PurchTips - Edition # 124

 

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Procurement Card Pros & Cons

By Charles Dominick, SPSM, SPSM2, SPSM3

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

Do You Want a More Rewarding Procurement Career?

Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.

Earning your SPSM® Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!

Download

Need Better Performance From Your Procurement Team?

Are you a procurement leader whose team isn't achieving the results you know are possible? Maybe it's not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.

You need a performance improvement plan that's easy to implement and quick to produce results. The NLPA can help.

Download our whitepaper "The Procurement Leader's Guide To A More Successful Team." You'll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.

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Are You Getting The Most Out of Your NLPA Membership?

Members of the NLPA get more than just articles like this by email. As a member, you also get access to:

  • The Procurement Training & Certification Starter Kit
  • The latest Purchasing & Supply Management Salaries Report
  • Leading-Edge Supply Management™ magazine
  • Members-only webinars 10x per year
  • And more!

If you haven't been taking advantage of these benefits, why not log in and start now?

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