Procurement Card Pros & Cons

PurchTips - Edition # 124 April 17, 2007

By Charles Dominick, SPSM

What Should You Know About Procurement Cards?

More than a decade after becoming mainstream, procurement cards remain a key component of procurement departments’ repertoires. Whether implementing a new procurement card program or administering one that has been in place for years, procurement departments need to continually consider these pros and cons of procurement cards...

Advantages/Pros:

• Procurement cards reduce the cycle time of purchasing transactions
• Procurement cards can improve supplier relations as suppliers receive payment within 2-5 days
• Procurement cards can reduce the number of supplier invoices, which could lead to a reduction in expenses on accounts payable personnel
• With proper controls, procurement cards can restrict maverick buying as well as buying non-authorized categories of goods and services
• Some procurement card programs can provide clearer reports of how money is being spent
• Procurement card programs foster a feeling of empowerment among employees

Disadvantages/Cons:

• Procurement card use exposes the organization to the potential for undetected credit card fraud and identity theft, which can result in lost money
• The work involved in reconciling a procurement card statement with a purchase log and distributing charges to the proper accounts can divert resources from value-added work
• Procurement cards generally don’t provide the same level of budget visibility as an ERP system does
• Multiple ways of placing orders (e.g., Pcard, eProcurement, ERP, requisitions, etc.) can confuse requisitioners who may not know the proper method for each type of purchase
• Procurement card spend data may not be integrated with other purchase data, resulting in incomplete information when conducting spend analysis

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