Introduction
As enterprises search for innovative ways to reduce overheads and streamline during an economic recession, Management looks to its procurement leaders to find innovative ways to reduce costs. Overlooked by procurement at times, Purchasing Cards (P-Cards) can be an expert's tool to streamline purchasing processes for low-cost items.
The most common purchase methods include purchase orders (POs), checks, recurring payments and petty cash to pay suppliers. These methods offer legal terms and conditions to cover any liability and may provide robust records for payment, delivery and execution of services. However, these methods are also expensive and may not be appropriate for certain purchases.
P-Cards are not a new concept, but can reduce costs for enterprises looking to streamline low-dollar and/or high volume transactions. Based on a 2010 study1, the average, monthly P-Card spend per organization surveyed was $1.8 million, with an average transaction value of $315. Between the years of 2007 and 2009, North America's P-Card spend grew from $137 billion to $161 billion. Annual purchasing card spending is expected to increase to $213 billion by 2012, and $255 billion by 2014, considering a growth rate of 12 per cent for the next five years after 2010.