| Purchasing Card Basics |
Purchasing Card BasicsWhat are Purchasing Cards? Purchasing Cards (P-Cards), sometimes known as Procurement Cards, ProCards, Payment Cards or Purchase Cards, are an accounts payable and purchasing best practice that allows organizations to significantly streamline processes and associated cost. They are typically used for indirect spend categories such as office supplies, maintenance, repair and operational expense, temporary labor, subscriptions, and the like. P-Cards often take the form of plastic cards and are typically distributed (sometimes referred to as distributed cards) to an organization’s requisitioners. However, they are not limited to plastic cards and can also take the form of non-plastic account numbers, often referred to as Ghost Cards/Ghost Accounts which are cards/accounts that an end-user organization issues to a specific supplier or supplier type whereby the supplier processes the organization's purchases to the account(s); they function much like a P-Card although typically require a different reconciliation process.
Why Use P-Cards? The traditional procure-to-pay process is costly The transactional, or process cost, of using a traditional procure-to-pay process—often involving a requisition, purchase order, invoice and check payment—is the same regardless of the dollar amount of the purchase. In other words, the process cost of a $25 purchase is the same as a $10,000 purchase. Often, the process cost exceeds the value of the item being acquired (e.g., the cost to acquire a $25 wrench may exceed $100). Estimates of the process cost of the traditional process range from $50 to $200. A P-Card program simplifies the processMost organizations recognize that a large number of check payments are made for low-value items to a substantial number of suppliers—a costly, inefficient process. When the payment method is switched from the traditional process to
a P-Card process, efficiency savings range from 55% to 80% of the traditional process cost. Per an IOCP evaluation, typical savings resulting from P-Card usage are $63 per transaction. P-Cards also benefit suppliers
Suppliers that accept P-Cards for payment can reap considerable benefits to outweigh the costs related to card acceptance. Benefits include:
How P-Cards Work
Program Implementation Overview The success of a Purchasing Card (P-Card) program begins with thorough planning long before an organization conducts a request for proposal (RFP) process to select a card issuer. Getting StartedA P-Card initiative typically begins with senior management, whose support is critical from the start. A team approach to researching the P-Card opportunity, followed by the creation of a business case that offers an appropriate level of detail and data, should lead management to a decision concerning a P-Card program. The team should include representatives from key stakeholder departments, such as purchasing, accounts payable (A/P), audit, tax, treasury, etc. The research phase addresses questions such as:
To reap the greatest benefits from a P-Card program, an organization must reengineer its procure-to-pay processes rather than simply add P-Card processing to existing procedures.
The Business Case Based on the team’s research, the business case should illustrate the anticipated savings and benefits; outline potential challenges, risks and mitigating controls; identify the required resources; propose a recommendation; and so on.
Developing the P-Card Model At a high level, this involves tasks such as: creating program goals and metrics; identifying targeted transactions; defining program roles and responsibilities; documenting program requirements, especially those related to information
technology (IT) and interfaces to the general ledger; and designing the control environment.
Piloting the Program A pilot program that effectively tests the P-Card model will provide the foundation from which to build a long-term program, revealing gaps and issues that must be addressed prior to full program rollout. In addition to the recommendations described above, it is important to have a strong, internal communications strategy plus a dedicated resource to manage and support the program. Become a Member
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4/27/2026 » 4/29/2026
2026 Annual Commercial Card and Payment Conference-Scottsdale
