Small Business Resource Center Small Business

Finance and Money Matters

Back to Finance and Money Matters

Making Payments: Purchasing or Credit Card?

Everyone groans when they’re in the checkout line at the grocery store and the person in front of them pulls out her checkbook to pay. Why? Because writing a check takes longer and is more inefficient than using a debit or credit card.

The same is true for a business’s accounts payable department. It is more time intensive—and therefore more costly—to issue a check or purchase order for goods and services than using a card. Many companies have realized they can help streamline their cash flow by paying with credit cards.

Commercial credit cards are a great payment method for most businesses, but some may need even more card-level control and flexibility than a standard card can offer. That’s where corporate purchasing cards come into play.

Purchasing cards

Corporate purchasing cards look and act just like credit cards, but they’re more than that—they’re a payment tool. These cards provide enhanced internal controls and reporting that come in handy for businesses that spend a lot each year, regularly purchase large-ticket items or have a lot of lower ticket travel and entertainment expenses. Many states and large corporations have established purchasing card programs, but smaller businesses may benefit too.

The business’s purchasing card administrator can turn cards on or off for employees easily and can set spending limits per employee. Cards can also be designated for certain purposes, such as specific merchant type (e.g. office supply store).

These cards are particularly helpful for businesses with fleets. Fleet cards can help companies manage mileage tracking by vehicle, driver fuel utilization and vehicle maintenance recordkeeping.

Administrators can also receive email notifications in fraud scenarios to help control against abuse and misuse.

Implementation

Before you implement a purchasing card program, you’ll want to:

  • Assess your current procurement process to get an idea of the possible cost savings.
  • Make sure your vendors would accept payment by card—many appreciate receiving payment more quickly.
  • Take into account your technology and current controls.
  • Evaluate the support that the purchasing card program provides, including help with implementation, training and assistance for individual cardholders.

Paying with a card is much more efficient than writing a check—you just have to decide which card is best for your business.

David Sturdivant can be reached at 615-744-3726 or david.sturdivant@pnfp.com.

What you'll find here

ArticlesPractical, straight-to-the-point information on key issues you will face.
Action PlansInteractive online training that allows you to build your own custom action plan.
VideosShort videos on everything from cash flow to competitive analysis.
TemplatesExperiment with financial scenarios and create a business plan to map your direction.

Client Programs

Client Programs

Building a Great Place to Work

Wed, Jun. 3 - 9-10:30 a.m.
Tennessee Bankers Association

Chip Cards are Coming: Are You Ready for EMV? - Brentwood

Tue, Jun. 16 - 11:30 a.m. - 1 p.m.
Pinnacle - Brentwood
See All Client Programs

Calculators

Calculator

How much mortgage can you afford? Do you have enough insurance? Get answers with these free calculators.

Case Studies

Case Studies

Learn how we've helped our clients purchase dream homes, build their businesses and become successful.

Pinnacle 5 Podcast Series

Pinnacle Podcast

Arm yourself with knowledge on financial topics from the advisors at Pinnacle.