P-card program pitfalls and success strategies

1. Lack of infrastructure to support the program

If your P-card program infrastructure is still missing something, take the steps necessary to fill the gaps. Growing a program before the infrastructure is solid will only compound the problem. Many components of a solid infrastructure are discussed below.

2. Program administrator/manager (PA/PM) not suited for the position

Your organization should look for a self-motivated professional with a combination of strong communication skills, analytical abilities, training experience (creating and delivering), technical abilities, knowledge of accounting principles and past success with project leadership and management. Also, consider the Certified Purchasing Card Professional (CPCP) designation, which ensures someone’s grasp of the P-card industry and program management best practices.

3. Lack of partnership with card issuer

Even a well-conducted RFP can transition to a less-than-ideal situation if the end-user and/or provider fail to put forth the necessary effort to build a partnership. Discuss roles and responsibilities with your issuer so that both sides are clear about expectations.

4. Lack of communication to internal organization and to suppliers

Effective communication is critical for getting people to embrace the process changes associated with P-card program implementation. Your organization should convey the P-card business case, tailoring the message to fit each audience. For example, communicate your P-card-related requirements to suppliers.

5. Lack of program goals and benchmarking

Without program goals, policies and procedures cannot be properly developed. Benchmarking, in one form, serves to measure progress and success against the goals. Benchmarking against peer organizations and industry averages can also reveal if your program is on track. Use benchmarking to identify improvement opportunities.

6. Ineffective training

A mandated training program is essential and commonplace. Are employees learning what they are supposed to? Regardless of training method, your organization should have ways to identify the effectiveness of the training.

7. Unclear, undocumented and/or outdated policies and procedures (P&P)

First and foremost, P&P must be documented. P-card P&P should align with program goals, not conflict with other organizational P&Ps and must be updated as the program changes and grows.

8. Over- or under-controlling the program

The ultimate challenge is striking the right balance of controls, and effectiveness is more important than the sheer number of controls. Auditing every transaction for every cardholder in every period reduces the process savings inherent to P-cards. A better long-term approach is for an organization to review the cost versus benefit and consider its level of risk tolerance.

9. Complicated, inefficient and/or manual processes

For utmost efficiency, do not simply add P-card payment to the end of a current, inefficient procure-to-pay process; this provides little benefit to your organization and its suppliers. The key is to eliminate the inefficiencies while re-engineering the “traditional process,” which is often paper-based. Your organization should pursue electronic reporting, data integration between systems, online statement delivery, electronic review and approvals and, when appropriate, automatic transaction reconciliation.

10. Ineffective card distribution

Cards may be in the wrong hands, under-distributed and/or over-distributed. First, determine which employees tend to initiate purchases or requisitions; they are prime targets for the cardholder role. Issuing a card to just one employee per department may represent under-distribution, as that one employee may have nothing to do with some of the purchasing activity within his or her area. Similarly, over-distribution is a potential problem, usually resulting in a high number of inactive cards.