Increased use of purchasing cards in government likely in 2012

Government user group members within the Minnetonka, Minn.-based National Association of Purchasing Card Professionals (NAPCP) recently shared their views on Purchasing Card (P-Card) use in government in 2012.

The NAPCP is a membership-based professional association created to advance the commercial card and payment industry. Its members include individuals tasked with managing card programs such as purchasing, travel and fleet cards, and electronic payment solutions. The NAPCP has more than 1,000 members. The group has an associate membership offering for end-user and provider organizations. It will stage its 13^th annual commercial card and payment conference in Atlanta, April 16-19, 2012.

Here is a summary of comments from government users within NAPCP on how they see 2012 shaping up in P-Card use. Lynn Larson, NAPCP’s manager of education, compiled the responses from NAPCP government user members. The question posed to user group members: Does your group see increased use of P-Cards by governments in 2012?

—A public school district employee projected that, because there continue to be budget constraints, P-Card spend will remain relatively flat in 2012 with only a possible slight increase. A city employee echoed a similar statement, noting that P-Card spend will increase, but within budget constraints. This city employee went on to express an awareness that some local government entities are curbing P-Card use due to concern about the risk of maverick spend in these hard times. However, the employee accurately noted that this risk greatly diminishes in strong P-Card programs that have effective controls, policies and practices. Going back to the “old way,” with a reliance on purchase orders and invoices, would sacrifice immediate transparency and the process efficiencies offered by P-Cards.

—Another city government employee observed that, as more government agencies add electronic payables to their programs (to address larger purchases), such a move will greatly impact and increase the annual P-Card program spend in 2012. Further, another benefit of P-Card use, causing a shift from paper checks to P-Cards, is that card payments are no longer reportable by end-user organizations per federal 1099 reporting requirements.

—Finally, a former state government employee, who currently works for a card provider organization, expressed the opinion that P-Card use will absolutely grow in 2012 because governments are looking to work smarter — not harder — with fewer resources. Cards offer more streamlined efficiencies, as well as potential for revenue income. “It’s a great fit for the times,” noted the user group member.

The year 2012 promises greater reliance on purchasing cards, Larson says. ”Across all sectors, the NAPCP continues to see increased P-Card usage, as there is still much untapped potential, as well as increased adoption of complementary electronic payables solutions from card providers (i.e., banks). An organization can improve its overall payments strategy by effectively utilizing more than one type of commercial card, such as P-Cards, corporate cards and electronic payables.”

For more forecasts on 2012 government budgets and operations, read the 2012 Keating Report on 2012 Government Budgets and Spending, which will be part of the January 2012 Government Product News and online at Govpro.com. Go
here for Keating’s mid-year 2011 forecast.