9/12/2013. CAPITALIZE ON YOUR PURCHASING CARD PROGRAM September 20, Agenda. With a card payment you can:

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1 CAPITALIZE ON YOUR PURCHASING CARD PROGRAM September 20, 2013 Agenda Why Use a Commercial Card? Review the benefits of a card solution Travel Cards Automate expense reporting and gain visibility into spend Purchasing Cards Streamline low dollar procurement solutions Accounts Payable Cards Realize the value and ease of capturing larger transactions on a card 2 With a card payment you can: Maximize Rebate Dollars Extend Cash Flow and Days Payable Outstanding (DPO) Decrease Vendors Days Sales Outstanding (DSO) Reduce the Number of Checks Issued Improve Internal Operational Efficiencies Enhance Negotiating Positions with Vendors Maintain Control and Visibility into Company Spend 3 1

2 What concerns do you have? Losing purchasing control and visibility Cooperation from cardholders Losing vendor history It won t work with my system Too much work/not worth the change Fraud Control 4 One Card Solution addresses all areas of spend Travel Purchasing Accounts Payable Transaction Size Account-level control Importance of Process Merchant Category control Project level budget control Supplier and transaction control Increased importance of Control Travel Cards Solution used for hotel, airline and other business related travel and entertainment expenses Purchasing Card Solution used at the point of sale for smaller dollar transactions, typically less than $5,000 Accounts Payable Cards Solution used to pay large dollar invoices that have gone through the typical procurement process 5 Automate expense reporting and gain visibility into spend TRAVEL CARDS 6 2

3 Paper based T&E process is inefficient T&E spend is often employee funded or funded with cash advances Spreadsheets are utilized for expense reporting Creates a manual reconciliation and reimbursement process Labor intensive and time consuming Manual processes provide no visibility into travel data Difficult to monitor for policy exceptions No insight into where travel dollars are spent Difficult to negotiate vendor discounts 7 Automation brings efficiencies Travel Cards allow for automated expense reporting using smartdata.gen2 (smartdata) online expense reporting platform or a third party expense reporting system Smartdata provides an economical option Account allocation, review and approval Upload receipts Capture out of pocket expenses Allows for non-card users Exception monitoring Card data can be fed into third party expense reporting platforms Sophisticated approval routing Higher level of policy compliance monitoring Companies that use card data to negotiate contracts with vendors receive deeper discounts than those don t have card data to share* *Source: 2011 RPMG Travel Card Benchmarking Study 8 Travel Cards provide additional program benefits Chase and MasterCard also provide benefits to employees who use their corporate cards to secure travel Travel Accident Insurance - $400,000 Lost Luggage Insurance - $1,250 Primary Rental Car loss damage waiver Roadside assistance Emergency Medical Coverage 9 3

4 Streamline your low dollar procurement solutions PURCHASING CARDS 10 The 80/20 Rule at its best ACH/EDI/Wires ACH/EDI for your top tier suppliers Wires transfers for immediate needs AP Card solutions Ghost Cards Accounts Payable Cards reduce check volume Checks continue to decline Commercial Cards and Direct Deposit Purchasing Cards for low dollar procurement and travel related spend Direct Deposit and Payroll Cards for payroll 11 Circle of efficiency Cards issued to designated employees Pre-set spending limits Merchant controls Transactions post to smartdata Accounting information appended Receipts image attached Key to savings Single invoice for all transactions Single auto-debit payment Single account upload file Rebates paid on spend Accounting system integration Transaction file import Automated posting and payment 12 4

5 Efficiency drives cost savings The average cost of the traditional purchase order is $90.77* The average cost of a card transaction is $17.24 resulting in an 80% cost savings The average cycle time savings is 8.5 days over the traditional process Employee Receiving Employee Employee Manager Purchasing Employee Accounts Payable Accounts Payable Need to buy Generate PO or requisition Approve purchase Purchase goods Receive goods Receive goods Receive invoice Match per purchase Pay per purchase Shipping notice * 2012 RPMG Purchasing Card Benchmark Survey PO or requisition information 13 Three stages of program control PROGRAM POINT-OF-SALE 1 COMPLIANCE 2 CONTROLS Establish and enforce policies and procedures Cardholder agreement Senior management support and visibility Mandate program Training and communication Spend Limits Single purchase limit Monthly spending limit Authorizations per day Transactions per cycle Merchant Category Code restrictions Block cash access TRACKING & 3 MONITORING Daily access to online reporting Monthly reconciliation Cardholder review transactions Manager approves transactions Audit spot check Take advantage of exception reporting THE RESULT: A successful and secure program 14 Key to success: Smartdata online reporting Best Practices for online review and approval: Transaction review and approval by cardholders and managers Receipt upload to avoid paper shuffling Accounting defaults simplify the review process Generate automated s to remind cardholders and managers they have transactions to review Best Practices for program management: Create hierarchy structure to simplify reporting and transaction approval Schedule reporting to simplify the administrative tasks Define user roles and access Maintain card limits and controls in real time Streamline posting process via general ledger upload 15 5

6 Realize the value and ease of capturing larger transactions on a card ACCOUNTS PAYABLE CARD 16 The Accounts Payable Solution Card accounts are issued to the Accounts Payable Department and are used to pay invoices in lieu of issuing checks Purchasing and approval processes remains intact Vendor is flagged in AP data base as a card paying vendor A/P Department already has processes in place to capture Account allocation Capital equipment accounting Benefits of an Accounts Payable Card Reduce the number of checks issued Retain vendor history Increase DPO and decrease Vendor DSO The financial incentive can turn Accounts Payable into a profit center 17 A/P Card process works with all systems Your Company 1. The process for matching, entering and approving invoices in your company s AP system remains intact nothing changes Your Supplier 2. Process payments for card-accepting vendors 6. Transaction data extracted from smartdata for account reconciliation Payment Instructions 3. Notify your supplier of approved payment 4. Supplier processes transaction on POS device and is paid within 48 hours 5. Vendor transaction is posted and becomes available in smartdata 18 6

7 Suppliers benefit from card payments Receives payment within 1-2 days from merchant processor Reduces credit approval costs Vendor receives payment directly from their merchant bank Lowers billing and collection cost Decreases days sales outstanding (DSO) Reduces check handling costs Improves cash forecasting Eliminates risk of check delays A vendor match will help identify cardaccepting vendors 19 A vendor match uncovers opportunity A vendor match is a quick and cost free service Identify which vendors accept card and what level of data they provide MCC codes for matched merchants should be provided Simply provide an Excel spreadsheet with basic vendor information Tips for a successful vendor match Provide 12 consecutive months worth of data Include: Annual number of invoices Annual spend Payment type (ACH, check, wire) 20 Summary - Benefits of Commercial Card Classic Organizational Benefits Cardholder Benefits Vendor Benefits Reduce paperwork and automate processes Consolidated payment saves time and money Reduce number of one-time suppliers in A/P database Faster payment results in improved supplier relationships Electronic data provides visibility into spend Real-time program management and control Improved cash flow - take advantage of float Easier cash forecasting Easier and faster procurement Unsurpassed card acceptance Travel accident and lost luggage insurance gives peace of mind Easy on-line reconciliation Emergency services and no-strand policies protects travelers Improves cash flow - get paid in 2 days Lowers billing and payment processing costs Eliminates collection activities Increased sales opportunities over non-card accepting vendors Improvement in DSO (Days Sales Outstanding) Easier cash forecasting 29 7

8 QUESTION & ANSWER 22 Card payment can alleviate 1099 MISC reporting IRS regulations effective for the 2011 tax year shifted the burden for 1099 reporting on transactions paid by card to the acquirer Acquiring entity is now responsible for reporting all card transactions to the IRS You no longer have to marry card and check transactions to verify payments at the $600 reporting threshold Your company still has to report transactions paid via check, cash, ACH and wire MasterCard s whitepaper outlines the legislation 8