P-Cards Cut AP Costs and Earn Rebates, but Hit a Ceiling

A purchase card program can cut AP processing costs, reduce purchase orders and earn up to a 2.5% rebate. And the savings can add up. Just ask Steve Iannarone, longtime AP leader. 

He helped build a p-card program that eliminated approximately 200,000 invoices annually from indirect spend and generated more than $75 million in annual rebate-eligible spend.

IOFM sat down with Steve Iannarone to better understand the business case, rollout sequence, ownership, Treasury’s role, workforce impact and the practical limits of card programs, including why AI can sharpen spend analysis but cannot replace merchant-code card controls. 

What is the p-card program worth today?

The p-card program’s value is measured across three primary dimensions: 

First, lower AP processing costs, calculated by multiplying the number of invoices eliminated by the organization’s average cost per invoice. 

Second, fewer requisitions, purchase orders, and goods receipts when p-cards replace transactions that would otherwise require a two-way or three-way match. 

And third, revenue share generated by program spend, based on total spend volume and the organization’s payment timing with the card-issuing bank. Average rebates typically range from 1% to 2.5%, depending on transaction volume and payment speed. 

Responsibility for recording the rebate is typically established by agreement among the CFO, procurement, and treasury when the program is launched. The rebate may remain within finance or be allocated across departments or cost centers in proportion to the spend each generates. 

In what order did you roll out p-cards relative to the other rails (ACH, virtual card, wire, check outsourcing), and why that order? 

We began by revising the corporate p-card policy to require existing cards for all eligible indirect purchases under $5,000. We then established a cutoff date after which noncompliant requisitions would no longer be accepted. Requests that did not meet the revised policy were declined, and users were directed either to use an existing p-card or request one for their department. 

This approach reinforced the revised policy and systematically shifted eligible spend into the program. 

At the time, payment methods were prioritized in the following order: 

• ACH 
• ePayables (virtual payables) 
• p-card for Indirect 
• Supply chain finance for direct, critical materials 
• Checks, outsourced 
• Wires 

Who owns this program? Did AP and Procurement fight over it, who won, and where does it sit on the org chart today? 

Procurement owned the program and administered it through the Buying Desk. The Buying Desk supported adoption by declining requisitions that did not comply with policy. During supplier onboarding, the team also determined the appropriate payment method based on the goods or services each supplier would provide.

What role did Treasury play, and how did you resolve competing priorities on working capital — such as paying at the swipe and DPO compression — versus rebate? 

Treasury did not have a direct role in administering the P-card program. However, it monitored and reported utilization of ghost cards/ePayables and supply chain finance to procurement and finance leadership to confirm that both programs continued to deliver value. Because supply chain finance represented more than 5% of annual accounts payable spend, it was disclosed in the company’s Form 10-Q.

What happened to the FTEs whose work disappeared? How many cardholders and program administrators do you now support? What is the one thing you would tell a director not to move in the first wave? 

The affected positions were offshore roles staffed by a business process outsourcing partner. The partner was responsible for redistributing the remaining workload and demonstrating improved resource utilization. Program administrators supported up to 300 cardholders. 

For an initial rollout, I would recommend conservative per-transaction limits and would avoid thresholds high enough to capture potential capital assets until the program is stable and mature. 

Where is the ceiling? How much farther can p-cards take you before diminishing returns, and what is left that only supplier-portal work or AI can touch? 

P-card returns begin to diminish when cards are used for managed-spend categories, where transactions may bypass contracted purchasing channels. AI can strengthen spend analysis and exception detection. However, card controls generally cannot restrict purchases to specific suppliers and instead rely on merchant category codes (MCCs) to limit eligible transaction types.