Survival without a credit or debit card is next to impossible in this digital world. Even then many companies rely on traditional invoice practices where the employees need to request the admin department with a purchase order and wait till they approve it to settle the payment of a supplier. Corporate purchasing cards, however, can be an efficient and safe solution for all the expense-related problems in the company. They are a feasible alternative to physical money, monetary cheques, and corporate cards.

It has been widely accepted as a purchase or procurement option. It is observed that more than 70% of US companies have already started using P-cards for the procurement of goods and services.

What is are corporate purchasing cards?

A P card also known as a purchase card, procurement card, or payment card is an alternative payment method for organizations to enable employees to make purchases on behalf of the company quickly and efficiently. Unlike traditional purchasing policy, it eliminates the need to issue a purchase order to the admin and unnecessary waiting time for approvals. This card allows the cardholder to make small purchases directly from the card without the need for approvals. It offers built-in approval and control process where the managers and financial controllers can monitor the spending limits of the individual cards.

P-cards are a blend of both debit and credit cards. They usually have a credit period of 30 days. The organization needs to settle the entire payment for all the purchases made during that billing cycle. Unlike credit cards, they can’t carry the balance to the next month. The organization and the financial controller can restrict the p-cards based on the per day dollar spending, the maximum amount of each transaction, or specific merchants.

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Why use a P card?

According to NAPCP reports, the processing costs are generally the same irrespective of the amount of the purchase order. This means, at times the processing cost can exceed the purchasing amount. This can cause bottlenecks in the flow of the organization and lead to higher administrative costs. In contrast, using a P card can save up to $63 per transaction. It gives greater spending flexibility with real-time monitoring of expenses.

How does a P card work?


  • The organization, also known as the end-consumer in this case, places a request for a P-card from an issuer.
  • The organization then distributes the P-cards to the employees(cardholders) who are responsible to make purchases according to the company’s policy. Crucially, in an organization, a P card is issued to a particular department and the manager holds the P-card.
  • The employee wanting to make a purchase submits the request for payment to the manager with details including the name of the vendor, purpose, and amount of the payment to be made.
  • The manager checks if the payment request follows the policy of the P-card and gives approval to the employee to access the money.
  • The employee then settles the payment of the merchant.
  • The finance team receives the invoice of the transaction in real-time, and they process it in their system for financial record purposes.
  • The organization receives the monthly record of the P-card transactions where they review it and make payments to the issuer.

P card benefits

1. Quicker and more cost-efficient process

The use of P-cards eliminates the waiting time for approvals from the admin and finance departments. The employees can directly approach their managers for smaller purchase requests and make the payments then and there. It also reduces the burden on the administration to monitor every single transaction in the company.

2. Control over company spending

Unlike corporate cards, it is easy to track each transaction. The financial controllers can limit the spending on each card, for each transaction, and for each department. The managers, crucially have records of each purchase request from their employees which can be used to track each transaction.

3. Easy to use

The employees and the managers find it convenient to use a P-card as compared to traditional payment procedures. The employees don’t have to pay out of their own money and wait for reimbursements. It also simplifies the recording for managers by automatic generation of reports.

4. Improved cash flow

The P-cards allow a credit period of at least a month. The company need not settle the whole amount to the merchant on the date of the transaction. They can allot a bank account or pay manually after a specified period.

Drawbacks of p cards

1. Training of employees is required

Understanding the concept of purchasing cards can be complicated as every issuer has different policies. The company needs to train the employees regarding the situations where they can avail of the benefits of the P-card.

2. Risk of misuse

Even after thorough training, some employees may misunderstand the purchase policy and use the card for personal expenses. This increases the risk of misuse of the procurement card and may lead to multiple training sessions, thus, increasing costs.


Corporate purchasing cards are here to replace purchase orders for smaller transactions and are certainly proving to be the best option for corporates. Despite its disadvantages, the companies are saving on their administrative costs. Businesses with high procurement transactions must analyze all the pros and cons of the p-cards to determine if they can improve the financial management of the company.

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Corporate Purchasing Cards FAQs

What is the difference between P-cards and corporate credit cards?

Corporate cards are physical cards issued to particular employees with a certain limit that is usually non-changeable. The transactions are sometimes non-traceable when multiple people use the same card. P-cards on the other hand, can be physical as well as virtual where the management can easily monitor the spending limits on the card. It is specially designed for businesses.

What are some other types of commercial cards?

In addition to P-cards, the companies have options for corporate cards, one card, prepaid cards, and fleet cards.

How to make payments for a higher amount than the allotted card limit?

For larger payments, the employees need to use the traditional purchase order payment. The P-cards are only used for smaller purchases.

Can P-cards save you from fraud?

Yes, the companies have the option to allow only particular merchants on their P-cards. This means that employees won’t be able to make payments to unauthorized suppliers and hence save the company from fraud.


Pratyush is a traveling enthusiast who always looks for innovations in business travel management. He has 5 years of experience writing content on corporate travel management and working closely with expert business travel facilitators.