Helpful hints for reducing fraud, waste, and abuse in purchasing card programs

01.06.22 09:17 PM By Cal Webb III

Many managers are ambivalent about purchasing cards (p-card).  This love, hate relationship with purchasing card programs has the potential to create unplanned risks.  Either a p-card program is too risky to consider or it provides a good outlet to control and monitor small dollar spending.  With the new strategies to recover costs through rebate programs, p-cards are becoming more of a staple of small to large entities.  Over the years, Gradient has seen a variety of controls and issues within p-card programs. Here are some of our recommendations (not comprehensive) to reduce risk in p-card programs. We’d suggest performing a thorough review of your own program against best practices.

 ·You need well designed policies, forms, and training. The information needs to be supported by strong cultural norms.  Without this, you don't have a foundation to monitor, instruct, and correct behavior.

·A single person or group (depending on size) needs to take responsibility for overall program management.  Responsibilities must be clear.

· Reconcile p-card policies to other organization policies including travel, purchasing, code of conducts, etc.

· Implement and monitor both single limits and monthly limits.

· Restrict vendors using the merchant category codes.

· Monitor rejected (denied) purchase reports.

· Require user input fields on transactions.

· Perform periodic monitoring and data mining of p-card transactions.

· Let people know when you find something.  They need to know you are looking.

· Ideally, link each individual transition to the general ledger to gain a comprehensive third-party spend view.

We’ve also performed numerous data analysis programs around p-cards and have well developed processes using both visualization and transaction analysis techniques. Here are some of our recommendations (not comprehensive) for data analytic procedures within p-card programs.

· Consider split transactions.

· Consider potential matching or duplicative transactions.

· Search for key words in the data.

· Review activity by categories such as weekday, merchant category code, department, title, and cardholder.

· Consider even dollar purchases.

· Consider items with sales tax.

· Flag and monitor particular vendor, cardholder, or merchant category code activity when appropriate.

· Review activity for frequency of cardholder usage, limit reasonableness, and spend against certain purchasing policy levels.

Cal Webb III