What is a Procurement Card?
A procurement card is a cost saving payment vehicle for companies to do business with other companies (business to business or B2B). It is also known as a commercial card, purchasing card, business or corporate card.
The City of Tacoma uses the card as an alternate form of payment to checks or ACH to allow businesses to take payment upon shipment or completion of services instead of net 30.
Based on research, the top most drivers for the procurement card business case are:
- Process efficiencies
- Buyer spend reduction
- Buyer working capital improvement
- Supplier working capital improvement
Why accept a Procurement Card?
Suppliers who understand the concept of DOS (Day Sales Outstanding) cash leveraging and the efficiencies associated with card acceptance list the following benefits:
- Cuts operating costs
- Enhances customer relations
- Improves cash flow - prompt payment within 24-48 hours instead of 30, or more, days
- Reduces carrying costs
- Simplifies payment for goods and services by eliminating complex invoicing, collection activities and reduces receivables