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What is a purchase card? Understand how p-cards work and the advantages for companies

What is a purchase card? Understand how p-cards work and the advantages for companies

author two

The Navan Team

24 Nov 2023
5 minute read
Relaxed woman holding a phone and p-card

Purchase cards, also known as purchasing, procurement, or p-cards, are commercial cards companies issue to employees for business expenses. These cards enable employees to spend company funds without going through a typical accounts payable process. Depending on the policy companies set, employees can purchase anything from cups of coffee to hotel rooms.

P-card: meaning and definition

A p-card is a type of corporate payment card used by organisations to streamline the procurement process and facilitate business-related purchases.

Purchasing cards are typically issued to employees with authorised spending authority, enabling them to make purchases directly from vendors without the need for traditional purchase orders or reimbursement processes. They offer a convenient and efficient way to manage small and routine purchases, as well as track expenses, improve cash flow management, and enhance overall financial control for businesses.

These cards often come with predefined spending limits and detailed transaction reporting, making them a valuable tool for organisations seeking to simplify purchasing procedures and reduce administrative burdens.

How are p-cards different from corporate credit cards?

On the surface, corporate credit cards may seem like an ideal solution for companies; employees will be familiar with the cards' functionality since they mirror a personal credit card. And, like purchasing cards, corporate credit cards enable employees to access corporate funds. However, the way companies keep track of cardholder spending, how spend is limited, and the distribution of control varies.

What are the advantages of procurement cards?

With the right procurement card, finance and accounting leaders can eliminate out-of-pocket expenses for employees throughout the entire payment process. Here are just a few of the recurring benefits companies experience when using purchase cards:

  • Customisable policies. P-cards allow for more significant control over company spend. Employers can set spending limits per card or vendor and enable admins to create lists of pre-approved vendors. Having set per diems means that every employee knows how much they can spend, and accounting teams can customise these controls to match their general ledger codes.
  • Minimising reimbursements. Because of the customisable policies, card users automatically understand their purchasing power. Instead of employees having to pull out their personal credit or debit card, procurement cards can minimise reimbursements because employees no longer need to pay for company expenses with personal funds.
  • Decreased costs. Some companies can expect cost savings of up to 80% when implementing p-card programmes, by reducing the time to complete a purchase from requisition to payment.
  • Enhanced security features. Purchasing card technology tends to outshine traditional payment methods as they typically employ the latest security features for reducing fraud. Because of high payment usage rates, purchase card payments deploy technologies like fingerprint authentication, chip-and-PIN technology, S-HTTP, and secure socket layers.

Where corporate credit cards fall behind purchase cards

Below are a few examples of where purchase cards outshine when it comes to payments and expense management:

  • Unlike purchasing cards, corporate credit cards don't employ adequate spending controls, and attached to these credit cards is often antiquated software.
  • With many corporate credit card programmes, reconciliation can be a tedious process. Expense reports, paper receipts, and supporting documents create clutter and waste time for finance teams.
  • Corporate credit cards are also more susceptible to fraud. Simply asking an employee to hold on to the physical card is not enough. Consistent online purchases lead to credit card information scattered across the Internet.

Are purchasing cards right for my company?

Just as every company is unique, so is every corporate card solution. When looking for a way to make internal processes easier for financial teams, consider these obstacles that procurement cards can help companies overcome:

  • Lack of control over employee spending
  • Time wasted on tedious expense reports
  • Limited visibility into real-time business expenses
  • Slowed processes due to lost receipts and mismatched payments
  • Low confidence in the ability to scale

If any of these issues spark a recurring conversation or complaint from finance teams, admins, and employees, a new business purchasing process may be in order. Purchasing cards offer an innovative and safe option for companies and are more robust when combined with the correct expense management software.

Why companies should combine p-cards and expense management software

The most modern purchase card on the market should provide built-in adjustable controls capable of tying card transactions back to expense policies. That’s why the most efficient p-cards are attached to end-to-end solutions offering heightened security controls. An end-to-end spend management system features:

Efficient approval workflows

Throughout the approval process, procurement cards should ideally match a company’s purchasing policy against every expense. Charges within that policy approve automatically as set parameters create control for each card account.

Anything questionable receives a flag for manual approval. These automated approvals can still leave a clear audit trail while minimising back-and-forth communication. Finance teams are more likely to catch fraudulent transactions and stop unauthorised expenses before they happen.

Automated accounting entries

Modern spend management solutions also should integrate with most accounting systems. When that integration occurs, data seamlessly syncs, reducing the workload for finance teams.

Automation also streamlines the time needed to close the books each month by eliminating double entries and keeping systems decluttered. Finance leaders can strategically make timely decisions with data-driven reports, given better spending visibility.

Heightened security

With p-card use, every employee has the opportunity to be a cardholder, by attaching the same purchasing card programme to virtual cards. It’s possible to generate single cards, cards for recurring expenses, or cards with precise expiration dates. These unique virtual cards offer greater security against fraudsters because the virtual credit card number is untraceable without access to a cardholder's identity or computer system.

A purchase card that scales with companies

Purchasing cards prevail as a necessity for a more secure and convenient payment vehicle to handle company expenses. However, these card systems will not add value to the spend management process if they aren't built to scale.

With Navan, companies can combine purchasing cards with an award-winning spend management solution that runs the entire spend ecosystem — eliminating manual processes and high transaction fees associated with other card providers.

Procurement cards tied to a spend management system like Navan enable companies to generate more ROI by reducing processing costs, preventing fraud, and providing insightful data that connects revenue to spend.


Navan solves the most prominent problem associated with using legacy corporate purchase cards by giving you control over your company's entire spend ecosystem. Want to find out more? Schedule a demo today.

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