Glossary
Buying Cards (P-Cards)
Tags: Glossary
Basically, these are a form of credit card used to make maintenance, repair, and operating (MRO) inventory-type purchases versus using a purchase order (PO) that can cost more to process for small purchases. Companies using these cards typically work with card issuers to develop guidelines for use—sometimes by value limits and type of expense—which provide control over authorized purchases at the point of sale.
What is Buying Cards (P-Cards)?
Buying Cards (P-Cards)
Buying Cards, also known as P-Cards, are a type of credit card specifically designed for making maintenance, repair, and operating (MRO) inventory-type purchases. They offer a convenient alternative to using traditional purchase orders (PO) for small purchases, as the latter can often incur higher processing costs.
Companies that utilize P-Cards collaborate with card issuers to establish guidelines for their use. These guidelines may include value limits and restrictions on the types of expenses that can be charged to the card. By implementing such controls, companies can ensure authorized purchases are made at the point of sale, providing a level of oversight and accountability.
The primary advantage of using P-Cards is their ability to streamline the procurement process for small purchases. Instead of going through the time-consuming process of creating and processing purchase orders, employees can simply use the P-Card to make necessary purchases directly. This not only saves time but also reduces administrative costs associated with managing purchase orders.
Furthermore, P-Cards offer flexibility and convenience to employees. They eliminate the need to carry cash or rely on personal credit cards for work-related expenses. With P-Cards, employees can easily make authorized purchases for MRO inventory items, such as office supplies, equipment, or maintenance materials, without the hassle of reimbursement processes.
However, it is crucial for companies to establish clear guidelines and controls when implementing P-Cards. By setting value limits and defining acceptable expense categories, companies can prevent misuse or unauthorized purchases. Regular monitoring and auditing of P-Card transactions are also essential to ensure compliance and identify any potential issues.
In summary, Buying Cards or P-Cards are a valuable tool for companies to simplify and expedite the procurement process for small MRO inventory-type purchases. By working closely with card issuers and implementing appropriate guidelines, companies can effectively control and monitor authorized purchases, reducing administrative costs and providing convenience to employees.