Procurement Card

A procurement card [PCard] is a credit card used by some organisations as an alternative acquisition method to raising a requisition and/or purchase order. PCards were initially used to acquire low-value and low-risk categories, such as travel and entertainment, though because of their low transaction costs, they are increasingly being used for a wide variety of acquisitions. Most PCard systems incorporate a variety of controls to prevent abuse, and a key control is to limit the number of staff who have access to a PCard. Other controls can include a single purchase dollar limit, a monthly expenditure limit and a control on which merchants can be used. Once expenditure has been incurred, the card provider will issue a statement to the buying organisation, which will allow reconciliation of expenditure and attribution to the appropriate budget and expenditure accounts. The use of PCards can reduce the transactional workload for purchasing teams and focus activity upon establishing agreements for the key category spends, rather than managing individual transactions. See also Acquittal.

In short

A PCard lets approved staff pay for low-value purchases directly, without a purchase order.

When it works well

PCards suit frequent, low-value, low-risk purchases where raising and paying a purchase order costs more than the purchase itself: travel, subscriptions, minor equipment and one-off supplies.

Controls that matter

• A limit per transaction and per month for each card.
• Blocks on merchant categories the organisation does not buy from.
• Monthly reconciliation with manager approval.
• Regular analysis of card spend, so split transactions and off-contract buying show up.

In the Australian public sector

Commonwealth guidance encourages entities to use payment cards for low-value purchases, partly so small businesses are paid faster.