FinanceRegs.com » Are you on board with the latest payment trend?

Are you on board with the latest payment trend?

December 1, 2008 by Carol Katarsky
Posted in: Best practices, Electronic payments, In this week's e-newsletter, Latest news & views

P-cards aren’t just for the big boys anymore. Their use is growing fast — and will for some time, for one very good reason.

Total spending on purchasing cards is expected to grow 12% per year between now and 2012, according to the latest “Purchasing Card Benchmark Survey” by RPMG Research. In 2007, $137 billion in transactions were put on p-cards.

The growth is coming from two main drivers:

  1. the amount spent per transaction is up 6%, and
  2. cards are assigned to more people/departments within companies.

In fact, 80% of companies using p-cards in ’05 reported more p-card spending in ’07. And it’s not just large companies leading the way. More mid-sized companies reported increased spending than any other size of company.

In particular, companies were increasingly likely to use p-cards for purchases of:

  • computers and peripheral equipment
  • telecommunications services and products
  • printing and copying services
  • advertising and media, and
  • transportation or delivery services.

Why the increase in usage?

It’s all about the bottom line. The average cost to process and pay a transaction on a purchasing card is about $70 less than using the old-school paper P.O./check method.

If your company (or a key vendor) has been reluctant to try p-cards, it’s worth revisiting the issue. With significant savings possible, setting up a card program could quickly make up for any upfront costs.

If you’re worried less about cost and more about headaches and aggravation while you’re switching over, bear in mind that choosing a solid card vendor can eliminate most hassle. And starting small — say, by only using cards in one department or with one vendor — can help you work out the kinks early and minimize disruption.

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