P-cards and the high price of convenience

This focus highlights the critical need to control expenses and maximize the value of every dollar spent.

However, achieving this goal becomes increasingly challenging when procurement card (P-card) misuse — a significant driver of rogue spending — goes unchecked. If your organization is navigating procurement complexities during the era of hybrid and remote work, addressing P-card misuse is essential to enhance your company’s financial performance and foster long-term organizational growth.

Let’s explore what you really need to know about your P-cards.

What are P-cards, and why are they linked to rogue spending?

P-cards, or procurement cards, are corporate credit cards designed to streamline purchases by skipping the traditional requisition-and-approval process. However, if not managed properly, P-cards can lead to spending outside approved procurement policies, often resulting in rogue spending.

Rogue spending can occur in a variety of ways, but it often emerges when P-card programs aren’t well-managed, and employees use their cards for unapproved purchases outside the rules.

A recent Deloitte report points out that decentralized systems and the rise of remote work have made this problem worse.² Employees working from home often don’t have clear visibility into policy rules or spending limits.

The results? Remote work has caused a 35% jump in P-card misuse in companies without centralized procurement systems.¹

The true challenges of managing P-cards

Mismanaged P-cards don’t just hurt your budget — they can disrupt your procurement process and cause issues across your business. Here’s a breakdown of the key challenges and their financial impacts:

1. Weak policy enforcements

   • What happens:

     Teams use decentralized P-cards without proper oversight.

   • What goes wrong:

     Employees sidestep policies for convenience, leading to unauthorized or non-compliant purchases.

2. Lack of transparency

   • What happens:

     Organizations deprioritize tracking and reconciling P-card transactions.

   • What goes wrong:

     Without visibility into spending, supplier negotiations and audits become chaotic.

3. Cost complications

   • What happens:

     P-cards are used for purchases from non-approved vendors.

   • What goes wrong:

     While it might be convenient, it leads to inconsistent pricing and fewer cost-saving opportunities. It’s also worth mentioning that unauthorized purchases can inflate your operational costs by 20%.³

4. Transaction fees

   • What happens:

     Every P-card transaction comes with fees.

   • What goes wrong:

     Small, frequent purchases can make these fees add up fast, especially when transactions aren’t centralized.

5. Reconciliation challenges

   • What happens:

     Tracking purchases across multiple P-card users is labor intensive and prone to inaccuracies.

   • What goes wrong:

     These inaccuracies cause delayed audits, strained supplier relationships and financial reporting errors.

6. Fraud and abuse risks

   • What happens:

     P-cards enable significant flexibility in purchasing but elevate fraud risks if not closely monitored.

   • What goes wrong:

     Fake receipts, inflated expenses or duplicate submissions can go unnoticed. It’s a hidden cost many procurement managers overlook, but 14% of occupational fraud ties back to expense reimbursement issues.⁴ And 1-in-5 expense reports contain accidental or intentional errors.⁵ These hidden costs can snowball if left unchecked.