Developing and maintaining strong compliance policies for purchasing cards (p-cards) is one of the issues facing organizations today. Several top-performing organizations participated in a recent J.P.Morgan study on p-card use and discussed best practices that help them maintain control of their organization’s p-card programs.

Can an Invisible Purchasing Card Reduce Costs for Your AP Department?

Payment automation has long been the goal for accounts payable departments drowning in a sea of paper invoices. While corporate purchasing cards are ideal for managing the majority of a company's small-dollar transactions with multiple vendors, a variation of the p-card, a ghost account, can help when a large number of invoices are coming from a single vendor. Putting all these transactions on a single account with that vendor can significantly streamline your purchasing process.

What is a Ghost Card?

Three states have accused the office supply company, Office Depot, of overcharging on contracted orders and making costly pricing errors on its monthly billings.

According to a report published in the Lincoln Journal Star, state audits of Nebraska, California and North Carolina contracts with the company accuse Office Depot of increasing and substituting prices without prior authorization. Georgia terminated its estimated $40 million contract with Office Depot after less than a year for similar reasons.

Legal bills have traditionally been based on the idea of the billable hour. The problem many AP departments have with this model is that it’s impossible for them to estimate ahead of time how long a project will last and, in turn, how long it will cost.

For small and medium-size businesses without a lot of cash, this uncertainty can lead business owners to not seek legal advice when they need it. However, according to an article published in the St. Charles County Business Record by Bradley Crandall, law firms have alternatives to the billable hour that can benefit small businesses.

There have been more changes in Accounts Payable in the last five years, then in the previous ten years. This rapid rate of change can be primarily attributed to the growth in technology solutions. Many A/P organizations' that invested in such technology have earned the designation as "Best-In-Class."

The Hackett Group, which specializes in Benchmarking, defines "Best-In-Class" as being in the top 25% quartile in both qualitative measurements and traditional quantitative measurements such as cost, cycle time, quality and productivity.

"We are working on it" — or if I am in the southwest "we are fixing it" — is the expression I often hear about a best practice I discuss during an accounts payable workshop. We laugh and move on to the next subject. Fortunately in several organizations, I sometimes hear "we are doing that today," which is a way of identifying where a best practice has already been implemented.

Stretching accounts payable is an old-school strategy long considered common sense cash management. The advent of "business settlement networks," which electronically process invoices and payments, is questioning this premise. By compressing the settlement cycle from weeks or months to just days, business settlement networks dramatically expand early payment discounts programs to deliver treasury managers double-digit, risk-free returns on cash.