Purchasing Cards - The Advantages
Purchasing Cards - The Advantages
Purchasing Cards - The Advantages
The Advantages of Purchasing Cards: Both cardholders as well as vendors accepting purchasing cards tend to benefit from using purchasing cards. Time, money and energy are saved when people opt to use purchasing cards significantly reducing extensive paper work.
Advantages to the Cardholder:
o Purchase orders need not be generated.
o By presenting the card or by giving its number the order will be placed and paid for.
o With a purchase card, it is no longer necessary to use cash.
o Reduces the need for cash reimbursements
o Need for petty cash is significantly reduced.
o Eliminates the need for out-of-pocket expenses
o Significantly reduces cost of small dollar transactions.
o Businesses have benefited greatly by re-engineering their procurement process.
Advantages to Vendors Accepting Purchasing Cards:
o Receive cash in the bank within a couple of days helping cash flow. Time taken to process payments is drastically reduced especially those concerning payment from government departments. Earlier it would take 1 or 2 months for the payment to be processed and paid, with purchasing cards it takes about a couple of days!
o VAT is usually analyzed on the card statement, eliminating the need to save copies of low value invoices.
o Gives the vendor a strong competitive advantage over those who do not accept purchasing cards
o Increases sales as more and more business are opting to use purchasing cards.
o Lowers costs, saves time and money taken in preparing and documenting invoices.
o Helps customer retention
o Credit checks are no longer necessary as purchasing card holders are pre-approved.
These are a few advantages of using purchasing cards. The one disadvantage is the hefty bank commission. A lot of companies have begun using purchasing cards as they are cost effective, easy to monitor, more vendors accept them saving precious time taken to produce purchase orders, sending it to the vendor etc. by presenting the cards the vendor is assured of the payment and will deliver goods quickly making transactions hassle free.
Purchasing cards are also issued in universities such as Stanford who use MasterCard purchasing cards, issued by JP Morgan Chase. The cards are issued to the faculty and staff of Stanford University. Any vendor who accepts MasterCard can accept Stanford purchasing cards. These cards can be used to purchase anything up to $2,500 per transaction and Stanford pays one lump payment to JP Morgan Chase instead of paying each individual member.
There are firms that sell their services as well as products and they are dedicated to help new businesses run successfully.
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.
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