Purchasing cards have demonstrated significant value, reducing the average procurement cycle time by 71 percent and contributing $40 billion in annual transaction cost savings.1 Although a well-established card program provides simplified processes, working capital gains and rebate incentives, it also requires ongoing review to promote desired results.
Here are the top tips according to our client relationship managers that deliver tangible savings, visibility and control from your purchasing card program.
Ensuring you have cards in the right hands tremendously impacts program expansion. Companies with broad card distribution issue 300 percent more cards leading to 600 percent increased spend and a 30 percent higher per transaction amount compared to organizations with lower card spend—without an increase in fraud or misuse.2
Apply these best practices to grow your cardholder base:
"One of my largest clients noticed that spend suddenly dropped down by $3 million. It turns out the facilities manager for three different locations had changed positions and the new person in the job had not been issued a card."
In addition to extending the reach of your program, consider introducing alternative card types designated for certain types of spend. Distribute department, supplier or ghost cards to specific groups or for certain projects or transactions. These card options can complement your overall card program and allow you to expand the benefits of your program and capture more spend.
Department cards—can be issued for meetings/events, special projects, or distinct budgets.
Supplier cards—for trusted vendors with a negotiated agreement.
Ghost cards—can be used for centralized purchasing (e.g. eProcurement, A/P paid invoices for specific suppliers). Can also be used as supplier or department cards.
Increasing card circulation is vital for growth, but it’s only a start. Find compatible suppliers that match your level of spend, and develop your strategy around them. As you refine it, it’s critical to understand your suppliers’ needs to encourage card acceptance and grow your program.
Use your card program’s reporting to target key suppliers and hidden savings:
"Look at your spend report to identify the top 10 suppliers not transacting and re-engage them using a recruitment campaign. You can also create an incentive for your A/P team to sign up these suppliers."
Use your card program’s versatile data resources to automate time-consuming manual tasks. Integrating them across your organization saves time, improves accuracy and supports program expansion.
Your platform’s administration tools can automate reconciliation and reporting processes. Use them to:
While automating reporting, use your payment platform for ongoing auditing strategies, which can improve accuracy and eliminate errors.
"I tell my clients, ‘You have to ask yourself, what is taking the majority of my time? Is there any way to automate that part of my job?’ For example, if it’s taking a really long time to issue cards, you can use your program administration platform to automate that function."
Organizations with thriving card programs have earnest buy-in from stakeholders, clear objectives to inspire adoption and ongoing company-wide communication. It’s critical to align your program performance expectations with broader organizational objectives for clear direction and development support.3 Consult with your internal and external stakeholders for strategic guidance:
"You really need to network with Procurement and A/P to drive meaningful program growth. Consider asking them to take on the growth piece while you focus on program administration. It’s amazing how much collaboration happens when one of your stakeholders owns growing the program."
Create a thorough onboarding process and continually educate employees on not only how to use their cards, but why it benefits them and your company.
Take a critical look at every facet of your card program for savings opportunities and hidden value. The question is not where these opportunities exist, but how to best tap into them. Regardless of your approach, it’s integral to have a well-defined communication strategy. With your card provider’s resources and these insights, create a compelling narrative of how your purchasing card program contributes to your organization’s goals, and source supporting data to build a strong business case. With support from internal and external stakeholders, making even small adjustments to your card program can create unrealized growth.
2017 North American Purchasing Card Benchmark Survey, RPMG Research Corporation