Purchasing cards have been around in one form or another since the 1980s, but even today these popular tools to help treasurers reduce procurement costs are introducing new functionality. That’s why AFP has published its new Payments Decision Guide to Implementing a P-Card Program, underwritten by Fifth Third Bank.
This is a guide for seasoned P-card users and treasury professionals wondering how to establish their programs, said Tom Hunt, CTP, AFP’s Director of Treasury Services. “If you’re a seasoned P-card user its definitely has good advice, such as how to revisit your P-card vendor’s contract during renewal and make sure you’re focusing on some of the important aspects,” he said. “If you’re new to P-cards, it’s a good guide, also in the basics—the factors to consider when making the case for using them, identifying the major players, and more.”
The guide examines critical P-card components, including:
- Making a business case
- Best practices in managing P-card programs
- Assembling the proper cross-functional implementation team.
“The guide will offer an in-depth exploration of how P-cards can be an effective part of an overall disbursements strategy, deliver improved efficiencies, decrease expenses and enhance visibility,” said Jeff Ficke, SVP Treasury Management with Fifth Third Bank.
For experienced P-card users, Hunt said the guide covers new trends, including buyer-initiated payments. A newer use of P-cards is integrating them into the accounts payable (A/P) process, where the buyer initiates the payment after approval using a plastic or virtual card, by sending the data to the merchant’s acquirer. These payments are also known as “push” payments, where the buyer pushes the payment to the supplier. Traditional card payments are initiated by the seller, or supplier, at the POS or when payment is made online. These payments are also considered “pull” payments because the supplier pulls the funds from the buyer.
In addition, the P-card guide breaks down which vendors are the best candidates for usage. “You can’t force P-cards on all vendors,” Hunt said. “The guide also helps treasury professionals understand rebates as part of the P-card program, and that is an important driver for many.”
Download the new guide here.