Purchasing Cards: What They Do, Best Options
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What are p-cards?
P-cards vs. corporate cards
- Both types of cards are issued to companies, not individuals.
- Neither generally requires a personal guarantee.
- Companies have to pay their balance in full by the due date.
- Each comes with software tools that can help you monitor and control employee spending.
🙋 Can I use a business credit card instead as a p-card?
- They’re issued to individuals rather than businesses.
- The card issuer will check your personal credit and you’ll need to provide a personal guarantee.
- You can carry a balance (though you'll have to pay interest on it).
- They have less strict spend controls.
Why businesses get p-cards
- A company wants to order goods from a supplier.
- An employee creates a purchase order with what they want and how much they’ve agreed to pay for it.
- The company sends that PO to the supplier.
- The supplier fulfills the order, providing a delivery receipt and invoice.
- The company pays the invoice by the due date.
- A company wants to order goods from a supplier.
- An employee makes and pays for the purchase with the p-card.
- The company pays the p-card issuer, instead of every supplier individually.
How p-cards work
- A business owner or finance leader creates physical and virtual p-cards.
- They set up spending controls for each card. These may limit purchases by day, month, transaction amount, merchant category code, etc.
- An individual cardholder uses their card to buy supplies for the company.
- The supplier requests authorization for the transaction.
- If the purchase is within the spend controls, it’s automatically approved. If not, it might be declined.
- If approved, the supplier receives payment for the purchase.
- The company receives their goods.
- The card issuer sends the company a statement with lists of the transactions made on each card.
- The company pays the statement in full by its due date.
Does your company need p-cards?
- Multiple people frequently spend money on behalf of the company.
- That spending focuses on procurement. If employees commonly spend money on things like travel or restaurants, other cards might be a better fit.
- Procurement purchases are small and frequent.
Pros
Reduced reliance on purchase orders and invoices.
More controls than other types of business credit cards.
Faster payments to suppliers.
Opportunity to earn rebates.
Cons
P-cards may duplicate what corporate cards can already do, creating unnecessary complications.
Businesses with low revenue may not qualify.
Where to get a p-card
Best corporate cards for spend management
- Brex: Best for booking travel, thanks to increased rewards rates when you use Brex’s built-in portal.
- Rho: Best for flexible qualification requirements. Companies don’t need a specific bank balance or revenue level to qualify for Rho. The company says it evaluates each customer individually.
- Ramp: Best expense management suite. Ramp is popular with small businesses and nonprofits, not just funded startups. That suggests its tools are versatile enough to help a variety of businesses track and control their expenses.
- BILL Divvy: Best for companies that don’t qualify for the other options on this list. Like all these companies, BILL Divvy uses revenue, business history, credit score and cash on hand to determine eligibility. But you may be able to qualify for this card with as little as $20,000 in the bank. Its rewards structure is annoyingly complicated, though.