More Than Just Petty Cash: Purchasing Cards Now a Cost-Savings Option for Larger Purchases, Suggests PayStream Advisors Report

CHARLOTTE – When corporate purchasing cards (p-cards) first emerged on the payments landscape nearly a decade ago, they were touted as a modern-day version of the old petty cash box, but with better security. Most p-card purchases were small, one-time or occasional buys – office supplies, repair hardware, etc. – but card growth was explosive, as businesses embraced this easy, accountable way of purchasing. Today, nearly 50 percent of businesses large and small are turning to p-cards to pay for purchases, suggests a survey conducted by PayStream Advisors Inc. (paystreamadvisors.com).

What’s new isn’t the fact that p-cards have become corporate mainstream, but rather, that p-cards are now finding their place as a means for larger, recurring purchases like temporary labor, computers, software and corporate travel.

“The corporate purchasing card has emerged as a favorite tool for many companies because it cuts overhead costs when purchases are made with cards, provides strong rebates and spend management tools, and offers rebates for volume purchases,” said Henry Ijams, managing director for PayStream Advisors. “But now, larger companies, among the first adopters of p-cards, are looking for ways to expand and improve them, and increase the ‘spend’ on the card.”

Companies have learned by taking baby steps with p-card spending for smaller purchases. They’ve seen how cards virtually eliminate all of the overhead and paperwork associated with a traditional purchase: requisitions, approvals, purchase orders, buying through purchasing channels, filing receipts, and charging the purchase to the right department or project. Cost studies by larger companies have indicated this “traditional” purchasing process costs companies upwards of $70 per transaction. Increasingly, companies are weighing the costs of using traditional purchasing channels for larger purchases.

“Improvements in technology now make it easier than ever for payers and vendors to use procurement cards for a wider range of purchases,” said Ijams. “The average ticket size for a p-card purchase is now $250, with some companies authorizing p-cards for up to $2,500. By 2010, we expect more than $200 billion dollars will be processed by purchasing cards.”

That’s good news for preferred vendors, who are willing to offer discounts and rebates in exchange for volume purchases and customer loyalty. Prompt, certain payment by the issuing bank also sweetens the deal for the merchant, and the cards create pressure on competitors to follow suit.

A new PayStream Market Analysis Report “Purchasing Card Management: The Lure of Plastic” offers an insightful tool for business executives and managers who are considering an initial p-card program, as well as people at larger companies already using p-card programs who are looking for ways to further streamline purchasing operations and/or reduce the net cost of goods and services they need to buy. The free 26-page report provides an introduction to p-cards, analyzes the marketplace, identifies why a company might want to start or upgrade a p-card program, profiles seven leading p-card providers, and offers strategies for building a successful program.

To obtain a free copy of the Purchasing Card Management Market Analysis Report, visit https://paystreamadvisors.com/store/details.cfm?id=219

PayStream Advisors delivers unbiased, third-party market trend information, assessments of financial automation technology and innovative ideas to business leaders in consumer billing, finance and treasury, accounts receivable and accounts payable. Call 704-523-7357 or visit paystreamadvisors.com for more information.

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Contact:

Meredith Wiggs, Marketing Manager

PayStream Advisors, Inc.

704-523-7357 x223