Credit Cards, Rebates and #APAutomation – 3 Things
Whether you consider the payment process part of AP or a stand alone process credit cards can make a big impact. On the invoice side a credit card statement can be read just like an invoice and processed for payment. At the end of the process the credit card can be used to make the payments. From buying items to paying for those items and all points in between to make AP Automation efficient you need to strategically use credit cards, so here are three things to know.
Thing 1 – P-Cards and Corporate Cards
Purchase and corporate credit cards, or better know as P-Card are a great source of control and purchase power. One of the places you are able to help Accounts Payable Automation is to use P-Cards to limit the number of invoices in your process. What’s the point of limiting the number of invoices…. you would think that if you automate you wouldn’t want to limit the number, however all processes (invoices are no exception) can benefit for limited flow. P-Cards can help take the pressure off of an invoice approval process. Most people who I work with use P-Cards to have their people purchase anything under $100 as an example. (So) Everything under $100 goes on the card, and if you have the right card provider the card has alters and approvals to qualify the purchase, which is the way to make the entire program secure.
Thing 2 – Virtual Credit Card
Virtual credit cards are short-term, low limit lines of credit without a physical card. They are for a single or limited time use for when you are paying a vendor. Because of their low limit it is difficult to use a virtual credit card or VCC for a fraudulent purpose. They have a few down sides… because there is no physical card you must have a way to generate number with pre-approval and you must have a way of applying that card without presenting a card. Some credit card transactions require card holder information. With VCC there is no card holder information. That’s both good and bad. If there is no card holder information, it makes identity theft difficult, but if the receiver of the credit requires card holder information you won’t be able to complete the transaction.
Thing 3 – Rebates
I was talking with a large group about applying payments to virtual credit cards, and it wasn’t going very well. They didn’t see the genius and then my colleague said that it would put them in position to get rebates. The CFO said, “well, that’s different we are interested once you said the ‘R’ word”. As finance people our ears are perked by rebates, but there are a few things you should know about them before you put all your effort into them. Later this week I am writing an article on the “basis point myth”. This is where you concentrate as hard as you can in order to get the best rate. You will have to read the article when it comes out, but the rate is not the most important thing. The other thing to know is if you put too much on cards whether they are “P” or “V” you can put yourself in a position on not being able to track your expense or budget.
Stay tuned for more!
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