General Electric Co. (GE) uses a procurement card for all purchases under $2500. GE switched to procurement cards after an investigation of its accounts payable processing revealed that 82 percent of its invoices were for less than $2500 and that it took 25 to 40 days to process an invoice. This caused GE to miss 77 percent of early payment discounts. This is typical for many large companies. They have a relatively small number of large-dollar-amount invoices from the purchase of raw materials or products for resale and a huge volume of low dollar-amount invoices for other purchases. This means that the accounts payable staff spends about 70 percent to 80 percent of its time processing and matching invoices for small dollar purchases.

Using a procurement card can eliminate much time and cost associated with this processing of small-dollar purchases. The procurement card accomplishes the following improvements:

• Employees have more control over their purchases than when things are purchased by a centralized purchasing department.
• Many activities are reduced or eliminated, such as soliciting bids, negotiating with sup pliers, keying or entering purchase order and invoice data, matching documents, man aging orders that do not match, and writing checks for small-dollar purchases.
• The company can receive one large, consolidated bill from the credit card issuer.
• The information from the credit card issuer can be sorted or examined by employee name, purchase type, or other key needs.
• Managers can place limits on credit cards to control purchasing activity.
• Credit cards can be restricted to certain types of vendors, thereby reducing the chance that the card could be used at an amusement park or strip club, or for some other fraudulent purpose.