CFC U.S. Bank One Card Tuesday, July 12, 2011
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Background Original card programs began in 2001 Consolidated products into One Card program in August 2006 Program currently has 168 participants and generated $19.5 million in aggregated spending last year 4
U.S. Bank A Strategic Resource $311 billion in assets 5 th -largest commercial bank in the United States Unparalleled industry experience Solutions for the entire payment continuum Program design/implementation expertise Unsurpassed resource commitments World-class, U.S.-based customer service 5
U.S. Bank Strategic Benefits A strong commitment to the payments business Ubiquitous merchant acceptance Competitive commercial card advantages for CFC members Long-term relationship with a strong and stable commercial bank 6
Does My Co-op Need a Commercial Card?
Purchasing Landscape Annual purchasing card spending in North America grew from $161 billion in 2009 to $176 billion in 2010 Purchasing card spending in North America is expected to increase to $213 billion by 2012 and $255 billion by 2014 8
Purchasing Landscape Purchasing Card Spend in North America Source: 2010 Purchasing Card Benchmark Survey, RPMG Palmer & Gupta 9
Cards Are Expanding Into Larger, Core Purchases Cap Ex COGS CARDS Ad Hoc CHECKS CARDS MRO Rebate potential Extended DPO via credit function Control in the form of restricting spend categories and amounts T&E Common Uses Office Supplies/MRO POS ad hoc purchases Petty cash alternative Increasingly used for larger purchases including COGS Ability to automate G/L interface Pre-purchase process efficiencies Detailed transaction data No cost to buying organization 10 10
B2B Payment Matrix (% of total number of transactions) 81% 58% Checks ACH 10% 7% 2% 25% 13% 4% Wire Cards Source: AFP Electronic Payments Survey Data for 2004-2010 11
Bottom-Line Results Average net savings of $69+ per transaction Average procurement cycle time reduction of 6.3 days Average reduction in supplier base of 31% 38% increase in ability to negotiate preferred pricing Happier and more productive employees 12
Real-World Successes* Procure-to-pay and commercial card programs build the bottom line. One electric utility expanded its card program from emergency purchases only to all its routine purchasing, reducing manual AP check payments by more than 65%. A leading provider of technology and business solutions plans to move more than $8 million of company spend from paper checks to its commercial card program. A construction company saved more than $100,000 and grew its commercial card program from $1 million to $6 million by eliminating local house charge accounts. *2008 Visa Global Procure-to-Pay and Commercial Best Practices Study, Deloitte Consulting 13
The Program
What Is the CFC One Card? Meets the needs of every co-op s spending activity combining the benefits of corporate and purchasing cards in a single card program. Corporate Travel Card Designed to pay for travel and entertainment (T&E) expenses Airfare Hotel Car rental Meals Entertainment Meeting and event planning Employee relocation Purchasing Card Designed to pay for small dollar, frequently purchased items + Office equipment and supplies = Maintenance, repair and operations Budgetary spend Computer hardware, software and peripherals Printing and duplicating services Professional, temporary and janitorial services One Card Designed to manage both T&E and procurement expenses Office equipment and supplies T&E Maintenance, repair and operations Budgetary spend Meeting and event planning Miscellaneous services Employee relocation 15
Program Benefits No annual fees or interest No credit check on cardholders No individual liability Flexible online reporting and administration capabilities Exciting rebate opportunity 16
Program Benefits Simplify and streamline operations Save time, money and resources Stay in control and in compliance Tailor the card program to your specific needs Provide a convenient payment tool to employees Make better-informed business decisions 17
Types of One Card Accounts Individual Cardholder Accounts A card assigned to an individual employee that has the employee s name on the card Department Cardholder Accounts A card that is commonly used by a department or for a specific type of purchase Ghost Accounts A virtual, card-free purchasing account tied to a single department, supplier or spend category 18
One Card for Purchasing Reduces volume of purchase orders, invoices and check payments Improves purchasing management and provides reporting for IRS and state regulators Enables monitoring of corporate policy compliance Improves employee spending controls Facilitates vendor negotiations 19
One Card for T&E Customized authorization controls Online account access Cash advance option Ability to interface with your accounting software Comprehensive travel benefits Worldwide automatic travel accident insurance: $250,000 Excess lost/damaged luggage coverage: $1,250 20
Typical Co-op Cardholders Human resources Plant and maintenance employees Technical and office staff General administration Purchasing department Advertising/marketing staff Sales force 21
Typical Co-op Expenditures Oil and fuel Computer and software purchases Utilities payments Office supplies Continuing education expenses Online purchases Airfare and hotel expenses 22
One Card Top Co-op Spend Categories Volume Wholesale Trade Hotels Business Expense Vehicle Expense Other Eating/Drinking Office Services Airline Office Supplies MRO Supplies Mail/Telphone Auto/RV Dealers Annual Volume Type of Spend ATS # of Transactions $5,043,787.93 WHOLESALE TRADE $164.23 30,712 $3,610,702.51 HOTELS $295.52 12,218 $2,578,426.81 BUSINESS EXPENSE $393.11 6,559 $2,418,725.45 VEHICLE EXPENSE $59.73 40,495 $1,763,016.10 OTHER $198.47 8,883 $1,734,222.01 EATING/DRINKING $50.48 34,354 $1,466,929.51 OFFICE SERVICES $364.36 4,026 $1,302,718.90 AIRLINE $227.87 5,717 $972,141.91 OFFICE SUPPLIES $166.86 5,826 $499,338.89 MRO SUPPLIES $365.28 1,367 $435,439.17 MAIL/TELEPHONE $312.59 1,393 $225,941.45 AUTO/RV DEALERS $273.21 827 23
One Card Rebate Opportunity
Rebate Overview Participating cooperatives have the opportunity to qualify for an annual cash rebate The rebate period runs annually from September through August 25
How the Rebate Works Participating cooperatives must collectively generate at least $5 million in annual charge volume and have an average transaction size of at least $120. The higher the collective charge volume, the higher the percentage of rebate. Once the collective program rebate is attained, cooperatives can earn a portion of that rebate if they meet the individual eligibility requirement. 26
Individual Rebate Eligibility The cooperative s annual spend must be at least $175,000. If the cooperative has an average transaction size of least $120, the rebate is even higher. 27
Effective September 1, 2011 Two separate ways of earning a cash rebate through the One Card program: A portion of the collective rebate will be paid to each cooperative that spends a minimum amount of $5,000 in one rebate year. A separate rebate will be paid to each cooperative that averages at least $120 per transaction during the rebate year. 28
Rebate Success 2008 2009 Rebate Year Total spend: $15.9 million Average transaction size: $125 Performance Rebate: $67,687 Individual co-op payouts ranged from $780 to $11,800 2009 2010 Rebate Year Total spend: $19.5 million Average transaction size: $144 Performance Rebate: $71,963 Individual co-op payouts ranged from $640 to $8,170 29
Making One Card Work for You
Access Online Free Web-based access tool provides: Convenient, secure online access to data anytime, anywhere Account setup and maintenance Ability to adjust cardholder spending limits Access to view cardholder statements online Reports to better understand spending patterns, vendor usage and policy compliance Automated posting capabilities to integrate card data with accounting and general ledger entries 31
AutoPay Amount due is automatically drawn from specified account Cycling date is the 16th of every month unless on a weekend or holiday Cooperative chooses a draft date that is within 14 days of the 16th 32
Fleet Capabilities Cards issued at a driver or vehicle level Enhanced spending controls Ability to limit spending to fuel and/or maintenance only Prompts for driver ID and odometer reading Velocity controls and hard limits Accepted by Visa and MasterCard merchants worldwide Enhanced fleet data capture provided by most major oil companies 33
Merchant Category Codes Provide a method of understanding and managing company spending by category code Use merchant category codes (MCCs) to prevent employee misuse Open and close MCC blocks for flexibility as necessary to your organization and supplier base Automate annual IRS Form 1099-MISC reporting 34
Flexible Spending Management Authorization parameters Monthly spending limit Daily spending limit Single-purchase limit (SPL) Supplier category restrictions Travel, casinos, jewelry, liquor, etc. 35
Automated Accounting Methods Default account code assigned to each card Cost center, budget code, company code, etc. General Ledger object codes assigned by type of purchase Office supplies, computer equipment, hotels, hardware stores, etc. Accounting codes can be changed/edited as needed Transaction data can be exported for integration with accounting software 36
Addressing Cooperative Concerns
Cooperative Concern 1 Spend Out of Policy (also known as Maverick Spend ) A commercial card is used in a way that does not conform to the spending policies of the organization 38
Do Commercial Cards Increase Out-of-Policy Spending? Purchase card policy violations account for 0.006% of purchasing card spending the equivalent of $60 of policy violations for every $1 million of purchasing card spending. 1 Cumulatively, noncompliant transactions account for about 0.021% of travel card spending (or $210 out of every $1 million of travel card spending), a figure that has fallen from 0.035% in 2006 and 0.163% in 2004. 2 1 RPMG Research Group, 2010 Purchasing Card Benchmark Survey Report 2 RPMG Research Group, 2009 Corporate Travel Card Benchmark Survey Report 39
Cooperative Concern 2 Card Misuse An employee charges a personal expense through a commercial card and misrepresents it as a business expense. 40
Will Employees Misuse Commercial Cards? Purchasing card misuse accounts for.014% of purchasing card spending, which is the equivalent of $1.40 of misuse for every $10,000 of purchasing card spend..008% for fraud and misrepresentation.006% for policy violations Losses are a fraction of the administrative cost savings and other benefits attributable to card use. Visa Liability Waiver Program covers your cooperative up to $100,000 per cardholder in the event of employee card misuse. 41
Dedicated Program Support
U.S. Bank Support Greg Wenisch, Relationship Manager Jennifer Kartes, Program Coordinator Custom implementation Ongoing strategic consultation Training on Web-based access tools Problem resolution A complete partnership approach to your business success 43
CFC Program Support Manages relationship with U.S. Bank Provides day-to-day member contact Establishes new cooperative accounts Answers general member questions and concerns 44
Get Started Today! Contact Tara Cromp for more details: Phone: 800-424-2954 E-mail: onecard@nrucfc.coop 45
How to Submit Your Question Step 1: Type in your question here. Step 2: Click on the Send button.