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Last updated on 2024年7月7日

How do you monitor and prevent fraud with purchasing cards?

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Purchasing cards, or p-cards, are a convenient and efficient way to pay for goods and services without going through the traditional procurement process. However, they also pose a risk of fraud and misuse, which can result in financial losses, reputational damage, and legal consequences. How do you monitor and prevent fraud with purchasing cards? Here are some best practices to follow.

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Dylan Martin

Procurement Consultant | [DISC??] | Artificial Intelligence & Cultural Intelligence | Exploring the Future of…

1 Set clear policies and procedures

The first step to prevent fraud with p-cards is to establish clear and consistent policies and procedures for their use. These should include the eligibility criteria, spending limits, approval processes, reconciliation requirements, and reporting obligations for cardholders and managers. They should also define the types of purchases that are allowed and prohibited, and the consequences of violating the rules. Make sure to communicate these policies and procedures to all relevant staff and provide regular training and reminders.

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Dylan Martin

Procurement Consultant | [DISC??] | Artificial Intelligence & Cultural Intelligence | Exploring the Future of Procurement & Supply Chain | Reach out anytime ??
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Developing clear policies and procedures is the foundation of a secure purchasing card program. These policies should outline what types of expenditures are allowed, set spending limits, and define approval processes for transactions. It’s important to make these guidelines accessible and ensure they are clearly understood by all cardholders. Regular updates to these policies can help.

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Jassim Alampara CIPS

Procurement Consultant @ Alambaar | Co Founder @ The Founder's Story | Procurement Audit & Training | Cross Industry Benchmarking | Procurement Transformation Specialist |
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Monitoring and preventing fraud with purchasing cards involves setting clear policies and procedures. Establish proper guidelines outlining acceptable card usage , spending limits and approval processes. Implement robust controls like regular audits and transaction monitoring to detect any suspicious activity or unauthorized purchases. Employees need to undergo training on fraud awareness and reporting procedures to ensure they understand their responsibilities and the consequences of fraudulent behavior.

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2 Implement internal controls and audits

The second step to prevent fraud with p-cards is to implement internal controls and audits to monitor and verify the transactions. This could involve requiring cardholders to submit receipts and supporting documents for each purchase, which must be reviewed and approved by managers. Additionally, software tools or third-party services can be used to track and analyze the data and flag any suspicious or unusual patterns. Periodic audits and reviews of the p-card program should also be conducted, along with testing the effectiveness of the controls and procedures. Any incidents or allegations of fraud or misuse should be reported and investigated, with appropriate disciplinary or legal actions taken.

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Dylan Martin

Procurement Consultant | [DISC??] | Artificial Intelligence & Cultural Intelligence | Exploring the Future of Procurement & Supply Chain | Reach out anytime ??
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Always include a setting transaction limits. Regular audits and thorough reviews of purchasing card activity help to maintain compliance and catch discrepancies early.

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Jassim Alampara CIPS

Procurement Consultant @ Alambaar | Co Founder @ The Founder's Story | Procurement Audit & Training | Cross Industry Benchmarking | Procurement Transformation Specialist |
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Monitoring and preventing fraud with purchasing cards requires the implementation of robust internal controls and regular audits. Internal controls involve establishing clear policies and procedures governing the use of purchasing cards, including authorization limits, transaction review protocols, and segregation of duties. Regular audits should be conducted to verify compliance with these controls, identify any irregularities or anomalies in purchasing card transactions, and investigate potential instances of fraud or misuse. By proactively monitoring transactions and enforcing strict controls, organizations can mitigate the risk of fraud and safeguard their financial resources.

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3 Foster a culture of accountability and transparency

The third step to prevent fraud with p-cards is to foster a culture of accountability and transparency within the organization. This means that everyone involved in the p-card program should understand their roles and responsibilities, and act ethically and professionally. It also means that the senior management should support and oversee the p-card program, and promote a tone of honesty and integrity. Moreover, it means that the organization should encourage and protect the whistleblowers who report any fraud or misuse, and reward the compliance and performance of the p-card users.

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Amr Mohsen -MBA-CIPS L4 Candidate

Procurement Lead | CIPS, Purchasing, Contracts Management
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Creating a culture of accountability within the organization is crucial. This means ensuring that everyone understands their roles and responsibilities in the p-card program, promoting ethical behavior from senior management down to card users, supporting whistleblowers who report fraud, and rewarding compliance.

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4 Review and update the p-card program

The fourth step to prevent fraud with p-cards is to review and update the p-card program regularly, and adapt it to the changing needs and risks of the organization. This means that the organization should evaluate the benefits and challenges of the p-card program, and solicit feedback from the stakeholders. It also means that the organization should benchmark its p-card program against the industry standards and best practices, and identify any gaps or opportunities for improvement. Furthermore, it means that the organization should update its policies, procedures, controls, and tools to reflect the current business environment and regulatory requirements.

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Amr Mohsen -MBA-CIPS L4 Candidate

Procurement Lead | CIPS, Purchasing, Contracts Management
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Regularly reviewing and updating the p-card program is essential to adapt to changing needs and risks. Evaluating benefits and challenges, benchmarking against industry standards, seeking feedback from stakeholders, and updating policies accordingly are key steps in preventing fraud.

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5 Educate and engage the suppliers

The fifth step to prevent fraud with p-cards is to educate and engage the suppliers who accept the p-cards as a payment method. This means that the organization should inform the suppliers about its p-card policies and procedures, and ensure that they comply with them. It also means that the organization should monitor and evaluate the performance and satisfaction of the suppliers, and address any issues or concerns. Additionally, it means that the organization should leverage the relationship with the suppliers to negotiate better terms and conditions, and to prevent or resolve any disputes or errors.

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Amr Mohsen -MBA-CIPS L4 Candidate

Procurement Lead | CIPS, Purchasing, Contracts Management
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Educating suppliers who accept p-cards as payment is important. Informing them about p-card policies, monitoring their performance, addressing concerns promptly, leveraging relationships for better terms, and resolving disputes effectively can help prevent fraud.

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6 Seek external assistance

The sixth step to prevent fraud with p-cards is to seek external assistance when needed. This means that the organization should consult with experts or consultants who can provide guidance, advice, or support on the p-card program design, implementation, or management. It also means that the organization should join or collaborate with industry associations or networks that can offer resources, best practices, or benchmarking on the p-card program. Lastly, it means that the organization should report or refer any fraud or misuse cases to the relevant authorities or agencies, such as the police, the bank, or the card issuer.

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Amr Mohsen -MBA-CIPS L4 Candidate

Procurement Lead | CIPS, Purchasing, Contracts Management
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If necessary, organizations should seek external assistance to enhance their fraud prevention efforts with purchasing cards. External expertise can provide additional insights into best practices and help strengthen controls against fraudulent activities.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you monitor and prevent fraud with purchasing cards?

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1 Set clear policies and procedures

2 Implement internal controls and audits

3 Foster a culture of accountability and transparency

4 Review and update the p-card program

5 Educate and engage the suppliers

6 Seek external assistance

7 Here’s what else to consider

Purchasing Processes

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