Government spending has had some rough press this week. In the UK was the news that in the first 2 months of the year £1m has been spent on ‘taxpayer-funded credit cards’ with several councils and MPs being picked out for special attention.
Whereas in Australia there were allegations of fraudulent spending on government cards by a backbencher. The common theme seems to be that public sector spending on credit cards is frivolous, wasteful and mostly for personal entertainment and jollies.
But is it actually scandalous squandering of taxpayers’ money or are corporate cards actually a more cost-efficient and controlled way of spending? Let’s see …
The public sector uses cards to gain better visibility and control of what’s being spent. It may be easy to hide a few personal cash purchases in a manual expense process but if that transaction is made by card it’s visible straightway. Management and finance teams can run reports on transactions and check for any unusual or out of policy spend patterns to help identify fraudulent activity or misuse.
Cards allow front line staff to spend when they need to. Who would deny that a social worker trying to get a child out of danger needs to be able to spend immediately without going through a long-winded petty cash request process?
We can’t expect public sector workers to fork out their own money for legitimate work-related expenditure and claim it back on expenses. Too many businesses have got into the habit of making employees carry the liability and it’s wrong.
Not all cards are credit cards as we think of them. The majority are purchasing cards which can be used by authorised staff, or lodge cards which can be used to make payment to a single supplier. These give control and visibility of all kinds of spend, not just travel and entertainment expenses.
Card transactions take place automatically which dramatically reduces the time and resources required to manually process thousands of invoices and make the payments. Because these are often low-value expenses the invoice processing cost can be greater than the value of the initial transaction!
And some enterprising public sector organisations even generate money by using cards! Many credit card providers offer rebates based on spend volumes across the card programme and the rebates can run to hundreds of thousands of pounds per year.
When you consider these benefits and add up the tangible cost savings this equates to, then it’s no wonder the public sector want to use cards more rather than less. I’ve seen firsthand the positive impact it can have when public sector organisations are using cards for purchasing and have a robust spend management system to back that up.
So let’s stop being sensationalist and let them get on with reducing costs by driving efficiencies. I could start on the perils of fraudulent invoicing but I’ll save that for next time.