost" p-card accounts. These are cardless accounts assigned to the vendor, not the buyer; as orders come in, the vendor charges them to the ghost account and gets paid within days.

P-card programs have good, consistent performance records, the study notes; 70 percent of these initiatives deliver results that meet or exceed the goals of the original business case.