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Corporate Purchasing Card

I am in the process of looking to implement a Corporate Purchase Card program in our company.  I have recently found out that a lot our our online services are paid via the employee who then get reimbursed by the company.  Some of these services are critical so that when an employee leave also does the service (get shut off).  Therefore, I am looking for ideas, programs and policies other have used to implement a Corporate Purchase Card program so that we are not reliant on employees paying for critical services.

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Like all purchase orders/expense reports, implement safeguards to waste, abuse and fraud.

Make this policy a double-bind, on the purchase and then on the payment using different people to review, sign-off and actually cut the payment.

John Harmon
Title: Owner
Company: John Harmon CPA
(Owner, John Harmon CPA) |

Edward,
I understand that many of these purchases will be for software subscriptions and other key recurring purchases. We recommend a control system for clients in small to medium businesses for one company paid card as follows:

- One individual is responsible for the purchase card and acts as the “Buyer” for the company for credit card purchases.
- That Buyer orders as needed on the card, accumulating receipts and filing in a separate file. We recommend a vinyl pouch if that person doesn’t have an organized filing system.
- When the monthly credit card bill arrives, the Buyer is responsible to attach all receipts to the bill and submit to accounting. Wherever there is a supporting receipt, the Buyer should check that item and note the department charged on the credit card bill. The Buyer should mark the recurring items, which do not have monthly receipts, by department. All items should be marked in some way so the analysis is complete.
- Depending on the dollar amount of purchases, you may want department head approvals for the total charges to each.
- Every few months, the Buyer should review these recurring items with each department head to make sure the purchases are still needed (pay special attention to items from departments with high turnover).
- Buyer retains a copy of the statement and receipts and sends the original as a voucher packet to AP for processing as a normal bill.

Additional:
All AP controls will stay in place as far as verification, approvals, etc.
Consider setting a lower limit on the card’s balance, so the risk of loss is reduced.
Set policies on what charges are appropriate for credit card payment.

I hope this helps.

Robert Honeyman
Title: CFO
Company: Advanced Predictive Analytics
(CFO, Advanced Predictive Analytics) |

If there are mission critical services that transcend any particular employee, those services should be paid at the corporate level, not at the individual level. I agree completely.

The biggest problem with a corporate purchase card is when it moves out of the control of the finance group. In my mind, it's always better for employees to use their own credit cards for spending they control, with reimbursements coming through expense reporting systems. However, watch out for individuals requesting personal issuance of corporate cards, where the company pays the cards directly. That will create a system begging for headaches.

At a previous company, I inherited such a mess. One of the co-founders was constitutionally incapable of providing supporting documents for all of his transactions. Further, he had a nasty habit of mixing personal goods with corporate goods amongst his purchases. End of the month was always a battle.

We finally weaned him from the card, but it was not easy and it was not pleasant.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Know that issue all too well.... Can we say nightmare :)

Ernie Humphrey CTP
Title: CEO & COO
Company: Treasury Careers
LinkedIn Profile
(CEO & COO, Treasury Careers) |

You can set up a corporate purchase card program so that the right people have the right authority to purchase the right products and services. Permissions are set up my MCC codes, purchase cards also allow great efficiencies in getting journal entries posted, offer clear audit trails for transactions, and can offer rebates and better management of working capital. It has been a few years since I was directly involved in managing a purchase card program, but I would advise that you look into it further. This is a core treasury management issue, and the Association for Financial Professionals would be a great place to find resources. You can also post questions in Treasury Management LinkedIn groups to connect with fellow Finance Leaders who run purchase card programs.

Pamela Wise
Title: Director/General Accounting
Company: The E.W. Scripps Company
(Director/General Accounting, The E.W. Scripps Company) |

We use USBANK Pcard program. They have various options such as 1) PCard only without travel and 2) ghost cards that can be used for specific purchases (this is good if someone leaves as the card is not assigned to a specific person, but AP or Purchasing usually handles these cards). USBANK offers a rebate program based on the amount spent on all Pcards for your company. They may have other options that I am not aware of as well.

Bruce Schumacher
Title: Director, Strategic Initiatives
Company: Mister Car Wash
(Director, Strategic Initiatives, Mister Car Wash) |

We have had a p-card program in place for a few years with no issues. The banks all have systems designed with controls and a review process to ensure compliance with company policies. Like Ernie stated, it actually increases controls and streamlines the entire accounting process and eliminates procedures in AP. With enough spend, you also earn a rebate from the bank. All in all, I am a big proponent of the system. I recommend contacting two to three banks and find the partner that will work best for you and your needs.

Alan Goldberg
Title: Principal
Company: Triplet Advisory Services
(Principal, Triplet Advisory Services) |

Suggest that this may be done through the Purchasing organization. Buyers can be issued a card for MRO and indirect purchases, or can set-up as a ghost account for recurring spend by Purchasing or P Card administrator, depending on who administers program.

In any event, all monthly purchases per user statement and receipts should always be reviewed and approved by separate Manager.

Mark Matheny
Title: VP - FInancial Planning and Analysis
Company: Novolex (formerly Hilex Poly)
(VP - FInancial Planning and Analysis, Novolex (formerly Hilex Poly)) |

I also have had experience with various P-Card programs. I highly recommend that there by a sign off before payment by the individual responsible for the card, their superior, and a review by someone in the controllers organization. Most of what I have experienced has been positive, but there are some risks of abuse. Lack of discipline on the three sign offs has usually been the reason.

Robert Neyens
Title: Finance Manager
Company: TITAN Containers A/S
LinkedIn Profile
(Finance Manager, TITAN Containers A/S) |

Hi,
we also introduced a company credit card, linked to a person in finance.
Instruction had gone out that any INTERNET purchase this card had to be used and NOT someone's personal card or another corporate card usually linked to a sales person traveling a lot.
The person ordering something through Internet had to come to the finance dept with a per-approval in order to do the purchase. Finance would then have the necessary approval/proof/documents needed.
Make sure you have a back-up system in place.
If any 'strange' transactions went through the card it would be captured immediately and we could simply replace the card.

Reason for introducing this was, often the sales person card showed smaller amounts being debited on a monthly basis and they didn't remember or know what it was for.
Although we got the money back for the Credit card company the next month these amounts would re-appear, in the end we had to replace the card, causing a lot of hassle with the sales person.

Since then we have changed our system, giving the sales person a permanent advance on his expenses, forcing him to use a personal card with the promise to pay back his expenses maximum 1 week after he had presented his expenses. Advantage to this system is that it is in their best interest to present their expenses on a timely basis, it's controllable. Indeed in the past it took some sales persons months to present their expenses.....

Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

I support the reimbursement of personal cards as well as a few others before me. For the recurring services that disappear when an employee does, that can be handled with a review of their expense reports over the past year and a review of your pre-paids for renewal dates and payees (I am guessing many of these services are semi or annual renewals.) I have stepped in on many occasions to assist with transitioning a service from a private credit card to a company account. I have never had any push back when I explain why we are moving the renewal fees (even if they are losing points for gifts on their personal card).

(I am, today, working with a sales person who is too busy traveling to get her receipts in from the past three months. She has lost/misplaced receipts for at least one flight for over $800 and several meal invoices, plus... People are much more motivated to keep receipts and timely turn in expense reports when they need to be reimbursed. I get all sorts of excuses for missing receipts when it is a company card being used. At a prior company, one of the exec's let others use his card and never required these people to give him receipts. Each month there was a separate section of the board report that discussed credit card purchases that could not be identified and had to be coded by 'best guess.' The good news at my current company is that the owner has now told me he supports the one month policy and then the corporate card gets turned off. I expect this will be the last time I am helping this salesperson get caught up.)

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