Did you know that seven of ten U.S. companies use corporate purchasing cards (p-cards) to pay for goods and services? There’s a good reason for that, as p-cards are an ideal alternative to the slow procurement process associated with traditional payments. Read on to find out more about p-cards and why your business should start using them as well!

What Is a P-Card?

A p-card is a business charge card that an employee can use to purchase things on behalf of their employer. P-cards are most often used for transactions that are too small to go through the traditional procurement process. They’re perfect for this purpose because they allow employees to completely bypass the approval process, which can take a while.

A p-card is similar to a corporate credit card, but there are some key differences. The big one is that p-card balances need to be paid off in full every billing cycle, whereas a corporate card allows you to carry your balance into further cycles. That’s why corporate cards are commonly used for larger purchases, which are more likely to be paid off over time.

How Do P-Cards Work?

Though all companies can issue p-cards to individual employees, this practice hasn’t been embraced yet. Instead, most companies choose to share p-cards between employees, only give them to executives, or even issue a single p-card per department.

P-cards can come with a variety of spend control features, such as per-card spending limit. Balance repayment functions like a hybrid of debit and credit card repayment. The cardholder is billed for all purchases at the end of the billing cycle, usually at the end of the month.

Benefits of Using P-Cards

P-cards offer many clear benefits to both employers and employees. Here are three reasons why they would be a valuable addition to your business as well.

Lower Transaction Costs

The average fee of a transaction processed via the traditional procure-to-pay method is about $50-$200. With multiple transactions processed each month, these costs add up quickly. With smaller purchases, such as a new computer keyboard, the transaction fee often costs more than the item itself. By using a p-card, you can eliminate most of these fees.

Improved Efficiency

When you’re using a p-card to make a purchase, you don’t need to complete forms and wait for the transaction to be approved. In addition to saving the manual time employees spend on completing these tasks, you reduce the time between needing an item and receiving it.

Simple Spending Management

With a p-card, an employer can easily control how much a particular department or employee can spend. This is the perfect way to ensure that a company’s spending stays within budget. A p-card also allows employers to track and manage purchases. If needed, an employer could use a specific merchant code to restrict any unnecessary purchases.