Many businesses recognize the need for corporate payment cards but distinguishing between purchase cards and corporate cards can be confusing. They look similar—the same business-branded credit card for spending—but they operate in very different ways to the point that confusing them is problematic.
The bottom line is that using the wrong type complicates situations and using the right one facilitates spending ease for everyone involved.
What Are Corporate Cards Actually For
Corporate cards are for employee spending. Travel, client meals, business supplies, software subscriptions—those general expenses that resonate with the job-day routine.
Corporate cards get assigned to individual employees to use for whatever they need. A sales rep can buy client lunches, purchase office supplies, and pay for his/her/their own travel expenses on the same corporate card. It’s made for as much flexibility as possible.
Generally, corporate cards have monthly limits and perhaps category restrictions, but aside from that, employees have discretion. The goal is tracking who spends what to ensure legitimate business spending.
What Are Purchase Cards Built For
Purchase cards (or P-cards) exist for procurement. Procurement means buying goods or services necessary for business operations. They’re assigned to individuals who have purchasing capacity—not for their spending, but for their department or company.
A purchase card is designed for purchase with certain vendors or types of purchases—not for general employee expense or business. Restriction is tighter with a purchase card and there’s more focus on what’s being purchased.
Often, P-cards supplant purchase orders for anything smaller than $500 or $300. Instead of filling out a formal purchase order form for a $200 office chair, the employee with a P-card would just buy it. It’s easier and less time-consuming, as long as it’s within the appropriate budgeted realm.
How Are the Controls Different
Corporate cards have generalized settings—monthly limits, transaction limits, maybe category restrictions but aside from that, an employee has discretion over what to buy—within reason.
Purchase cards work differently. They may only be used at certain vendors. An office supply P-card can only work at certain office supply stores. A facilities card may only work at hardware stores.
Transaction limits might be smaller. Many P-card programs have $500 or $1000 restrictions on single purchases. They’re meant for more routine purchases as opposed to strategic buying.
The difference comes down to usage expectations. Corporate cards assume employees will spend responsibly within categories and limits appropriate to their job. Purchase cards otherwise enforce regulations automatically so procurement policies don’t get ignored.
Who Gets Which Card
Corporate cards go to people who are regularly spending money within their positions—sales staff, executives, managers—traveling personnel who may require spending might need corporate cards. If your position requires you to meet with clients in person, your expenses might necessitate corporate card use.
Purchase cards are given to those who have buying responsibilities—office managers, department heads, facilities staff and IT. This means that even if they don’t use a purchase card themselves, they still have a responsibility to procure items necessary for the operation of the company.
Sometimes the same person has both—a department head needs a corporate card for travel expenses, but also needs a purchase card for departmental purchases. Different card types serve different purposes.
The Difference in Approval Process
With corporate cards, generally approval isn’t needed prior to spending by employees—employee discretion works within spend limits where receipts are collected and an expense report is submitted to a manager afterwards.
P-cards work differently—anything above $300 might require approval before the transaction goes through. Smaller expenditures might go through automatically; however, larger ones might require approval confirmation.
This makes sense with regard to travel considerations. It’s not always predictable when travel expenses would occur or when client lunches could happen. But purchases? They can typically wait two minutes for approval.
How Does Tracking Work
Both tracks create transactional data, but the data is used for different means. Corporate cards register expenditures as travel, meals, supplies and other budget categories based on trips or projects and who spent what and why.
Purchase transactions are tracked like procurement—by vendor, department allocation, what’s being purchased, etc.. Essentially, it’s not about how much was spent but what was bought and from whom.
This also speaks to which systems the cards link to—corporate sync with expense management systems; purchase cards often connect with procurement or ERP systems where all purchasing information lives.
When Do Companies Use Both
Larger companies often implement both types of corporate payments—corporate cards for employee expenditures and purchase cards for supplies and services. This makes life easier—the cards distinguish between purposes and keep travel-related expenditures separate from purchasing expenditures.
Smaller companies typically start out using only corporate cards until their purchasing alignment gets complicated enough where P-cards become necessary. As companies grow and procurement becomes more structured over time, the addition makes sense.
Typically this switch happens when there is enough purchasing that would save real time with streamlined processing and when there is enough organization so that a more formal acquisition authority makes sense.
When Is One Card Type Enough
If most all expenditures come from employees doing their jobs (travel, meals, subscriptions) there is no need to add procurement controls by implementing a second type of card.
If procurement is rigidly patterned with only a few individuals making purchases at predetermined vendors, P-cards might be all that’s necessary. Though in reality, most companies requiring P-cards also have departments needing corporate cards for other items.
The point is to get aligned with how money gets spent—forcing procurement through a corporate card adds extra steps. Using a P-card solely for employee expenditures is too restrictive.
What Happens in Reality
Small businesses start with corporate cards—more straightforward and gets the job done on its own until expansion occurs and formalized purchasing occurs with growth.
Medium-sized companies utilize both options—a corporate card for expenses for employees and a P-card for procurement. Each card type gets what it needs done while it’s appropriate.
Large companies almost always run both programs and within either type can go with several P-card options depending on departments or what type of purchasing needs to be done.
Getting Clear on What You Need
Assess how money is spent! If most comes from employee expenses, corporate cards with good tracking features make sense. If procurement is the greatest function of operations then a purchase card becomes wildly more efficient.
Many companies end up needing both types because both categories of spending exist! The solution just lies in differentiating between two useful solutions when neither should do everything alone without compromising to some extent neither party will enjoy.
Map out who spends money on what and why! That will illustrate whether one card solution works for everything or if different spending patterns need more specific solutions. There’s no right answer universally—but understanding the difference makes it clearer to find one!
Amanda Dudley is a lecturer and writer with a Ph.D. in History from Stanford University. After earning her doctorate in 2001, she decided to pursue a fulfilling career in the educational sector. So far, she has made giant strides by working as an essay writer for EssayUSA, where she delivers high-quality academic papers to students who need them.
