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Guide

How Your Company Could Benefit By Using Purchasing Cards

Learn how, by using a purchasing card you can reduce your payment processing costs & also realize a wide range of other benefits.

 
The traditional procure-to-pay process most companies follow to pay suppliers for goods and services can be unwieldy and expensive. The process typically involves a requisition, purchase order, invoice and, finally, a check payment. 
 
According to the NAPCP, the professional association for the commercial card and payment industry, the cost of this traditional process ranges from $50 to $200 for each invoice paid. When paying for low-value items, this cost can actually be higher than the value of the item being bought. 
 
However, there is a better way to pay for the things you and your employees buy to keep your business running smoothly. By using a purchasing card (or PCard) to pay for these items, you can significantly reduce your payment processing costs and also realize a wide range of other benefits. 
 

 

What Is a PCard? 

A PCard is a type of commercial card used by businesses and their employees to pay for many different kinds of expenses. These range from office supplies and travel and entertainment expenses to raw materials and inventory used in the manufacture of products or delivery of services. 
 
“Purchasing cards aren’t just for travel and entertainment anymore,” says Cadence Bank Treasury Management Sales Executive Katrina King. “More companies today are making large purchases using a PCard program in order to realize payment and accounting efficiencies and receive cash rebates that are part of many such programs.” 
 
King says many companies are now remitting payment for most of their accounts payable via a purchasing card program. “This includes the office mortgage or rent, utilities, and mobile phone and Internet bills — basically, any expenses that you would normally pay by check or an automatic bank draft.” 
 

 

The Benefits of PCards 

Paying for these and other expenses using a purchasing card can result in many benefits for your company, including: 
 
  • Cash rebates on business purchases — Some, but not all, PCard programs offer cash rebates to the business, instead of points or airline miles. This cash can help offset the cost of items purchased and boost the bottom line. Rebate schedules generally are tied to frequency of payment and amounts of annual spend limits. 
  • Better cash flow management — By optimizing your working capital, you will be able to extend your Days Payable Outstanding (DPO) and improve your cash flow. 
  • Lower payment processing costs — A NAPCP evaluation determined that PCard programs save companies an average of $63 in payment processing costs per transaction. 
  • More efficient transaction management — A PCard program will eliminate purchase orders, invoices and checks. It also will allow you to review, reconcile, modify and approve transactions at any time, day or night. The result is more streamlined transaction management. 
  • Improved management reporting — You can analyze spending data by expense type, Merchant Category Code, geography and more. PCards offer multi-level electronic approval authorizations which give companies flexibility in their internal control and approval processes. 
  • Enhanced security and expense control — Payment and authority streams are locked down, which can help mitigate internal accounting fraud. And Standard Industrial Classification (SIC) coding provides more control over employee T&E spending and reimbursement by setting limits and guidelines at multiple levels. Most card programs even offer insurance for protection against employee fraud. 
  • Accounting platform integration — Automated data capture delivers enriched information that can be used for cost allocation and integration into your accounting platform, thus enabling you to avoid duplicate keying of invoice detail. Level 1, Level 2 or Level 3 data (also known as Level I, Level II or Level III) is available depending on the merchant participation. Level 3 detail includes invoice level line item detail similar to information on an itemized invoice electronically. This automation alone improves accounts payable processing efficiencies dramatically. 

 

A Flexible and Powerful P-Card Program 

Cadence Bank offers a purchasing card program that combines the flexibility and power of a T&E card with the function and control of a purchasing card. You can choose to receive cash rebates, instead of points or airline miles, which will increase your profitability. 
 
A unique purchasing card program can be designed to fit your company’s specific procurement and spending needs. Contact your Cadence Bank representative to learn more about our purchasing card program and how it can benefit your company.
 
This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.


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