Final answer:
Companies control P-Card usage by setting spending limits, using merchant category code restrictions, establishing approval workflows, conducting regular transaction reviews, and providing employee training on acceptable use.
Step-by-step explanation:
Ways Companies Control P-Card Usage
Companies utilize various methods to control Purchasing Card (P-Card) usage to ensure that spending is within company policies and for legitimate business purposes.
One common way is through setting spending limits, which cap the amount that can be spent per transaction or over a certain period of time (monthly, for example). Companies also employ merchant category code (MCC) restrictions to prevent purchases from unauthorized vendors or categories.
Spending limits can be customized per cardholder based on their role and spending needs, helping to control costs and prevent misuse.
Approval workflows may be established where transactions require verification by a manager or another responsible party before they are processed, adding a layer of oversight.
Audit trails and regular reviews of transaction histories are conducted to identify any irregularities or non-compliant spending patterns.
Companies may also provide training and clear policies to employees on acceptable use of the P-Card, detailing what types of purchases are allowed and explaining the consequences of non-compliance.
Through these measures and continual monitoring, companies can effectively manage P-Card usage and mitigate risks associated with misuse or fraud.