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Monday June 21, 06:03
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P-Cards Improve Corporate Cash Flow, Efficiency
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US firms that use corporate purchasing programs save a total of USD 23 billion annually, according to a 2003 survey by RPMG Research, and by 2007, this figure is predicted to reach almost USD 40 billion. In the two years ending in January 2003, corporate purchasing card use doubled to USD 80 billion, with spending almost tripling to an average of USD 1.6 million per month in 2003, from USD 633,000 in 2001. Immediate availability of data in the purchase card cycle also enables corporations to see how resources are spent, and to negotiate with suppliers, while improving accounting controls and overall cash flow.
P-card programs, which integrate expense monitoring, reporting and auditing functions, subsequently have an immediate and positive effect on an enterprise’s operations and financial results, while reducing overall costs. Improved payment and business systems geared to an electronic world similarly imply that corporations continuing to rely on paper-based systems will find themselves at a disadvantage. In short, cashless business operations empower enterprises to optimize their workflow through data management while restricting any unapproved expenses and making smarter corporate purchasing decisions.
For optimal effect, purchasing card programs need careful management, the GAO reported recently, with government agencies found to be losing USD 300 million per year due to not negotiating discounts of 10 per cent or more from suppliers which earned over USD 1 million a year from purchase card buys. In 2003, US government agencies used p-cards to buy USD 16.4 billion worth of goods and services, the GAO reports. Consequently, the US government is not believed to be maximizing its opportunities for volume purchasing, particularly for repeat purchases from vendors, but the situation is under review.
(SmartPro)
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