Card Policies on Prohibited and Allowed Purchases
If you are a card program manager or administrator, you have probably seen it all in terms of the types of purchases cardholders have believed were appropriate. There is a lot of gray area in between what is prohibited and what is allowed. You cannot possibly list every potential purchase within your card program policies and procedures. It is especially difficult to address product quality. Something might be an allowed purchase, but there can be a fine line between necessary and extravagant. How, then, can you help cardholders and their managers make the right decision about the appropriateness of a purchase? Following is a suggestion.
Suggestion
Add a prominent headline to your card program Intranet page: “Am I allowed to buy this?” Link to the prohibited and allowed purchases specified in the card program manual. Then walk cardholders through a series of questions to guide them to the right answer, even though the questions are a bit subjective. You could format the questions as a decision matrix.
Is the purchase necessary for conducting the organization’s business and your job role?
If you didn’t have a company card for making the purchase, would you submit your request through other procure-to-pay channels? Saying “no” indicates they are aware that their intended purchase is unnecessary.
Is there a less expensive option (than the option you are contemplating) that would work?
Would taxpayers be outraged by your purchase, considering it extravagant? This is geared toward the public sector, but the private sector could use something similar.
Would you buy this item if you had to pay for it yourself (non-reimbursable)? Too often, employees are not prudent about business purchases because it is not their money.
At the end:
Include who they should contact (and the applicable contact information) if they are still uncertain about a purchase.
Remind cardholders that, just because a preferred or approved vendor offers something, it does not mean that the item is an allowed purchase. For example, Staples sells nice Keurig® coffee makers, but your organization likely does not want employees buying them for their individual offices or cubicles.
Stress that they should use good judgement when making business purchases and seek the best possible value that meets business needs.
Final Thoughts
On a related note, ensure your policies are clear about purchases like:
food and beverages—for individuals, for business meetings, for department celebrations, etc.
employee gifts, including flowers, greeting cards, balloons, and gift cards
charitable donations, including memorials and fundraising campaigns
By not addressing popular items like these, your organization risks more than frivolous purchases and possible budget issues. It could be hard to terminate an employee for improper purchases unless the policy is clear and you can prove there was a violation.
Finally, update your training content for cardholders and managers. Language in policies only goes so far. Keep training, too.
Upcoming Training Webinar
Speaking of training, I will be delivering a related webinar for AP Now next week. I encourage all card program administrators and managers to register and attend.
Title: Best Practices for Your P-Card Training Initiative
Topics: Who should be trained and when, a key question to answer before you build the training, different training options, the role of quizzes and tips for writing good questions, and how to create stronger presentations
Date: March 21, 2024, beginning at 1:00 PM Eastern
To learn more and to register, visit: https://www.ap-now.com/products/Best-Practices-for-Your-PCard-Training-Initiative-2.cfm
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About the Author
Blog post author Lynn Larson, CPCP, launched Recharged Education in 2014. With more than 20 years of commercial card experience, her mission is to make industry education readily accessible to all. Learn more…