Corporate procurement cards are widely used in many medium to large-sized organisations. Some of the benefits of its use include reduced volume of purchase orders, invoices, vendor setup and the consequent cost reduction derived from shrinking processing time. But the question is how to manage Procurement Cards (P-Cards) efficiently within the SAP landscape?
What is a Procurement Card?
This sort of card should not be confused with a travel and expenses corporate card, which is fully integrated with the standard travel and expense (T&E) process, in the different ways explored in SAP Travel and Expense Management: Know your options. A procurement card should be seen as an alternative purchasing channel, used mainly for low value and low frequency purchases, meant to reduce the number of purchase orders (PO) raised and vendors created in the system.
Unfortunately, there is no comprehensive SAP module to date that covers this functionality. Because there is no such functionality, most organisations using P-Cards either put in place heavily manual and time-consuming procedures to validate card statements and receipts or end up losing considerable amounts of money by being unable to claim the VAT that they could.
Keeping it simple with Fiori Apps
Even when there is no easy-to-activate module available, the solution for P-Cards is more straightforward than it seems thanks to the ease of use of Fiori apps. So, in most P-Card scenarios, an employee uses a P-Card to pay for goods or services and this is expensed back to the company when the card statement is due. At this stage, the company has an open payable which needs to be cleared through its usual Procure to Pay (P2P) process. However, how is the VAT included in those purchases recovered? How do we get further details of those transactions to ensure that the use of P-Cards is consistent across the board?
From a technical standpoint, P-Cards can be integrated into SAP in the same way as T&E card files, i.e. a file is received from the card provider, the logic embedded in the system enhances the data, and provides the user with the ability to manually reconcile transactions to the appropriate expense types and include any other relevant details.
Similarly, a P-Card provider sends an electronic card statement and the logic to interpret transactions can be developed in SAP without the need to invest a significant amount of time and money in it. In addition to this development piece, Fiori apps can be developed to enable users to ‘code’ and review their purchases from any mobile device or desktop, making the whole process slick and simple. A simplified range of G/L accounts and cost objects can be made available for the user in order to improve accounting and reporting accuracy. Approvers and reviewers can also have access to a Fiori app to ensure good use of P-Cards.
This solution is scalable and can be developed to cater for different card providers and file formats, with no limitations in terms of the number of cards that can be handled. Card owners can review their purchases, scan and attach receipts, change defaulted cost centres or G/L accounts and even split transactions to reflect that one purchase needs to be posted against two different departments.
The fact that Fiori apps are appealing, simple to use and intuitive should not be underestimated: it increases the level of user engagement considerably and in turn the company gets the required information from card holders in a timely and accurate manner. P-Card Fiori apps can be developed with a similar look and feel to Fiori apps already in use, such as PO and invoice processing and T&E apps. They can also be included in the same Fiori Launchpad to maximise the benefits of the non-disruptive, user-centric approach.
As a result, the company is able to keep track of spend categories, ensure adherence to P-Card policy, pinpoint frequently used merchants, interrogate purchasing behaviour within the organisation, claim back taxes and most importantly, reduce operating costs.
If you have yet to start your Fiori journey then take a look at our complimentary Fiori workshops in May, run by our very own Nathan Adams.