Businesses that need to reduce costs by streamlining processes can replace paperwork with credit or debit card programs. Two examples of processes impacted by these card programs include procurement purchases and incentive payments.
Corporate Credit and Bank Card Programs
Procurement card programs simplify purchasing and accounts payable processes and reduce the paper trail of invoices that these processes traditionally create. These programs are intended for small purchases (less than $500), which typically make up the bulk of procurement transactions. With a credit card these small dollar purchases are summarized on the monthly statement, which eliminates the need to issue multiple invoices to a single vendor for several payments. Overall, the use of a procurement card can reduce internal cost per transaction by an estimated 35 to 40 percent (Loftis). In addition to cost savings, buyers can also get their goods or services much quicker by bypassing the typical purchasing and receiving processes.
An incentive card program issues employees with prepaid debit cards that are reloadable. Each time the employee earns an incentive payment, it is credited to their debit card, which they can use to make personal purchases. The program replaces paper-based check payments with electronic payments on a debit card. Not only do the electronic payments reduce costs by eliminating paper checks, they also eliminate the processing costs of generating and mailing the checks.
The Unanticipated Business Process Management Consequences
However, while both the procurement and incentive card programs can increase efficiency and simplify processes, they may create a need for additional process management elsewhere.
For example, for tax and cost management reasons, a business that has implemented a procurement card program must now be able to manage all of the charges being made to credit cards held by many different card holders. Depending on the size and resources of the business, it may need an auditing process to review paper statements (a smaller business) or to review data feeds from the bank that issues the card to the business’s financial systems.
Incentive payment card programs face their own process issue. To be successful an incentive program employees must connect their behavior to the rewards. In a paper check-based system, the employee receives a tangible reward for a specific accomplishment. When payments are automatically and invisibly loaded on a debit card, the employees may not connect reward to behavior.
To ensure that incentives reinforce solid performance, a business needs a reporting process that shows employees why they received incentive payments on their debit card. By seeing their incentive payment history, they can identify what performance goals they met and can focus on meeting future goals.
Of course, these unanticipated business process management consequences should not discourage a business from considering a corporate procurement or incentive payment program. On balance the business process management trade-offs associated with implementing a program may still outweigh the costs and inefficiencies of the traditional processes.
