A snapshot of P-card system use among public agencies

Usually, when we think of P-card systems, we think about decreased costs per transaction, higher purchasing efficiency and the rest of the many benefits touted by the credit card providers themselves. Some of this hype is generally true. However, there is not a lot of hard data available on how widespread the use and how efficient these P-card systems are across public agencies. This article is just a snapshot of data we received from a “rough and simple” survey we conducted on our database of North American public procurement departments.

What prompted us to look at this?

Well, it all started with a simple book sale. A U.S. state agency recently tried to purchase a $50 book from our web store. This is a frequent occurrence for us and doesn’t usually merit much attention. Credit card info comes in. We process it. Book is shipped out. Easy. Not that difficult all around.

This particular state agency, however, raised our eyebrows as to how much work was required to process a simple credit card payment. This state agency required no less than 13 separate e-mails requesting additional information to complete the transaction. Because of this agency’s accounting and procedural constraints, the purchaser could not use his P-card to complete a simple $50 book purchase transaction. Instead, the purchaser was required to ask the bookseller to register as a vendor and provide a tax form, after which he sent out a fax (yes a fax!) purchase order. The agency then needed to have the invoice revised to accommodate its system’s constraints. Needless to say this made us wonder if other public agencies implement their P-card systems in such a way as to actually eliminate many of the cost/time/efficiency savings.

Our survey was not designed to be scientific. We sent our database of public procurement agencies across North America a simple question: Can you use a P-card to make a $50 book purchase? If yes, can you provide any details as to how the process works? If not, why not? We received 279 responses, of which 261 had actual usable data.

What we found was encouraging. Most (81 percent) of our respondents have P-card systems in place. The remaining 19 percent, though, did not have any P-card system at all.

Of those that did have P-card systems, we categorized the respondents as “High Red Tape” or “Low Red Tape” based on whether the use of the P-card also required additional paperwork processing, such as requisitions, vendor registrations and/or purchase orders. “Low Red Tape” responses had a very simple P-card use process:

1. Order book online using P-card

2. Keep the receipt

3. Log it to a monthly reconciliation report

“High Red Tape” responses that required additional extra paperwork were similar to our nightmare book purchase example above. They included additional steps such as requiring the purchaser to file a purchase requisition first and obtain sign off on a form before obtaining and filing the vendor registration/tax information and/or creating a purchase order in the system.

In summary, about half of the 81 percent of respondents who use P-cards seem to have gotten the idea of the spirit of P-card use, which is to save time and money. The other half seems to have a P-card system in name only. There may be many, many reasons for a “High Red Tape” system (pre-existing accounting software system constraints, legal or procedural requirements), but it’s clear that there is room for improvement.

Here is a link to the survey results.

Michael Asner is an independent consultant specializing in public procurement. He is author of “The Request for Proposal Handbook” and a speaker at conferences throughout North America. (Web: www.rfpmentor.com, email: [email protected]). He is based in Vancouver, British, Columbia.

Sharon Sheppard is consultant/researcher for Michael Asner Consulting.