CIPS: Purchasing cards - CIPS Documents
CIPS is expressing beliefs on purchasing cards as it takes the view that purchasing cards can add value to most organisations' P & SM processes and as such are a very useful tool in the P & SM professional's armoury.
CIPS suggests that purchasing cards may deliver greatest value when used for high volume, low value supplies (from call-off contracts for example). For purchases from new ad hoc suppliers, purchasing cards avoid the time and cost of the customer establishing the supplier on their finance systems and the supplier opening an account for the customer.They are also useful when used like an ordinary credit card, instead of petty cash, for ad hoc purchases at retail outlets as deemed appropriate by the buying organisation. Purchasing and supply management P & SM professionals should determine how, and in what ways, their own organisation should use purchasing cards to support their purchasing and supply chain strategy. Numerous estimates have been put forward for the cost of raising an order and paying an invoice. Much depends on the nature of the order, ie whether it is a call off order for instance, and more importantly, the salary levels of the person carrying out the process. Nevertheless, CIPS believes that a reasonable estimate for the cost of raising a typical low value, simple order and paying the corresponding invoice is approximately £50. As, typically, 80% of an organisation's orders are low value and this represents less than 20% of expenditure, purchasing cards can significantly reduce the overall costs of an organisation's transactions or at the very least, ensure a more effective reallocation of resources.