The resulting Aberdeen white paper on the two-month P-Card study focuses on business-to-business credit card solutions where the company maintains liability. It highlights several actions a company can implement to grow its program and maximize savings.

Highlights

Just over a decade old, expenditures managed via P-card programs have grown over the past five years at a compounded rate of approximately 21%.

A P-Card program streamlines the low value transactions – typically paid via petty cash and check request processes -- with a credit card-based alternative. For example, NAPCP reports that a purchase order can range between $50 and $250. With a P-Card program savings can be between 50% and 90% of the transactional cost of a purchase order.

When implementing a P-Card program, companies carefully outline the parameters of the program. This includes the following: (1) Single transaction minimum and maximum limits. 2) Ghost card limits  3) Number of active account numbers  4) Number of cards with no activity  5) Annual transactions via P-Card  6) Annual expenditure via P-Card  7) Number of suppliers paid via P-Card   8) Number of suppliers refusing P-Card.

According to the report, the average number of annual P-Card transactions is 77,000, and the average dollar amount is $12,025.

Many program directors feel their programs have reached a plateau, according to the study, and most are interested in driving more value from the P-Card program through expansion into new business areas, and cost reductions to reduce the non-value added administrative aspects in the business and program offices.

In addition, 19 percent of respondents reported that the pressures for auditability, mandated by Sarbanes-Oxley, reinforces the usage of P-Card programs. Aberdeen

Steps for growth

The main goal of a P-Card program is process and transaction cost savings, cited as “very important” by 82% of respondents. Employee productivity and convenience, and reporting data, came close behind.

Aberdeen’s report recommends steps to increase the success of P-Card programs. “Top actions implemented to increase the success of purchasing card programs are aimed at bringing the card program more in direct line with the traditional procurement and financial reporting activities of the business. By improving purchasing card data integration with GL, ERP and e-procurement systems, and targeting ‘ghost card’ accounts to seek out specific suppliers, categories, and high ticket items, P-Cards are positioned as a permanent payment vehicle.”

Specifically, Aberdeen suggests that a P-Card program:

1. Use purchasing cards to reduce process and transaction costs via an electronic payments approach. Use P-Cards to complement other methods such as XML-EDI and electronic invoicing.
   
   
2. Structurally address a broader class of purchased requirements and transactions. Use P-Cards to address master agreement and contract pricing requirements. Create strategic sourcing strategies and selection activities. Examine specific categories, supplier relationships, or business regions to determine which purchase orders lend themselves to payment via purchasing cards. And extend the use of the card to service categories such as advertising, marketing, print, maintenance, temporary services, and consulting.
   
   
3. Use technology to support the program. Evaluate and proactively collect electronic payment remittance information on suppliers providing non-traditional, large project, or recurring service requirements.

For more information: http://www.aberdeen.com/summary/report/benchmark/RA_PCard_JP.asp