P-card policies: 5 common mistakes and how to avoid them

Purchasing cards, or P-cards, are gaining popularity with businesses looking to streamline low-value, high-volume transactions – and with good reason.

P-cards offer a faster, more flexible alternative to traditional procurement processes, making it easier for employees to make essential purchases without the headache of unnecessary admin.

But whilst they’re great for efficiency, P-cards can come with their own challenges – especially if they’re not properly managed. Without a clear, well-defined company purchasing card policy, businesses can become vulnerable to everything from compliance issues to overspending and fraud.

The good news? Most of these risks are avoidable with the right policy in place.

In this article, we’ll explore five common mistakes companies make with their purchasing card policies – and how you can avoid them to keep your business spending under control.

Key takeaways:

• A clear, well-maintained purchasing card policy is essential for keeping business spend under control.
• Set consistent, role-based spending limits to avoid budget overruns and maverick spend.
• Define simple, transparent approval workflows so everyone knows who signs off on what.
• Enforce timely, accurate transaction reconciliation to maintain financial visibility and compliance.
• Be specific about what purchases are permitted – and what’s strictly off-limits.
• Regularly review and update your policy to keep it aligned with business growth and evolving spend patterns.

1. Unclear or inconsistent spending limits

One of the fastest ways to lose control of your purchasing card programme is by failing to set clear, consistent spending limits. Too often, businesses hand out cards without properly defining how much can be spent, by whom and on what – and that’s where the problems start.

When limits vary wildly between teams or individuals (or worse – don’t exist at all), it’s almost impossible to manage budgets or spot unusual activity. Suddenly, the P-card meant for office supplies is paying for high-end tech or last-minute hotel upgrades, and the costs rack up quickly.

The solution: Setting spending limits

Set standard, role-based limits for transactions, daily use and monthly spend. Tailor them by department or function, and make sure everyone – from cardholders to managers and finance – knows exactly where those boundaries are. Pleo’s spend controls can help you with this.

Most importantly, review your spending limits regularly to make sure they’re aligned with your business needs as they evolve (we’ll come back to this later).

A clear limit isn’t about restricting employees: it’s about protecting your budget, maintaining visibility and avoiding nasty surprises when month-end reporting rolls around.

2. Vague or missing approval workflows

One of the most common gaps in purchasing card policies is a lack of clear, documented approval workflows – both for issuing cards and for signing off on transactions.

If no one knows who’s supposed to approve what, things tend to get messy fast. Without proper checks in place, you risk a free-for-all where employees order whatever they think is fitting and managers are left scrambling to figure out who spent what, when and why.

Worse still, transactions might slip through the cracks entirely, leaving your finance team to clean up the mess.

The solution: Building approval into your policy

Build a simple, transparent approval process into your purchasing card policy. Clearly define:

• Who can request a P-card
• Who needs to approve new card applications
• Who reviews and signs off on transactions
• How exceptions or disputes are handled

Better yet, digitise the process! Automated workflows speed things up and make it easier to track approvals so nothing gets missed.

Bottom line: no transaction should be a surprise when the statement lands.

3. Poor or nonexistent transaction reconciliation processes

If you aren’t keeping a close eye on what’s being spent, you’re basically asking for trouble. Still, a surprising number of companies either leave transaction reconciliation to chance or treat it as an afterthought.

The result? Incomplete records, missed errors and plenty of awkward moments when audit season rolls around.

Without a clear process for matching receipts to transactions and reviewing spend regularly, it’s easy for oversights, duplicate payments or even fraudulent activity to slip through unnoticed. Plus, if supporting documents go missing, you risk losing out on tax reclaim opportunities like VAT.

The solution: Mandatory transaction reconciliation

Make transaction reconciliation non-negotiable. Set clear deadlines for cardholders to submit receipts and explanations for every transaction. Require managers to review and approve statements promptly.

And, wherever possible, integrate your P-card system with your spend management platform. This way, reconciliation is faster, cleaner and less painful for everyone involved. For example, with Pleo’s expense management solution and smart company cards, you can get both solutions in one – so you know they work together seamlessly.

Good reconciliation is more than just admin: it’s an essential safeguard for your business.

4. No definition of acceptable and prohibited purchases

One of the biggest reasons P-card programmes go off the rails is because nobody’s spelled out what the cards are actually for. If your purchasing card policy doesn’t clearly list what employees can and can’t buy, you’re leaving too much open to interpretation.

People will absolutely test those grey areas – even if it isn’t always on purpose. Before you know it, cards meant for office supplies are covering everything from personal gadgets to luxury client dinners, and your finance team is left to untangle the chaos after the fact.

The solution: Approved spend categories

Be specific. Your company purchasing card policy should include a list of approved categories, such as:

• Stationery
• Software subscriptions
• Small equipment purchases

It should also include a clear list of prohibited items. These could be things like:

• Alcohol
• Personal expenses
• Travel costs, if these go through a different system

Better yet, set up merchant category code restrictions through your spend management solution to automatically block off-policy transactions.

When employees know the rules and there’s a system in place to back them up, you avoid misunderstandings – and a whole lot of refund requests.

5. No regular policy reviews and updates

One of the most overlooked mistakes companies make is treating their P-card policy as a one-and-done document. Spoiler: it’s not. The way your business spends today probably isn’t the same as it was two years ago – so why is your purchasing card policy still stuck in the past?

As your business grows, teams change, new suppliers are added and payment tech evolves. Without policy reviews, you risk operating with outdated limits, obsolete approval processes and rules that no longer reflect how (or where) your people actually spend.

The solution: Set up regular policy reviews

Treat your P-card policy like any other business critical document. Review it at least once a year, and involve finance, procurement, IT and compliance teams. This will help make sure your policy stays relevant and covers everything from emerging risks to new technologies like virtual cards and instant payments.

These regular reviews are also a good opportunity to tighten up processes, adjust limits and reinforce expectations with cardholders.

A company purchasing card policy that grows with your business is a policy that protects your business.

Final thoughts

P-cards are a brilliant tool for streamlining everyday business spend – but only if they’re backed by a smart, well-enforced purchasing card policy.

The mistakes we’ve covered here aren’t rare. In fact, they’re the exact issues that quietly drain budgets, cause audit headaches and open the door to unnecessary risk – but luckily, every one of them is fixable.

Take the time to review your company purchasing card policy, tighten up those weak spots and make sure it reflects the way your business operates today.

In spend management, a little structure goes a long way. Clear limits, solid approval processes, sharp reconciliation and regular reviews aren’t just admin: they’re the guardrails that keep your spend under control whilst giving employees the freedom to do their jobs.