As a business owner in Singapore, you handle your company, clients, service, production, and employees. Apart from fulfilling the basic need of paying their salary, you may have to maintain your employees’ expenses when they are out of the office on company business.
Earlier, this was done either using a corporate card or the employee would spend money from their pockets and then raise a reimbursement invoice for these expenses. However, both processes have their own limitations—they can be cumbersome and time-consuming.
With changing times, newer means of expense management have come into the picture. A widely used and preferred mode of procurement payments in Singapore is Purchasing Card, also known as P-card.
A P-card is similar to a corporate credit card but better. It simplifies the process of paying for products and services charged by employees while they are out of office on business trips.
In this article, you will learn everything you need to know about procurement cards, how they work, and how your business can benefit from their use.
What are Purchase Cards?
A Purchase card, also known as a P-card or procurement card, is a type of corporate card that facilitates the payment process for goods and services, including office supplies, travel expenses, and vendor payments.
Procurement cards streamline the purchasing process by minimising cumbersome approvals and paperwork, enhancing control and visibility over employee expenditures. They also mitigate the risk associated with utilising personal credit cards for business, maintaining organised and safe finances, which makes it beneficial for your company as well as employees.
Difference between Purchase Cards and Business Credit Cards
Business credit cards and P-cards may seem like the same thing; however, there are a few significant differences between them. Procurement cards enhance the purchasing process by limiting where and how your employees can spend corporate funds, saving time and money.
This restriction may not be available on corporate credit cards, making the process more tedious and manual.
Here are a few key differences:
What are the Benefits of Using Purchase Cards?
Using a procurement card for your business has several advantages, especially when compared to a business credit card. Some of them are:
Simplified process
As a business owner, you get better visibility and transparency on their spending. Employees can purchase what they need for work without lengthy permission and reimbursement processes, which results in increased productivity. Providing a P-card especially makes things easier for employees who work in the field.
A business credit card has an extensive reimbursement and verification process.
Better control
You can establish clear spending restrictions on a daily, monthly, or per-trip basis to maintain control. This prevents excessive spending and also makes it simpler to handle procurement accounting. P-cards can be aligned to specific vendors.
Business cards can be used for all business expenses, which makes the tracking process tedious and time-consuming.
Efficient Process
By reducing administrative and other expenditures (related to accounting), P-cards can help your business save time and money.
In comparison, business credit card reimbursements are cumbersome as their verification process is detailed and requires manual tracking.
No scope for misuse
By training your employees on how to efficiently use a P-card, you can reduce the possibility of misusing company funds.
Business credit cards have a higher limit and have no spending control, which makes them high risk.
As a result of these provisions, business owners in Singapore prefer purchasing cards as opposed to reimbursement of invoices for business credit cards.
What are the Features of Purchasing Cards?
Improved Spend Management
As a business owner in Singapore, you can set a spending limit so that the purchase aligns with your budget, specify a merchant category to ensure business purchases are made within the organisation’s standards, authorise and approve items that can be purchased, and place restrictions on certain vendors and items when assigning a P-card to your employees. This gives you control over spending without having to dive deep into bills and receipts.
Purchase windows
Setting specific dates and timelines within which employees can use the card helps you prevent fraudulent charges made on company expense accounts.
Better Compliance
When these constraints are in place, employees are more likely to adhere to corporate policies and purchasing process while using the card. There won’t be issues such as declining reimbursement requests later due to non-compliance.
Real Time Tracking
With the ability to view spending patterns in real time, the finance team can easily track and manage expenses. Matching receipts and incorporating approval makes tracking expenses more efficient and less time-consuming.
Auditable Data
The idea of using purchasing cards is to limit the time spent on auditing and reimbursements. These cards have a detailed transaction report (card statement), which can simplify the auditing process. You can easily verify transactions for consistency with your accounting.
Negotiating with vendors
You can leverage your P-cards to bargain for better pricing with your vendors and improve your procurement process.
Low risk
P-cards have the potential to offer various security features, such as protection against fraud, doing business with authorised suppliers, and spending limits on transactions. This automatically reduces the risk involved with using a corporate card for procurement and purchase.
P-card Integration with Accounting Systems
It is good practice to integrate your purchasing card with your business’s accounting program to automate spending monitoring, GST reporting, and reconciliation. This process entails linking card transaction data with your accounting software. The following is a brief guide that can help you get started:
P-card and Accounting Platform Compatibility
Select a P-card provider that is integrated with your accounting program or can be integrated with common accounting platforms such as Xero, SAP, QuickBooks, and Oracle.
Allow Live or Scheduled Data Feeds
Automate P-card provider data feeds or CSV/Excel imports into your accounting software. Tag transactions with merchant name, date, GST component, and purpose. This will simplify the accounting process without having to cross-check bills and invoices for expenses such as office supplies and other vendor payments.
Automate GST reporting and calculation
Your system should identify GST-eligible transactions and separate input GST for IRAS reporting. Tax invoices with GST input must be legitimate.
Establish Approval Processes
Automate P-card transaction approvals in accounting software. Set transaction size, category, timeline, or department rules for more control.
Audit Regularly
Audit your general ledger monthly and create alerts for duplicate charges, policy breaches, and untagged transactions. Maintain digital P-card data with receipts and approvals for internal audits and IRAS inspections.
How to Optimise P-card While Traveling
As a business owner, you can allot a P-card to your employees when they are travelling on a business trip. They can use the card to book air tickets, hotel stays, car rentals, food bills, and stationery, or to entertain clients while on the trip. Here is why allotting a purchase card makes better business sense:
- P-cards reduce paperwork, accounting, and miscellaneous administrative work required to process claims for travel expenses.
- The expense reporting is more accurate and quicker.
- All cards come with pins and authorisations, which reduces any chance of fraudulent transactions or unauthorised spending.
- With pre-approved limits, there is no possibility of overspending by your employees.
- Lower possibility of administrative delays caused by missing receipts, as the card statement will provide exact details of the spending.
All things considered, P-cards simplify and improve the efficiency of trip expense management.
Best Practices for Using P-card
Many businesses, like online shops, service providers, and retail platforms, accept P-cards. When providing your employees with a purchase card, do the following for better control:
- Lay down clear rules for utilising P-cards, including expenditure limitations, restrictions on vendors, and approval procedures.
- Frequently review and update the usage of the P-card to maintain efficiency.
- Instruct employees on how to properly utilise and manage their P-cards to reduce the administrative burden of reimbursements and invoice processing. This should include spending limits, vendor restrictions, and approval flows.
These procedures contribute to the prevention of misuse and the improvement of overall control over P-cards.
P-card Fees Structure and Limits
Different P-cards come with fees such as transaction fees, regular maintenance fees, and interest charges.
As a business owner, you should be aware of these charges when you choose a P-card provider for your company. You can keep your costs under control when you have a better idea about these fees and charges.
Your chosen P-card program should meet your company's purchasing needs.
Customer Support for P-card
Strong customer support is a critical factor in the success of any P-card program. As a business owner, seek out providers that offer comprehensive support across multiple channels, ensuring timely assistance and guidance whenever needed. With Aspire as your P-card partner, you gain access to best-in-class customer service, including online resources, dedicated telephonic and responsive email support, empowering your team to manage your procurement card program confidently and efficiently at every stage.
Ensure that you never miss a payment, prevent delays, and maintain your suppliers' satisfaction by automating your invoicing process. Aspire’s Payables Management allows you to schedule payments ahead of time by displaying all of your impending payments from a single dashboard.
Conclusion
P-cards are a great way to streamline your business procurement and purchase process. As a business owner in Singapore, you can improve your ability to control employee expenditure and effectively manage their overall spending.
By understanding how P-cards function and putting them into practice with the proper policies and training, you can cut costs, increase efficiency, and simplify the process of tracking expenses. Whether it be for day-to-day business purchases or travel expenses, P-cards may be an invaluable tool to improve the management and accountability of your business and employees’ spending patterns.
Although running a P-card program requires organisation and planning, working with the appropriate provider can make a huge impact.
Working with a seasoned partner like Aspire helps businesses minimise disruptions, and simplify the onboarding and implementation process of the P-card.
Aspire provides the expertise and support required to enable your staff members to properly adopt and use P-cards, unlocking increased control, efficacy, and visibility in corporate spending.
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