Most companies now use purchasing cards to manage their expenses. Vendrix's blog will guide you on how purchasing cards can be beneficial for your business.
As you know, construction companies have many ways to pay for goods and services. Yet, many of them create purchase reconciling headaches.
Seven out of ten companies now use purchasing cards to manage their expenses. Before you decide to become one of them, make sure you’re selecting a system that has been designed especially for the construction industry.
What is a Purchasing Card?
Purchasing cards (also known as P-Cards, procurement cards, and payment cards) are a form of payment used by businesses to enable their employees to easily obtain the goods and services they need to do their jobs.
The difference between a purchasing card and a corporate card is that the business owner or financial control executive can decide:
Exactly who gets spending power (and how much)
What types of goods and services each person or group can buy
How much flexibility they need in payment terms
This is especially valuable in the construction industry, where you may have many people out in the field making on-the-spot decisions and purchases. In addition, project cash flow can be unpredictable and purchasing cards can enable you to manage spending more precisely.
You maintain total control over spending and can see -- anytime, anywhere -- what’s being spent. Rather than waiting until the end of the month and discovering issues, you can remain on top of cash flow and cost overruns.
Companies also save time and labor on processing expense reports and generating summaries of spending.
Although empowering spending and eliminating tedious expense reports is not guaranteed to improve company morale overnight, giving your valued team members autonomy and removing non-work-related tasks can definitely make people happier. And who doesn’t want a committed work team?
How P-Cards Compare to Other Cards
Business owners today have many options beyond check-writing for controlling spending power. For example:
Corporate Cards are primarily used for travel and entertainment. They are also called Travel Cards.
Fleet Cards can only be used for fuel, maintenance, and repair of company-owned vehicles.
Prepaid Cards are debit cards and can only be loaded with a certain amount.
In short, purchasing cards give your construction business the most flexibility and range of spending.
A Card Is Not Enough
You may be deluged with offers from your bank (or financial institutions who want your business) to choose their p-cards. After all, that helps them build loyalty among their customers or attract new ones.
But before you make that decision, consider this:
Having a way for your team members to buy goods and services is just one thing you should look for when selecting a purchasing card. The cards themselves have become commodities. You need a spending system that will save you significant time and resources.
Most importantly, you want to be able to sync that system with your current expense management tools and give you up-to-the-minute insights on spending patterns and categories and individual team member patterns.
An added benefit can be rewards. But be wary of generic reward programs.
Our founders, who had more than a decade of experience managing construction projects, realized that most of the purchasing card solutions were designed for generic businesses, rather than specifically for builders and construction companies.
Construction companies have a variety of needs that other types of companies might not. Tools and supplies, fuel, travel, permits, and even meals for the crew are expense items that can make or break the timing and quality of a job. Those purchases can make up anywhere from two to 10 percent of project spending. And construction spending is more than $1.5 trillion a year, so we saw a problem that traditional banks weren’t solving.
If your team members are spending time and energy getting permission to buy the things they need and then spending even more resources filing expense reports, your work productivity and company morale can suffer. That doesn’t even take into account the people you need inside the office to monitor and report on spending.
Other P-card systems are highly complex and may require technology and financial experts to use them. So, we also set out to build a system that was easy to adapt and that integrated with the other cost-tracking and reporting tools you use.
In short, we reinvented the purchasing card -- with an eye toward ease of use and adoption, maximum control for business owners, and the optimal amount of information and control, so you can spot and fix costly problems as they happen.
In fact, everything we do is designed to make your life simpler. And we know how to do that because we’ve been where you are.
We realized the drawbacks in some generic card reward programs, so in response to requests from construction companies, we recently launched a fuel reward program.
Perhaps the P in P-Cards should also stand for profitability. Our valued Vendrix customers save 40 hours a month by using our system.
Redeploy those dollars for business growth, team rewards, or that hard-earned vacation.