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Small business purchasing card guide

GoCardless
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Last editedOct 20222 min read

Every business must manage its expenses, a complicated and time-consuming process without a purchasing card system in place. This is especially so when there is a high volume of transactions via company credit or debit cards, with each purchase needing to be approved and signed off before going ahead.

Approval and subsequent invoice reconciliation slow down the process, but the use of purchasing cards (p-cards) helps a business manage expenses more efficiently.

P-cards streamline the purchasing process and empower individuals and departments at the same time. Here is our guide to p-cards and how they can benefit small businesses.

What is a p-card?

A p-card differs significantly from a company credit card. While a company credit card is issued in the name of a senior manager or executive, a p-card can be issued in the name of a department head or even a lower-level employee.

A p-card can have a pre-set budget and limitations on what it can be used for, in terms of purchasing and procurement. These limitations mean the usual approval system for purchases is not necessary. The transactions of a p-card are monitored in real time, rather than at the end of a certain period as with credit cards and statements. 

The limitations of each p-card are customisable, so a particular department or employee can make certain purchases without approval. An employee may be issued a p-card allowing them to make purchases up to a certain amount without approval, but any purchase above that amount needs traditional approval.

P-cards can also be either physical or virtual, and are managed using a central merchant account with control functions that monitor the purchasing card's activity.

Business benefits of a p-card

One of the big benefits of a p-card over a credit card is that the employee with the p-card does not have access to the company's credit. The bank account funding the p-card must be adequately funded for the employee to use it.

A p-card provides great flexibility for a business, with the complex approval process for small transactions eliminated entirely.

The central account system logging every transaction also ensures that employees with a p-card do not misuse it for their own personal use. Providers of p-card services also offer platforms where invoices, receipts and other proofs of expenses are uploaded.

The real-time record of p-card transactions on the centralmerchant account also allows accounts managers and finance controllers to monitor purchasing activities and investigate any suspicious expense immediately.

In summary, the business benefits of a p-card include:

  • no access to company credit

  • flexibility for small transactions

  • real-time transaction records

  • complete transparency

What is a p-card used for?

A business p-card is used by an employee to purchase goods or services that the company or a department within the company requires. Usually the purchase is for smaller amounts, hence the pre-approval system, and consists of a number of different expenses.

Such business expenses include office equipment like stationery, copier ink and paper, or refreshments for the canteen. It also includes raw materials for lower-level manufacturing tasks, or for the maintenance and upkeep of equipment.

A p-card can also be issued to employees travelling for meetings with clients, with the employee using it for their train or plane tickets plus other expenses such as hotel rooms or breakfasts, lunches and dinners.

The employee in charge of paying the utility bills of the company's premises may also be issued with a p-card.

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