How Purchase Cards Simplify Nonprofit Accounting
Lost receipts, multiple tracking spreadsheets, and unchecked spending, oh my!
Is this sounding like your month-end scramble? These hurdles are a few of the challenges facing school business offices and nonprofit organizations doing their best to evaluate and keep track of employee purchases day-to-day.
Zeroing in on an easier way to get a handle on expenditures can be a game changer for any business office. And while there’s nothing like “the thrill of the chase” when hunting down multiple receipts…does anyone truly have time for that? So, how then do you get off that expense management merry-go-round?
Allow me to introduce you to a business tool called the Purchase Card. In the same way that a traditional, personal credit card or corporate card can streamline your spending and payments, a Purchase Card does just that for your financial office, and then some. Not only can a Purchase Card provide a singular place to review all spending, but it comes with added benefits like custom credit ceilings and individualized transaction controls.
A well-functioning finance department ensures day-to-day security and efficiency in all their processes. Supervisors and controllers especially need tools that help increase their ability to oversee compliance and provide visibility into various aspects like universal spending. Let’s dive into a few ways Purchase Cards offer increased control and streamline your expense management.
Adding Security with Purchase Cards
Many business professionals rely on Google Docs or Excel for their purchasing and expense tracking. These may be your tried-and-true business office tools as well, but how protected is that information? Going one step further, how many individuals have access?
What if you could log into one central and secure location to access everything from spending ceilings to daily charges to charge frequency? Purchase Card online portals allow supervisors to do just that. They provide an interface to regulate and keep track of the who/what/where/when for delegated cards and cardholders. This approach greatly reduces the risk of fraud or misuse of the purchase cards by the card owners.
Of course, there are caveats to consider when evaluating new tools. With any type of credit or purchasing card, there’s still a small percentage of risk involved. Even so, just like your everyday consumer credit cards, many Purchase Cards incorporate ways to mitigate that risk, having the extra benefit of liability coverage in the unlikely event a card is stolen or an employee were to try to use the card fraudulently.
Additionally, not every organizational employee has the same spending need. Your AP clerk may need a certain amount to ensure they can generate, process, and mail checks or EFT notices, while your IT manager might need greater bandwidth to regularly maintain, secure, and upgrade various technical systems for the organization. With different employee roles inevitably having different spending priorities and limits, Purchase Cards also give you the added bonus of specifying unique limits and spending controls for each card holder.
Streamlining Your Expense Management
When employees use their individual purchase cards, those transactions are funneled into one place for easy supervisor tracking and reporting. This workflow, in turn, provides admins or Controllers with a bird’s eye view of total spending. They can then use that spending to their advantage. For example, as an organization begins to build up a spending history, let’s say a top vendor emerges. This opens the door for a conversation about special rates or custom discounts with that vendor. Vendors do tend to incentivize their repeat customers. Along the same lines, there may even be a case for lower frequency but larger quantity purchases to take advantage of a quantity discount when offered by the vendor that might be used by multiple departments.
Purchase Cards are also better for the environment because they are electronic, efficient, and instant. They are easy to track because there’s no waiting around for mailed checks to clear. The online card portal makes accessing the pool of transaction information and controls easy and available 24/7. It also allows for increasing or decreasing a cardholder’s credit limit in real time.
Many cards also supply organizations with additional travel benefits. This can be a lifesaver for employees who are most often on the road or in the air.
Finally, at the end of a spending cycle, balances for purchase cards are typically paid automatically via ACH at a certain time of the month. This eliminates the risk of late payments and takes one extra task off your to-do list.
Creating a Connected Expense Management System
While not all purchase cards out there come coupled with an expense management system, you’ll find there are often multiple benefits to having both pieces in your business office arsenal.
Having both, for example, especially when integrated, creates a completely streamlined expense and approval workflow. This is especially helpful when you have employees out in the field daily, all making their own purchases. Accuracy and accountability inevitably improve when invoice request submissions are in the hands of the end user closest to that purchase.
Getting a Handle on Your Nonprofit’s Spending with Purchase Cards
Create your own butterfly effect and take the first step toward developing your spending insights. Purchase cards could very well be that new resource you implement for extra efficiency and control around your organization’s expenses. Having a solid handle on spending could eventually lead to opportunities for extra savings and in turn, a more accurately prepared budget, and so on.
Learn more about how Purchase Cards can streamline your processes and how real organizations are using them by visiting our Purchase Card solution page.
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