A successful P-Card program requires careful planning and regular oversight. Whether you have a program in place or are considering P-Cards for the first time, be sure to follow these best practices.
Purchasing cards, or P-Cards, are a convenient way for your staff to make low-cost purchases without having to go through a lengthy approval process. For example, maintenance workers authorized to use P-Cards can buy emergency supplies at the local hardware store without holding up a job to purchase supplies through the traditional purchasing cycle.
P-cards offer many advantages, and if your district hasn’t yet adopted them, the pandemic may be a good time to do so. P-Cards can reduce transaction costs and even earn money through rebates and incentives.
But a successful P-Card program requires careful planning and regular oversight. Whether you have a program in place or are considering P-Cards for the first time, be sure to follow these best practices.
Develop written policies and procedures. Be sure to incorporate P-Card practices into your procurement policies and procedures. They should be consistent with your district’s overall goals and other procurement practices. Spell out specific details, including the purpose of the P-Card program, cardholder responsibilities, authorized uses and limits on spending. Examples of authorized uses may be travel and fuel, emergency purchases, low-dollar purchases or one-time expenses. Unauthorized uses might be clothing, alcohol or large commodity purchases.
Grant authority to the right people. Limiting the distribution of cards to those individuals who need them to facilitate their job function is key to limiting the risk of the program. If your program allows it, providing one-time use ghost or virtual P-Cards for special situations is an easy way to allow employees who do not regularly need one to use a P-Card. Organizations should also periodically monitor the list of authorized users to make sure it is up to date and review those who have received cards. With staff changes and reorganizations, you may need to transfer P-Card authority or block former staff from using cards.
Establish spending controls. Restricting the use of P-Cards on single transactions and for monthly total expenditures is another important way to limit risk exposure for your district. You can also place limits on the type of merchants and vendors where the cards may be used to prevent unauthorized purchases.
Provide training. Require training for all employees who will receive individual cards so that they are knowledgeable about the policies and procedures for using them. Require cardholders to sign acknowledgements that they understand the appropriate use of the cards.
Develop detailed procedures for reconciliation and oversight. Integrate P-Card reconciliation into your financial system in a way that is compatible with your billing system. Make sure any training emphasizes the importance of including receipts for every transaction. Review P-Card use at the purchasing department level to make sure cards aren’t being used to circumvent established district procurement policies. Don’t forget to provide the reviewers of the P-Card activity the ability to escalate issues through district management. Enforcement of the policies is just as important as any other function in the program.
With the right controls in place, you should be able to reap the benefits of P-Cards while monitoring the risks that are inherent in any P-Card program. Especially now, with remote workforces and new requirements for flexibility, P-Cards make sense. Just make sure you are running the program, and the program is not running you.