Driving Financial Supply Chain Using SmartPay2

Transcription

1 GSA SmartPay 2010 Conference Driving Financial Supply Chain Using SmartPay2 Adam Jackson Vice President/Citi Global Transaction Services

2 12 th Annual GSA SmartPay Conference Atlanta, GA August 10-12, 2010

3 House Rules To ensure the best possible learning experience for participants, please adhere to the following house rules: Turn cell phones and pagers to vibrate Hold questions to end of session Ensure your participant badge is scanned to receive CLP credits For each course Must leave room and re-enter Take advantage of opportunities to provide feedback Please select the Ask Citi icon on any Citi PC at the conference Answers to be ed after the conference within 45 days

4 Goals & Objectives This course is designed to assist you in achieving the following objectives: Using SmartPay2 to optimize your agency s financial supply chain

5 Agenda 1. Financial Supply Chain Management 2. Get reacquainted with the SmartPay2 Contract 3. Concepts to Consider for SmartPay2 a. Inter/intra-Government Services b. Grants Management

6 1. Financial Supply Chain Management

7 Financial Supply Chain Management What is Financial Supply Chain Management (FSCM)? The Financial Supply Chain refers to: End-to-end trade processes between buyers and sellers that depend on supporting financial information to effectively manage accounting, cash and fulfillment Buyer s perspective, this involves the full procurement-to-payment process. For the seller, it is the order-to-cash cycle. The trade cycle involves a number of different types of parties needing to exchange information and a variety of contractual documents in a timely manner A supply chain finance solution is a combination of technology (platform), services, applications, content, contractual agreements and finance deployment

8 Financial Supply Chain Management Why is FSCM Important to the Federal Government? Continuous vigor around federal financial management: Accountability, Risk Management Transparency to the public Optimizing transaction value Inherent partnership: Federal Procurement and Financial Offices Tracking federal obligation life cycle through multiple recipients Visibility into the transaction life cycle is paramount Large orders are usually complex Varying relationships between government trading partners

9 Financial Supply Chain Management The Government continues to focus on improving quality of its payment systems and tools: Noteworthy payments statistics in 2010 Agencies delivered more than $98 billion in improper payments in 2009 $26 billion increase OMB Comptroller Danny Werfel calls improper payments biggest government problem Federal Financial Statements in 2009 demonstrated room for improvement in accounting for high payment flow areas such as intragovernmental transactions

10 2. Get Reacquainted with the SmartPay2 Contract

11 Getting Reacquainted with the SmartPay2 Contract Remembering some of the key themes: Streamline ordering, procurement, payment, administrative processes Reduce fraud, waste and abuse Strategic Sourcing Streamline the dispute process Improve accountability and performance reporting Platform to serve multiple government functions and processes Improve government cash management practices Provide convenience State-of-the-art technology and innovation

12 3. Concepts to Consider for SmartPay2

13 Concepts to Consider for SmartPay2 Intergovernmental Transactions (IGTs) Federal agencies conduct business with each other, resulting in an exchange of revenue, expenses, assets, liabilities and/or transfer transactions. Three primary types: 1. Management of funds/borrowings by one agency on behalf of another 2. Transfer of funds between agencies by agreement or statute 3. Buying and selling of goods and/or services between agencies FMS reports over $8 trillion moves monthly between federal agencies via IPAC Critical Source of Federal Financial Management challenge

14 Concepts to Consider for SmartPay2 Managing IGTs Today Currently, agencies use several different procedures to process the majority of interagency transactions including: Paper-based, manual SF 1081: Voucher and Schedule of Withdrawals and Credits Paper-based, manual SF 1080: Voucher for Transfers Between Appropriations and/or Funds The Internet-based electronic IPAC System Treasury checks Government PCard Agencies are advised to use IPAC by Treasury FMS to achieve a more electronic and collaborative approach to accounting for IGTs - Not Required

15 Concepts to Consider for SmartPay2 Challenges with Managing IGTs Estimated $20-$30 billion in imbalances annually The majority of IGTs flow through Treasury/IPAC Built for masses Limitations with transaction detail Minimal collaboration Ability to reflect accurate accounting in financial statements Buyer/Seller reconciliation differences due to varying systems, processes, accounting and technology Visibility into transaction detail Inconsistent and/or limited auditing records Budget management

16 Concepts to Consider for SmartPay2 Intergovernmental Payment and Collection (IPAC) Provides a standardized interagency fund transfer mechanism for Federal Program Agencies (FPAs). IPAC facilitates the intragovernmental transfer of funds, with descriptive data from one FPA to another Web-based technology Generally more useful for larger transactions that require less transaction level detail reporting

17 Concepts to Consider for SmartPay2 IPAC Transaction - Process Flow Diagram 1.0 Purchase 2.0 Fulfillment / Invoice 3.0 Acceptance 4.0 Payment / Collection 5.0 Agency Accounting 6.0 Central Accounting 7.0 Reconciliation Total Cost of Transaction is estimated at $125-$200 Transaction detail rolls up at high level Manual and paper based reconciliation still exists Agency financial systems are challenged

18 Concepts to Consider for SmartPay2 SmartPay2 Encourages Providers to Offer an IGT Solution C.2.12 Value Added Product and Service Offerings (Tier 2) C Inter/Intra-Governmental Services: Support spontaneous, pre-negotiated, recurring transactions Provide sufficient auditing detail Manage risk Provide required federal reporting Adhere to government cash management principles Transactions must be identified as inter/intragovernmental Flat transaction fee

19 Concepts to Consider for SmartPay2 Acceptance Considerations for Using a Card for IGT C.1.22 GOVERNMENT TO GOVERNMENT TRANSACTIONS Merchant category code 9399 Considered low risk Cost of acceptance should be considered for large transactions Cards are used today for select purchases

20 Concepts to Consider for SmartPay2 Accepting Cards for IGTs FMS Acquiring Terms to Accept IGTs: Must have a dedicated terminal or PC software for IGT use Should not use the same site to accept collections from the public Must not engage in accepting IGTs unless indicated on the agency application and allowing for subsequent approval in writing by FMS Agency will be solely responsible for all charges for IGT collections The Agency will pay with appropriated funds within 30 days of the receipt of the invoice

21 Concepts to Consider for SmartPay2 Rules on Non-Interchange Transactions PCard is not the only application Closed loop solutions may also be of value in the case of large ticket purchases B.4.5 NON INTERCHANGE BASED TRANSACTIONS Examples given include G2G and Large Ticket Not required to produce refunds Considered Closed-Loop System Allowed to be priced as flat fee transactions IFF rate is $0.56 per transaction

22 Concepts to Consider for SmartPay2 Where are IGT Solutions Included in the Contract? VALUE ADDED PRODUCT AND SERVICE OFFERINGS TIER 2 REQUIREMENTS (Base Period) Description CLIN Description Purchase Inter/Intragovernment Services Travel Inter/Intragovernmental Services Purchase Inter/Intragovernmental Services Fleet Inter/Intragovernmental Services Integrated Travel Inter/Intragovernmental Services Inter/Intragovernmental Services VP.0001(d) VT.0001(e) VF.0001(e) VI.0001(e) CLIN VP.0001(d) VT.0001(e) Fleet Inter/Intragovernmental Services VF.0001(e) Integrated Inter/Intragovernmental Services VI.0001(e)

23 Concepts to Consider for SmartPay2 IGT Solutions Using SmartPay2 Citi Purchasing Card Acceptance infrastructure already exists today within the federal government Transaction detail supports audit and controls, prevents discrepancies Robust reporting through the current Purchasing Card EAS Leverage data for auditing while supporting strategic sourcing Drive refunds, increasing monetary value of the transaction to the government

24 Concepts to Consider for SmartPay2 IGT Solutions Using SmartPay2 Citi Virtual Card Accounts - Overview Replace a real card account with a virtual card account (VCA) for card-not-present transactions Clients request virtual card numbers (VCN s) in real-time, set authorization controls and receive live virtual card account numbers Authorization controls include: Single or multiple use Individual and aggregate transaction amounts Date and time ranges Individual merchant or merchant group Transparent to the merchant at the point-of-sale 16-digit account number, expiration date, 3-digit security code Multiple client interface modes Web interface, batch file, real-time API Robust reconcilement 30 custom data fields

25 Concepts to Consider for SmartPay2 IGT Solutions Using SmartPay2 Citi Virtual Card Accounts Process Flow Transactions flow through the authorization and control processes, and post with robust reference data 1. Request Transactions and receive VCA flow via web through site, file or API the with authorization unique purchase controls2. and control Provide VCA processes, for transaction3. and Submit post transaction with (receive robust auth reference message) 4. Authorize dataand validate transaction against controls in the VCA platform5. Authorization and clearing message6. Reporting with VCN reconciliation and billing/payment against real card account Client 2. Provide VCA for transaction 1. Request and receive VCA via web site, file or API with unique purchase controls Merchant VCN 6. Reporting with VCN reconciliation and billing/payment against real card account and Controls VCA Platform Auth Reports and Clearing 4. Authorize and validate transaction against controls in the VCA platform 3. Submit transaction (receive auth message) 5. Authorization and clearing message Acquirer

26 Concepts to Consider for SmartPay2 IGT Solutions Using SmartPay2 Citi Virtual Card Accounts Benefits Payment efficiency with increased security and enhanced reconciliation Payment efficiency with increased security and enhanced reconciliation Security The real card account number is never shared Set controls on each virtual card number to ensure it is utilized for a specific transaction Safeguard against fraud Efficiency The real card account number is never shared Set controls on each virtual card number to ensure it is utilized for a specific transaction Safeguard against fraud Control Security Efficiency Customize and pre-set authorization parameters Set up hierarchy approvals to increase control over spend and reduce unauthorized transactions Control Execute larger transactions The real card account number is never shared Set controls on each virtual card number to ensure it is utilized for a specific transaction Safeguard against fraud The real card account number is never shared Set controls on each virtual card number to ensure it is utilized for a specific transaction Safeguard against fraud Customize and pre-set authorization parameters Set up hierarchy approvals to increase control over spend and reduce unauthorized transactions Execute larger transactions

27 Concepts to Consider for SmartPay2 IGT Solutions Using SmartPay2 Closed Loop Applications Brand Network Tools Business Service Agreements between agencies with high trading volume

28 Concepts to Consider for SmartPay2 Relevant FSMC Concepts Under SmartPay2 Intergovernmental Transactions Grant Management

29 Concepts to Consider for SmartPay2 Grant Management Context 26+ agencies manage annually over 900 grant programs, outlaying over $650 billion in federal spending to recipients Unique business rules and processes exist according to grant type for payment, tracking and reporting Federal authorities are seeking to increase controls, auditing efficiency and overall transparency and accountability to grant management $ billions in funding are lost to misuse or mismanaged accounting FFATA seeks transparency and accountability by requiring grantors and grantees to work collaboratively to improve grant data collection and reporting. Technology is at the heart of such data tracking

30 Concepts to Consider for SmartPay2 Federal Funding Accountability and Transparency Act Provides greater insight into use of taxpayer dollars Focuses on reporting, data quality and integrity Raised bar for financial data collection and reconciliation Increased demands on federal legacy systems Drives greater collaboration with recipients

31 Grants Management Types of Grants Organizational chart outlining Types of Grants including Mandatory Grant (e.g. to Entitlement, Block, Formula) and Discretionary (e.g. Education, Research, Non-Research) Federal Agency Mandatory Discretionary non-competitive* Competitive** Entitlement e.g. Medicaid, Food Stamps Block e.g. Housing Formula e.g., Highway Construction Education Research Non- research Substantial portion administered by State & Local entities Est. 2008: $348.2 billion Substantial portion administered by States, Universities and Non-profits Est. 2008: $57 billion (excludes individuals and for-profits)

32 Grants Management The Grants Process: Grantor & Grantee Relationship

33 Concepts to Consider for SmartPay2 Observations Payment systems exist today that electronically transfer grant funds to federal agencies and primary recipients. HHS; Payment Management System (PMS) Treasury; Automated Standard Application for Payments (ASAP) Under the Grants Management Line of Business (GMLoB): HHS, Education and NSF all provide grant management capabilities, with limited functionality around the post-award process Agencies still lack automated and collaborative tools to consistently track use of grant funds down to a transaction level, while collecting all required data elements as required under FFATA legislation

34 Grant Management Grant Payment Life cycle Announcement, Application, Award, Post-Award, Close-Out Grantor Addressable Grantee Pain points Announcement Application Award Post-Award Close-Out Post Award: Payment Processing, Grant Monitoring, Regulatory Compliance, Adherence to predetermined program requirements/benchmarks Clost-Out: Financial reconciliation, Preparation and delivery of final reports Front End Software providers (e.g. Grantium) Consultants (e.g. BAH, McKinsey) P.L progress Grants.gov focus Addressable Grantee Painpoints Grantee Back Back End End Oracle Market needs analysis is required Post-Award Close-Out Payment processing Financial reconciliation Grantor monitoring Preparation and delivery of final reports Regulatory compliance Adherence to predetermined program requirements/benchmarks

35 Grant Management Challenges for Grantors & Grantees Grantor Challenges Grantor Challenges for how grantees use funds Accountability for how grantees Measuring grant results use funds Timely collection of data and compliance with laws Grant process automation Measuring grant results Reconciling with financial reports Reducing improper payments Timely collection of data and Over $1 billion in expired funds spread across nine agencies compliance with laws Reconciling funds and returning unused funds to US Treasury Lack of definitions and formats for grant documents & online tracking Grant process automation Grantee Challenges Lack of standardization of terms Reconciling with financial reports Requirements for grant recipients to submit financial and progress reports Complying with disparate forms Reducing improper payments 9 different civilian payment systems Requirements and policies that vary by agency Over $1 billion in expired funds spread across nine agencies Reconciling funds and returning unused funds to US Treasury Grantee Challenges Lack of definitions and formats for grant documents & online tracking Lack of standardization of terms Requirements for grant recipients to submit financial and progress reports Complying with disparate forms 9 different civilian payment systems Requirements and policies that vary by agency

36 Grant Management Recovery Act Reporting, Tracking and Validation Agencies are to submit accurate, complete and reliable data with multiple recipients of ARRA funds into Recovery.gov However... Controls and processes must be in place between the funding partners in order to verify data accuracy All ARRA data collected within the financial supply chain should reconcile with a high degree of accuracy between funding partners Processes for the data collection should be automated and standardized Existing financial systems and reporting capabilities for all agencies must be considered The system should be nimble for flexible and high frequency reporting without losing data integrity Data collected and processed should be fully auditable Performance dashboards are only as good as the data

37 Grant Management SmartPay2 Solutions for Grant Management Declining Balance Card Virtual Cards Closed Loop Applications

38 Summary The SmartPay2 contract does enable innovation to increase the value within the current Federal financial supply chain Especially in the areas of IGTs and Grants Management There are enormous opportunities for agencies to drive down transactional costs, while improving data quality to improve auditing and strategic decisions Solutions are immediately available today through PCard applications currently in use, as well as new technologies that are readily available by Citi

39 Adam Jackson

40 Driving Financial Supply Chain Using SmartPay2 Reminders Thank you for attending! Visit the Citibank Welcome Center Across from Room#B212 National Industries for the Blind will have a display of products Conference Slide Show come see yourself shine! Visit the Citibank One-on-One Lab - B210 Visit the Citibank Mini Sessions B209 Ask Citi Link Tell us your thoughts

41 Interactive Training Events GSA Citi offers onsite training at no cost for agencies meeting the required minimum participant level of 20 or more as set forth in the GSA SmartPay2 Master Contract. Please contact your Account or Client Manager if you are interested in setting up a training session. Training can be conducted at a Citi Training Location or On-site at your office. Regional Citi Training Locations Norfolk, VA Washington, DC On-Site at your office 20 participant minimum Distance Learning Computer Based Training is available via the CLASS icon in CitiManager.

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