I have a member of the Treasury attempting to push through a P-card system. Conceptually, it makes all the sense in the world, but this person is only spouting the benefits in concert with the various sales people coming by. I want to know the pitfalls. What does not work well with P-cards? I also have an eProcurement system up and running and am wondering how or if these two systems can run in concert with one another. Any thoughts at all would be greatly appreciated.
P cards can lower your transaction cost, reduce the number of transactions coming to your shop. I would suggest that you have a daily transaction limit, monthly limit and a single transaction limit. You don't want the P card to become the primary method of procuring costly items because there is no competition and you might end increasing cost. This is off set by the lower transaction cost.
P - Cards
Biggest pitfall in the P-cards is control or 3 way match. We use P-Cards for non-essential procurement and with small value. Finance has issued P-Cards to Users and well as Procurement staff but users when using P-cards don't need to raise a requisition. P-Card statement is approved by the Department Head. Whereas, Procurement using P-cards requires that User raises a requisition and seek approval. Procurement raises a dumpy PO issued to self (company) and GR is made against that PO and material issued out. This way, we are able to maintain control on the spend.
make sure P-Cards are kept within the upper echelons of Finance department, and mid-and-higher ranges of Purchasing personnel.
It's the same song-and-dance I've heard a hundred times;
"It streamlines small transactions."
"It lowers cost."
"It empowers the employee!"
There are small problems with all of this;
1: It actually takes less time for an employee, at his desk, to enter a purchase REQUISITION than it takes for them to drive into town, and buy that XYZ. But what about the online P-Card purchase? If one uses their p-card, they're most likely going to pay whatever the market value of that item is. A requisition for the same item may go through a leverage spend account (national account for Grainger, for example), reducing the price to BELOW the market average WHILE ALSO reducing on freight charges, increasing rebates, etc.
2: A p-card is just a form of payment. Sure, the P-card purchases start small and risk-free, but eventually they transform into large and risk-filled. I don't think i'd have a problem if someone went out and bought a battery with their P-Card. I do, however, have a problem with someone buying a piece of specialized safety equipment with their P-Card. What happens if the safety equipment fails? This is why requisitions-POs are so important; your comapny's terms & conditions frequently go out with the PO. When your shop mechanic uses his P-card, he's signing whatever terms that is put in front of him; the only thing he sees is the product, not the risk.
3: We all love an empowered employee. However, there are Delegation of Authority limits for a myriad of reasons. Financial, SOX, best-practice, cost-control, you name it. The moment that shop mechanic etc gets that P-Card, you've given up the DoA on whatever spend he wants.
Just my .02
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