In this article
You might like
No items found.
See the latest spending trends for 25k+ companies on Ramp

Benchmark your company's expenses with Ramp's data.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Spending made smarter
Easy-to-use cards, spend limits, approval flows, vendor payments —plus an average savings of 5%.1
|
4.8 Rating 4.8 rating
Error Message
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Get fresh finance insights, monthly
Time and money-saving tips,
straight to your inbox
|
4.8 Rating 4.8 rating
Thanks for signing up
Oops! Something went wrong while submitting the form.
Ready to partner with Ramp?
Time is money. Save both.
Ready to partner with Ramp?
Time is money. Save both.
Ready to partner with Ramp?
Time is money. Save both.
Table of contents

Managing expenses efficiently is crucial for any business. You need a streamlined approach to control and monitor spending, and that's where a robust P-Card (Purchasing Card) policy and management framework comes in. 

P-Cards can simplify your purchasing process, reduce paperwork, and enhance the tracking of business expenses. However, to reap these benefits, you must develop a well-structured policy and management framework. 

This article will guide you through creating a P-Card policy that ensures compliance, mitigates risks, and maximizes the advantages of using P-Cards. Let's dive in and explore how you can build a solid foundation for your P-Card program.

Should your business consider p-cards?

A p-card, or purchasing or procurement card, is a business-issued credit card that allows employees to make business-related purchases. It simplifies the procurement process, especially for low-value, high-volume transactions. p-cards can reduce paperwork, speed up purchases, and provide better spending visibility.

Whether your company needs a p-card program depends on its specific needs. p-cards excel when you have frequent, small purchases from multiple vendors. They're particularly useful for industries like manufacturing, healthcare, and education.

Consider implementing a p-card program if you want to:

  • Cut down on purchase order processing costs.

  • Improve cash flow management.

  • Gain real-time insights into spending patterns.

  • Enhance supplier relationships through prompt payments.

Before deciding on this, assess your purchasing processes, transaction volumes, and the potential cost savings a p-card program could offer.

Let’s delve into the key components of a well-structured p-card policy to ensure effective management and compliance.

P-card policy best practices

Keep it simple

Your P-Card policy should be easy for everyone to understand and follow. Clear guidelines help prevent misuse and ensure compliance. Here's how you can achieve that:

  • Use straightforward language without jargon to make the policy accessible to all employees.

  • Provide step-by-step instructions for using P-Cards, including how to request one, make purchases, and handle returns.

  • Define spending limits and boundaries using real number figures if available. This clarity helps employees understand their purchasing power and responsibilities.

  • Ensure the policy is reviewed and updated regularly to reflect changes in procedures or regulations.

Keeping your P-Card policy clear and easy to follow encourages proper usage and adherence, making managing your P-Card program more effective.

Keep it concise

Aim to keep your p-card policy concise, ideally within one or two pages. This approach makes sure that employees can quickly understand ‌key information without getting overwhelmed by too much detail.

To achieve this, focus on the core elements:


  • Card usage guidelines, spending limits, prohibited purchases, documentation requirements, and consequences for misuse.

  • Use clear, direct language and avoid repetition.

  • If more detailed information is necessary, consider creating separate procedural documents or appendices that users can reference when needed.

A concise policy will likely be read, understood, and followed. It also makes updates and revisions easier to manage.

Opt for guiding principles over strict rules

While setting clear rules and limits on business spending is essential, consider emphasizing guiding principles rather than overly prescriptive orders. This approach encourages responsibility and decision-making within defined boundaries, allowing for some flexibility based on context and necessity.

Establish broad guidelines outlining the intent and objectives behind using P-Cards, such as promoting cost-efficiency and ensuring accountability. Encourage employees to apply these principles thoughtfully when making purchasing decisions.

Integrate technology

Using smart technology can significantly streamline your procurement process. Here’s how to make the most of it:

  • Implement software that automates approval workflows, reducing manual intervention and speeding up the purchasing process.

  • Utilize technology that allows real-time tracking of purchases and spending, giving you better control and visibility over transactions.

  • Use integrated expense management tools to simplify reconciliation and reporting, ensuring accuracy and efficiency.

  • Ensure your P-Card management system is accessible via mobile devices, allowing employees to make and manage purchases.


As you consider these general strategies, it's helpful to explore specific tools designed to enhance procurement efficiency, like procurement software, which offers significant technological benefits. 

Key features of effective p-card management software

Set spending limits with ease

A key feature of effective p-card management software is its ability to easily set and adjust spending limits, providing precise control over your expenses and allowing flexibility when needed.

The software should enable you to set individual transaction limits, establish daily, weekly, or monthly spending caps, create merchant category code (MCC) restrictions, and implement temporary limit increases for special purchases.

It's important to look for systems that offer real-time limit adjustments, enabling you to quickly respond to urgent needs or unexpected situations without compromising control.

Streamlined approval processes

A robust p-card management software should include built-in approval workflows to ensure oversight and compliance. These workflows automate the review and approval of purchases, reducing the risk of unauthorized spending.

The software should enable the setup of multi-level approval chains based on transaction amount, merchant category, or department, and allow for customizable rules that align with your structure and policies.

For example, routine, low-value purchases might be automatically approved, while higher-value or unusual transactions are routed to specific managers or departments. The best systems offer mobile approval capabilities, facilitating transaction authorization from any location.

Automated accounting integration

A robust p-card management software should seamlessly integrate with your existing accounting system.By using this integration, p-card transactions can be reconciled automatically, eliminating the need for manual data entry and lowering the possibility of mistakes.

When a cardholder purchases, the transaction details are instantly captured and synchronized with your accounting software. This real-time data flow ensures that your financial records are always up to date, providing accurate and timely information for decision-making. 

Automated accounting integration also streamlines the month-end closing process, as all p-card transactions are reconciled and properly categorized. This feature saves significant time and effort for your accounting team, allowing them to focus on higher-value tasks.

Enhanced security with virtual cards

P-card management software should include virtual cards for online spending, enhancing security and control over digital transactions. Virtual cards with unique temporary numbers linked to your main account can be generated for specific purchases or vendors.

These feature precise spending limits and expiration dates to minimize fraud risks. This technology protects your main account details during online transactions and aids in reconciliation by linking each virtual card to a specific purchase or project.

Ensure the software supports easily generating and managing virtual cards with customizable parameters. The best systems integrate virtual card issuance with your existing p-card program, providing a comprehensive view of physical and virtual card spending, essential for businesses with frequent online purchases or multiple online vendors.

Advantages of using procurement cards for your business

Procurement cards, or p-cards, offer numerous benefits to businesses looking to optimize their expense management processes. By implementing a well-designed p-card program, your business can:

Control and customize spending policies

You can set spending limits and restrictions using p-cards based on factors such as employee roles, vendor categories, and transaction types. This level of customization ensures that employees adhere to and helps prevent unauthorized or excessive spending.

Reduce out-of-pocket expenses and reimbursements

Employees no longer need to use their personal funds for business expenses with p-cards. This eliminates the need for reimbursements, saving time and effort for employees and the accounting department. Within their pre-approved limits, employees can make purchases, streamlining the expense management process.

Achieve significant cost savings

Implementing p-card programs can lead to substantial cost savings by simplifying the purchasing process and reducing administrative overhead. Additionally, rebates or rewards programs often come with p-cards, which can further boost savings.

Enhance security and fraud prevention

Advanced security features are incorporated into p-cards to protect against fraudulent transactions. These features may include chip-and-PIN technology, biometric authentication, and secure online payment protocols. By leveraging these security measures, you minimize the risk of unauthorized purchases and protect their financial assets.

Improve visibility and reporting

P-card programs provide real-time visibility into employee spending, enabling you to track expenses more effectively. Detailed transaction data can be easily integrated with expense management software, allowing for automated reconciliation and reporting. This transparency helps identify spending patterns, detect potential issues, and make informed financial decisions.

Automate your p-card policy with Ramp

Working with the right partner and technology can improve spend management, price transparency, and policy adherence when building and polishing your p-card policy.

The corporate card from Ramp includes software that enables finance teams to quickly implement and enforce their p-card policies. One of our key features is the ability to prevent non-compliant expenses before they occur, minimizing the risk of unauthorized use or fraudulent activity.

Ramp offers real-time visibility into transactions and customizable spend controls, so you always have insight into employee expenses—and the ability to reduce out-of-policy spend. Plus, Ramp offers features like integrations and accounting automations.

Learn why companies that use Ramp save an average of 5% a year.

Try Ramp for free
Error Message
 
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Finance Writer and Editor, Ramp
Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

FAQs

How The Second City expedited expense management and gained financial control with Ramp

“Just do it:” How Bratjen Construction Modernized Processes, Saved Time, and Improved Accuracy with Ramp

“Prior to Ramp, we had a handful of cards that our owners and leadership had access to, but it was more of a trust based system. Ramp has allowed us to give cards to more people, but the controls in Ramp ensure that the cards are used properly.”
Michael Irvin, Director of Operations, Bratjen Construction

How MAGNA-TILES® implemented a corporate card program, reduced stress, and prepared to build with Ramp

"In my day-to-day, Ramp helps me resolve things quickly and expedite month-end close. From an overall holistic business standpoint, we now have the ability to quickly scale as we add new users. It’s kind of crazy how quickly things have grown here, and Ramp has been a great partner for us in that growth.”
Tim Borse, Assistant Controller, MAGNA-TILES

How Eventbrite streamlined processes and improved UX with Ramp

"The Ramp dashboard easily shows how many cardholders are paying for the same subscription. Now the procurement team has the information they need to negotiate a corporate package.”
Laura Moreno, Sr. Manager, Global AP, Eventbrite

How Boys & Girls Clubs of America improved efficiency, gained visibility over spend, and regained lost time with Ramp

How Evans Hotels saved time and gained spend visibility with Ramp

“Ramp has been a big win for us when it comes to transparency and visibility. If the executive team wants to dig into spend at a property or review purchases the teams are making, we can have that information really quickly and are confident it’s accurate.”
Caryn Fink, Director of Accounting, Evans Hotels

How Ramp became KIPP Nashville’s biggest financial win

"There was no fire drill for the beginning of the school year this year, because the schools had a process. Ramp will ingest the line items automatically, so no more manual import. It’s made the process so much easier."
Carey Peek, CFO, KIPP Nashville Public Schools