Purchasing cards: Everything you need to know

 Managing everyday business expenses can be a headache. From office supplies and software subscriptions to last-minute travel bookings, small but essential purchases quickly add up – and so does the paperwork. That’s where purchasing cards come in.

Purchasing cards simplify and streamline routine business buying, giving employees an efficient way to pay for company expenses – and your business the perfect balance of flexibility and control.

In this article, we’ll cover what purchasing cards are, how they work and why they’re becoming a must-have tool for modern finance and procurement teams.

Key takeaways:

• Purchasing cards (P-cards) are corporate payment tools that simplify business spending by replacing traditional purchase orders and expense claims for low-value, high-frequency purchases.
• P-cards offer flexible controls like spending limits, merchant category restrictions and real-time approvals to help finance teams manage budgets and prevent unauthorised spend.
• There are different types of P-cards, including single-use, virtual and physical cards, each suited to specific purchasing needs and security requirements.
• The benefits of P-cards include streamlined purchasing processes, improved cash flow visibility, reduced transaction costs, faster supplier payments and enhanced spend reporting – what’s not to like?
• Implementing a successful P-card programme requires assessing your business needs, selecting the right provider and setting clear policies and guidelines for cardholders.

What is a purchasing card?

Purchasing cards (P-cards), also referred to as corporate procurement cards, are a type of corporate credit card employees can use to make business-related purchases on behalf of their organisation.

P-cards are typically used for low-value, high-frequency purchases – think office supplies, travel bookings, software subscriptions, training courses or emergency purchases.

Without a p-card, employees would have to use their personal cards to buy these things, submit an expense claim and wait to be reimbursed. But with a purchasing card, managers can approve or reject transactions based on the company expense policy – and there are no cardholder fees.

Purchasing cards typically come with key features such as:

• Preset spending limits, which can be tailored to the employee, department or transaction type
• Merchant category controls, which restrict usage to approved types of suppliers – e.g. travel or office supplies
• Simplified expense management, as P-cards reduce the number of purchase orders and invoices the finance team have to deal with
• Improved cash flow visibility, as transactions can be tracked in near real time
• Centralised reporting, which consolidates data for better spend analysis and policy compliance

In short, they’re very handy – so if your organisation isn’t already using them, now’s a great time to look into them!

Types of purchasing cards

Purchasing cards are designed to offer your company total flexibility – and that’s why there’s more than just one type of P-card.

Single-use cards

Single-use cards are for one-off purchases. They’re best suited to payments where security may be compromised, like when you’re buying something online.

Unfortunately, sharing your bank details over email can be a major security risk. Single-use cards enable you to pay for something using your card without having to worry about handing out your card details, because they’re scrapped after just one use. This means single-use P-card transactions are always secure.

Virtual cards

Virtual cards are often used for dedicated online subscription payments – think new software. You can set your purchase to automatically recur and be kept separate from other transactions in the payment process. Usually, a virtual card will be used solely for one transaction or supplier.

Physical cards

Physical cards are mainly used for in-store purchases. They work in the same way as any other charge card that you’d find in corporate purchasing.

Typically, physical cards are loaded with a monthly budget and charged at a card reader POS, which enables three-factor authentication. Cards like these are powered by either Visa or Mastercard and can be used in pretty much every store worldwide.

How do corporate purchasing cards work?

Purchasing cards work just like any credit or debit card, in that they have a card number, expiry date and CVC code. The difference is that P-cards make the whole spending process much simpler by allowing managers to set controls and automatically approve spend.

Here’s how it works:

 

• Spending limits: The finance team or manager sets the p-card policy controls for individual employees depending on company budgets. For example, you might want to cap your team members at spending £200 a month.

• Automatic approvals: If an employee makes a purchase and the amount is less than the spending limit, the payment is automatically approved. Some tools, such as Pleo, give you the option to set a card limit or limit per purchase.

• Easy requests for information: If the payment exceeds the spending limit, the employee can make a request explaining their purchase and associated costs. Their manager will receive a notification, and they can then choose to approve, change or reject the request.

• Paying is simple: Once the request is approved, the amount is automatically transferred to that employee to pay for their purchase. The employee can’t use this money for anything else, helping to prevent rogue spending.
  
  
• Receipt upload time: All the employee needs to do is upload their receipt to Pleo. This gives the finance team the necessary information to begin the expense reconciling process. Plus, employees can add more detail using tags, categories and notes if they choose to.

The finance team gets access to real-time reports showing total spend by cardholder, department or category, compliance with policies and exceptions or flagged transactions for review.

They can then use this data for activities like spend analysis, helping optimise budgets, supplier negotiations and policy enforcement.

And that’s basically all there is to it – simple, right?

 

The beauty of purchasing card controls

Finance teams tend to love using P-cards thanks to the high level of control they offer. Want to manage budgets more efficiently, prevent overspending and get accurate spending information when it comes to forecasting? Then purchasing cards are for you.

These are some of the controls that come with a P-card:

• Approved vendor list: Create a list of authorised suppliers ensures that the card can’t be used elsewhere.
• ATM use: Allow (or deny) each employee to withdraw cash from an ATM, alongside their card spending.
• Spending limit: Set thresholds around spending caps over a day, week or month.
• Manager approval: Purchases require instant managerial approval through the mobile app – great for new employees who are still getting accustomed to the spending policy.
• Limited dates and times: Unlock the card during certain times of the day or specified dates, such as when attending a conference.
• Online or in-store only: Block internet purchases or in-person usage. No unwanted spending – no problem.

The benefits of corporate procurement cards

With their key features and how easy they are to use in mind, here are some of the many benefits that come with using corporate procurement cards:

• Streamlined purchasing: P-cards bypass the traditional purchase order and invoicing process for smaller buys, speeding up purchases and minimising admin bottlenecks.
• Empowered employees: If you’re used to written purchase requests and manual expense report tracking and reimbursements, you’ll know how time-consuming they can be. P-cards simplify this process by allowing you to set up vendor restrictions for your employees, eliminating the need for manual reimbursements.
• Lower transaction costs: By consolidating expenses into a single card payment, P-cards reduce the number of supplier invoices and the time it takes to process accounts payable, lowering the cost per transaction.
• Better spend visibility: P-card transactions are captured and reported in near real-time, helping your finance team spot anomalies quickly, track spend by category or department and make faster, data-driven decisions.
• Tighter spend control: With spending limits, merchant category restrictions and usage limits, you can control how, where and on what employees spend company money.
• Faster supplier payments: Suppliers get paid quicker when employees use a P-card, which can strengthen supplier relationships – and help you negotiate better terms or discounts.
• Better reporting: P-cards generate rich transaction data that’s easy to integrate into spend management systems, ERP platforms and reporting tools, allowing for more accurate spend analysis and reporting.
• Fraud mitigation: With preset limits, merchant restrictions, real-time monitoring and audit trails for every transaction, P-cards can reduce fraud risk – and that helps you save both time and money.

In short, there are plenty of good reasons to implement purchasing cards – and they benefit both your employees and your wider business.

How to implement a purchasing card system

Now that we’ve established all the benefits of using P-cards, let’s take a look at how to implement a purchasing card system.

1. Assess your business needs and goals

Start by carrying out an internal needs analysis to work out your company’s priorities for outsourcing. This will help you establish which departments and functions need external support to improve their performance or efficiency. Remember to take into account the volumes and types of goods and services needed, as well as the time needed to procure.

And don’t forget – different suppliers will accept different cards, but banks and card companies might be able to help identify which suppliers accept payment using their card schemes. This is key before choosing a provider. Plus, you might want to work out what level of detailed data a supplier can provide you with when they’re processing a card transaction.

2. Choose the right provider

Different providers offer different benefits, so it’s up to you to decide what’s essential for your business. Some will offer little more than the average bank, so it’s important to do your research. The best procurement card providers will always offer individual logins for every team member to prevent card sharing and limit misuse.

Similarly, you might want to look for a tool that offers different levels of access. For example, your CFO should be able to track every single payment and receipt, whereas employees should only be able to view their own purchases. And let’s not forget the benefit of real-time spending reports – the best purchasing cards will give you up-to-date spend information without having to investigate.

Here are some things to consider when comparing providers:

• Cards for all employees: The more staff you have using a P-card, the better. It gives you tighter control over who’s spending what and where, without any purchases falling under the radar. Some providers only allow you to use a few cards throughout your organisation, whilst others will encourage you to make use of as many cards as possible. We recommend the latter.
• Spending limits: The downfall for many traditional company credit cards is that people are free to spend as much as they want, whenever they want. The best purchasing cards, on the other hand, allow managers and finance teams to set clear spending limits – either per purchase, per card or per period of time.
• Vendor approvals: Don’t want employees spending money with certain vendors? With a purchasing card, you can set a list of approved vendors and set your system to automatically reject any spending that’s not within the defined list of brands.

3. Set up policies and guidelines

Each cardholder should receive a copy of the cardholder guide, as well as a copy of the P-card programme policy and procedures.

There are some things to consider when writing your purchase cardholder guide in order to make things as transparent and digestible as possible for employees. These include:

• How and when cardholders should use the card (including online purchases)
• The importance of buying on contract
• A list of the suppliers the organisation works with
• Disciplinary measures for misuse or overspending
• Details of the spend limits on cards and what to do with when a cardholder has forgotten their PIN or lost their card
• How staff should redeem loyalty points (such as air miles)

Pleo P-cards: Take your business spending to the next level

Ready to take control of your company spending? With Pleo’s purchasing cards, it’s a piece of cake.

Pleo is the all-in-one spend management solution to help businesses optimise their  procurement processes with smarter purchasing cards.

With Pleo, you can issue company cards to employees or entire departments, giving them the freedom to pay for what they need – whilst you stay in complete control. No more clunky reimbursement processes or tedious expense reports.

Every transaction made on a Pleo card is automatically tracked, categorised and synced in real time with your accounting system, cutting down on admin and freeing up valuable time for your finance team.

Customisable spending policies, multi-step approvals and department-specific budgets mean you always have full oversight of your company’s expenses. Plus, with instant notifications and real-time data, you can proactively monitor spending, prevent overspending and adjust budgets on the fly.

And it’s not just about control – it’s about making your money work smarter. Pleo’s advanced analytics tools let you measure the ROI of your purchasing card program, uncover savings opportunities and make data-driven decisions to optimise your procurement strategy.

Discover how Pleo’s purchasing cards can simplify company spending, strengthen financial visibility and help your business grow.