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 managing one that has been in place for years, procurement departments need to continually consider the 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 quickly
- Procurement cards can reduce the number of supplier invoices
- With proper controls, procurement cards can restrict maverick buying as well as the buying of 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, which will take time and effort to resolve
- The work involved in reconciling a procurement card statement with a purchase log and distributing charges to the proper accounts can divert resources from other value-added work
- Procurement cards generally don’t provide the same level of budget visibility as does an ERP system
- Multiple ways of placing orders (e.g., Pcard, eProcurement, non-catolog requisitions) requires a steeper learning curve for requisitioners who need to know the procedure for each purchase type
- Procurement card spend data may not be integrated with other purchase data, resulting in incomplete information when conducting spend analysis
It's important to weigh the pros and cons of a procurement cards system, and put in place business processes so that that the benefits outweigh the drawbacks. Purchasing cards have a valid place in the modern procurement departments' arsenal, as long as they are managed advantageously.
Adapted from: Procurement Card Pros & Cons. http://bit.ly/9ok8yv
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