What is a purchasing card: Guide and benefits for businesses

When every dollar counts, visibility into company spending is essential. P-cards—also known as purchasing cards, purchasing credit cards or procurement cards—are a type of commercial card that gives businesses greater control over how employees make purchases.

By replacing manual approvals and paper-based processes within their accounts payables departments, companies use purchasing cards to help manage vendor payments more efficiently, reduce fraud risk and improve oversight. Here's how a p-card program works—and how to determine if it's right for your business.

How do p-cards work?

Purchasing cards are a type of payment card that may be issued to departments, teams or individual employees. By eliminating the need for individual purchase requests and approvals, they offer employees the ability to make business purchases quickly and easily. On the back end, business leaders gain enhanced visibility into employee purchases. More transparency means greater control over spending, making it easier for organizations to mitigate internal fraud and misuse.

To provide guardrails around their use, business leaders can set spending limits at the departmental or individual level, create a list of approved vendors and restrict the types of employee purchases. The result is a treasury management process that supports streamlined expense management and strong spending controls.

What can p-cards be used for?

Purchasing cards may be used for a wide range of business needs. Common expenditures include:

• Office supplies
• Business equipment
• Marketing and advertising
• Business travel
• Meetings and events
• Professional services
• Commercial invoices
• Service contracts

Who can use p-cards?

P-cards aren't limited to large corporations or specific industries. Any organization that manages recurring expenses, vendor payments or distributed purchasing can benefit from a p-card program.

P-cards are typically issued to:

• Employees who make frequent purchases, such as office managers, field reps or team leads
• Departments with decentralized budgets, like marketing, facilities or IT
• Procurement or finance teams to pay vendors quickly and track invoice-level detail
• Traveling staff or client-facing roles to cover business travel, lodging or event expenses
• Project-based teams where spending needs vary by location or timeline

With customizable controls and usage limits, companies can issue p-cards broadly while maintaining centralized oversight. This flexibility means they have the potential to offer several benefits to organizations of many sizes and structures.

How do p-cards differ from business credit cards?

Both purchasing cards and business credit cards can be valuable tools for businesses. However, p-cards offer a few features separate from business credit cards that are designed to control spending while streamlining processes:

What are the benefits of procurement cards?

For organizations with strict procurement guidelines, p-cards can help streamline purchasing and greatly improve productivity. While these are often the most significant selling points for businesses, purchasing cards offer many other benefits.

1Reduced processing costs

According to the Institute of Commercial Payments , the costs associated with the traditional procurement process frequently exceed the value of the item being acquired—particularly for transactions below $200. By offering a more efficient process, purchasing cards can help many organizations reduce these administrative costs.

2Fewer out-of-pocket expenses

P-cards eliminate the need for employees to use personal credit cards for expenses like business travel or client entertainment. This reduces the administrative burden associated with having multiple stakeholders review and process expense reports. It also prevents employees from having to cover business expenses out of pocket and then waiting to be reimbursed.

3Improved cash flow

Purchasing cards have an additional benefit that may be less apparent: improved cash flow. "One of the key benefits of a purchasing card is the ability to extend days payable outstanding, or DPO," explains Nicole Chauffe, Managing Senior Product Manager at First Citizens. "Once the standard monthly billing cycle ends, you have another 25 days to pay that bill." This allows companies to pay their vendors immediately while holding the funds for up to 55 days, depending on when the transaction occurs in their billing cycle.

4Increased visibility

P-cards provide companies with detailed insight into spending by employee and department. "Rather than listing a single charge and vendor name, our card management dashboard is set up to display level 3 line-item detail," Chauffe says. Depending on the level of detail reported by the vendor, this can include line-item details of everything an employee purchased, including the item description, number of units and price per unit. This level of detail can help deter frivolous spending and reduces the risk of employee misuse of a card.

5Reduced fraud

Purchasing cards have built-in defenses designed to help mitigate fraud, such as virtual card numbers. These single-use account numbers are linked to an underlying p-card account but are untraceable to it. Employees can use these virtual p-cards to make a single purchase online or by phone.

"You're generating a one-time-use account number each time, and typically they're only good for 30 days," Chauffe says. "They also have what we call an exact-match rule in place, so vendors can only process a charge for the exact amount of the invoice that was authorized—not a penny more, not a penny less."

Some card issuers also consistently monitor card use for suspicious transactions. "First Citizens has technology to track purchases on the back end," Chauffe notes. "Any unusual spending patterns are flagged."

Are p-cards right for your business?

For many organizations, implementing a purchasing card program can help improve operational efficiency while saving both time and money. However, some organizations may benefit more than others.

P-cards are typically a good fit for businesses that:

• Process a high volume of small expenses
• Are geographically dispersed with decentralized purchasing functions
• Have a complex budgeting process that requires detailed insight into spending patterns
• Face a high risk of internal and external fraud
• Seek enhanced control and visibility for reporting and management purposes
• Want a faster way to pay trusted vendors for essential goods and services
• Need additional insight to help streamline account reconciliation

Take the time to evaluate your organization's goals and weigh the potential benefits to determine if purchasing cards are right for your business.

What to look for in a p-card program provider

Not all purchasing card providers offer the same level of functionality, transparency or service. For finance and procurement teams focused on streamlining processes, reducing fraud and improving spend visibility, it's important to look beyond basic card issuance. The right provider should offer tools that integrate with your workflows, support detailed reporting and scale as your program grows.

• Flexible card issuing options: The ability to create both individual and department-level cards—physical or virtual—helps tailor access to specific roles, teams or vendors without adding complexity.
• Configurable spending rules: Set dynamic spend caps, purchase categories or time-based restrictions to align card use with internal policies and limit risk at the point of purchase.
• Real-time expense visibility: Dashboards and alerts that track spending as it happens allow managers to monitor trends, flag unusual activity and enforce accountability without waiting for month-end reports.
• Merchant and category controls: Block or allow purchases based on merchant codes or vendor lists to ensure cards are only used with approved suppliers or for specific business needs.
• Onboarding and training support: Access to experienced specialists during setup and rollout ensures a smooth transition, especially for organizations implementing cards across multiple departments.
• Proven compliance expertise: Providers that understand industry regulations and procurement standards can help you meet internal audit requirements and reduce exposure to risk.

Evaluate providers against your internal requirements—such as volume of spend, vendor mix and reporting needs—to ensure your program delivers long-term value.

The bottom line

Businesses today have more payment options to choose from than ever before. P-cards can be an integral part of a business payment strategy, adding both flexibility and control. However, selecting the right card program is essential. At a minimum, a p-card should offer a robust spending limit, vendor controls, detailed expense tracking and advanced fraud-detection tools.

When choosing an issuer, look for one with a responsive support team. "We have an experienced team dedicated to program administrators. This allows us to offer personalized support to our clients," Chauffe says. "Our team really gets to know how our clients operate. This helps businesses get the most out of their purchasing card program."

Key takeaways

• Compared to a business credit card, a purchasing card or purchasing credit card offers stronger spend controls, clearer reporting and lower processing costs.
• A well-designed p-card program can help reduce fraud risk, streamline p-card payments and improve visibility into business-wide spending.
• Business p-cards also support faster vendor payments, better cash flow management and more efficient reconciliation processes.