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3–5 Automate Three-Way Matching
• No cash advances. Whenever an employee asks for a cash advance, the account-
ing staff must create a manual check for that person, record it in the accounting
records, and ensure that it is paid back by the employee. This can be a very time-
consuming process in proportion to the generally meager advances given to
employees. A credit card can avoid this entire process, because employees can
go to an automated teller machine and withdraw cash, which will appear in
the next monthly card statement from the issuing bank—no check issuances
required. Of course, this benefit only applies if those employees needing cash
advances are the same ones with access to a procurement card.
• Fewer petty-cash transactions. If employees have procurement cards, they will
no longer feel compelled to buy items with their own cash and then ask for a
reimbursement from the company’s petty-cash fund.
• Fewer purchasing transactions. A whole range of purchasing activities are
reduced in volume, including contacting suppliers for quotes, creating and
mailing purchase orders, resolving invoicing differences, and closing out
orders.
• Reduced supplier list. The number of active vendors in the purchasing database
can be greatly reduced, which allows the buying staff to focus on better rela-
tions with the remaining ones on the list.
• Reduced mailroom volume. Even the mailroom will experience a drop in vol-
ume, since there will be far fewer incoming supplier invoices and outgoing
company checks.

A procurement card is easy to implement (just hand it out to employees), though
one should keep a significant difficulty in mind: The banks that issue credit cards
must expend extra labor to set up a procurement card for a company, since each
one must be custom-designed. Consequently, they prefer to issue procurement
cards only to those companies that can show a significant volume of credit card
business—usually at least $1 million per year. This volume limitation makes it
difficult for a smaller company to use procurement cards. This problem can be
partially avoided by using a group of supplier-specific credit cards. For example,
a company can sign up for a credit card with its office supply store, another with its
building materials store, and another with its electrical supplies store. This results
in a somewhat larger number of credit card statements per month, but they are
already sorted by supplier, so they are essentially a ‘‘poor man’s procurement card.”

Cost: Installation time:

3–5 AUTOMATE THREE-WAY MATCHING

The three-way matching process is a manual one at most companies; that is, a
clerk matches a supplier invoice to a company purchase order and a receiving