Do You Have P-Cards and Credit Cards Under Control?

Purchasing cards (P-Cards) and corporate credit cards allow your staff to make low-cost purchases without having to go through a lengthy approval process. For example, maintenance workers authorized to charge emergency supplies at a local hardware store can do so without holding up a job to purchase supplies through the traditional purchasing cycle.

Whether your organization opts for P-Cards or corporate cards, they offer many benefits in addition to convenience. They can reduce transaction costs and even earn money through rebates and incentives.

For oversight purposes, P-Cards have certain advantages over corporate credit cards because they are usually designed so that it is easier to control and monitor expenditures. However, either type of card program can be restricted.  The key is that all card programs require careful planning and regular oversight to be successful.

If your organization has not yet adopted a program for the use of P-Cards or corporate cards, with the distributed and remote working environment, now may be a good time to do so. Whether you have a program in place or are considering such a system for the first time, be sure to follow these best practices.

Develop written policies and procedures. Be sure to incorporate P-Card or credit card requirements and practices into your procurement policies and procedures. They should be consistent with your overall goals and with other procurement practices.

Spell out specific details, including the purpose of the program, cardholder responsibilities, authorized uses and limits on spending. Examples of authorized uses may be travel and fuel, emergency purchases, low-dollar purchases or one-time expenses. Unauthorized uses might be clothing, alcohol or large commodity purchases.

Grant authority to the right people. Limiting the distribution of cards to those individuals who need them to facilitate their job function is key to limiting the risk of the program. If your program allows it, an easy way to allow employees who do not need to make regular purchases is to provide one-time use ghost or virtual cards for special situations.

It is important to periodically monitor the list of authorized users to make sure it is up to date and review those who have received cards. With staff changes and reorganizations, you may need to transfer card authority or block former staff from using cards. 

Establish spending controls. Another way to limit your risk exposure is restricting the use of cards on single transactions and for monthly total expenditures. To prevent unauthorized purchases, you should consider implementing limits on the type of merchants and vendors where the cards may be used.  

Provide training. Require training for all employees who will receive individual cards so that they are knowledgeable about the policies and procedures for using them. Require cardholders to sign acknowledgements that they understand the appropriate use of the cards.

Develop detailed procedures for reconciliation and oversight. Integrate card reconciliation into your financial system in a way that is compatible with your billing system. Make sure any training emphasizes the importance of including receipts for every transaction. Review card use at the purchasing department level to make sure cards aren’t being used to circumvent established district procurement policies.

Do not forget to provide the reviewers of the card activity the ability to escalate issues through your organization’s management. Enforcement of the policies is just as important as any other function in the program.

With the right controls in place, you should be able to reap the benefits while monitoring the risks that are inherent in any P-Card or credit card program. Especially now, with remote workforces and new requirements for flexibility, these cards make sense. Just make sure you are running the program, and the program is not running you.

For more information on how P-Cards work, contact us. We're here to help.

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Dan Graves

Dan Graves

Partner, Risk Advisory Services and Higher Education Industry Co-Leader

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Dan Graves, CPA, has more than 15 years of experience in public accounting, including 10 years of internal control…

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