For Schools: Current Best Practice for Procurement and Accounts Payable - PowerPoint PPT Presentation

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For Schools: Current Best Practice for Procurement and Accounts Payable

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For Schools: Current Best Practice for Procurement and Accounts Payable Ronald Everett Summer 2007 Myth: The more paper, the better the paper trail The Traditional PO ... – PowerPoint PPT presentation

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Title: For Schools: Current Best Practice for Procurement and Accounts Payable


1
For Schools Current Best Practice for
Procurement and Accounts Payable
  • Ronald Everett
  • Summer 2007

2
Myth
  • The more paper, the better the paper trail

3
The Traditional PO Process Can Be Painful
  • Paper Intensive / Mountains of Paper
  • Multiple Departments Involved
  • Same Process Regardless of Transaction Value
  • High Average Per Transaction Cost to School
    District
  • High Average Per Transactions Cost to the Vendor
  • Not Cost-Effective for Small Purchases

4
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5
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6
What does it actually cost to complete a PO?
  • From requisition to receiving item?
  • From requisition to paying for item?

7
What are the Experts Saying?
  • The average cost of processing a purchase order
    manually is between 75 - 200. Automating
    procurement reduces that cost to between 10 -
    40... The Return-On-Investment (ROI) is
    amazing. Deloitte Consulting
  • Accenture
  • US Bank
  • Fifth/Third Bank
  • American Express
  • Chicago Public Schools - Elgin U-46 - Rockford

8
Bench Marking Questions
  • How many non-payroll checks are written each
    month?
  • What are for less than 1,000?
  • What are for less than 500?

9
Real example of reducing paperwork
  • Fulton County Schools, Georgia
  • 70,000 Students
  • 2 cards per building
  • Reduced POs from
  • 60,000 to 30,000

10
Another example of reducing paperwork
  • Naperville 203
  • 2001 - 9,847 POs
  • 2006 4,724 POs
  • Saved 5,123 POs
  • 5,123 x 75 384,225 in man-hours
  • 5,123 x 2.50 12,807 in postage
  • What can you eliminate?
  • What can you save?

11
Why is the Streamlining of Small Purchases
Significant?
  • The majority of transactions in most
  • organizations are for relatively small amounts
  • District 203 58 of AP checks are for less than
    500
  • District 204 58 of AP checks are for less than
    500
  • IOMA article 60 of case study purchases less
    than 1, 000

12
Bench Marking Questions
  • How many petty cash transactions per year?
  • How many emergency/reimbursement checks written
    per year?
  • How many imprest fund checks written each year?

13
Could all of these small transactions each month
be consolidated into one payment?
14
Who are the employees creating all of these small
purchases?
15
Key to Consolidating Small Purchases into one
payment
  • Get p-Cards into the hands of those who are
    currently making small purchases/ generating POs
    of less than 1,000.

16
What are Procurement Cards?
  • They look and operate similar to credit cards
  • They do not carry a revolving line of credit
  • Usage and authorization parameters can be
    reviewed and managed via the internet by district
    administration

17
  • Specific card use parameters
  • can be established for each card
  • Transaction limits per charge
  • Monthly limits
  • Preferred Supplier Restriction
  • You control what can be purchased, where it can
    be purchased from and limit amount per
    transaction

18
  • Customized Card
  • design can display
  • Card holder name
  • School District name and number and/or
  • Tax ID (up to 24 characters)

19
Advantages of an Association Sponsored Program
  • Single Contract
  • Creates a user group/support network
  • Negotiation clout
  • Due diligence costs eliminated
  • Rebates

20
p-Card Growth - Districts


Month 2003-04 2004-05 2005-06 2006-07
May 5 48 84 137
June 7 53 88 141
July 12 58 88 145
August 16 61 93 146
September 18 66 99 152
October 20 68 103 158
November 21 71 106 161
December 24 72 109 163
January 26 76 113 177
February 30 80 114 183
March 36 81 117 187
April 41 83 133 194
41 83 133 194
21
p-Card Growth Number of Cards
Month 2003-04 2004-05 2005-06 2006-07
May 5 686 2323 2356
June 24 957 2323 2742
July 24 1088 2420 2659
August 170 1100 2477 2799
September 187 1141 2477 2799
October 311 1475 2156 3336
November 354 1585 2336 3307
December 362 1647 2159 3362
January 395 2149 2685 3532
February 448 2149 3071 3585
March 489 2179 2900 4711
April 618 2186 2967 4825
618 2186 2967 4825
22
p-Card Growth Purchasing Volume
Month 2003-04 2004-05 2005-06 2006-07
May 1,200 355,405 1,025,004 2,562,422
June 30,500 420,569 1,018,773 2,558,846
July 24,300 356,835 1,140,360 2,354,778
August 24,700 452,171 1,499,626 3,374,260
September 101,400 697,709 1,499,395 3,376,079
October 186,900 664,393 1,405,328 2,622,251
November 192,100 623,687 1,448,102 2,719,870
December 217,000 733,780 1,374,497 2,607,935
January 194,200 709,256 1,606,136 2,534,792
February 254,700 987,478 1,763,880 2,466,692
March 357,400 885,233 2,257,205 3,227,319
April 318,600 1,181,706 2,454,114 3,475,371
1,903,000 8,068,222 18,492,420 34,344,057
23
Rebate History
  • 2003-04 0
  • 2004-05 46,101.51
  • 2005-06 125,522.01
  • 2006-07 295,899.63
  • 2007-08 ??

24
Customized Card Design
  • Individual Card
  • Department Card No Fraud Coverage
  • Ghost Card No Plastic

25
Billing Cycle Requirements
  • School District may choose a billing cycle
    cut-off of the 5th or the 20th
  • Payment is due at Harris Bank within 21 days of
    billing cycle cut-off
  • Penalty for late payment (Prime 7) on all
    transactions in the billing cycle
  • Penalties can be avoided with pre-planning and
    monitoring online usage reports

26
Current Rebate Schedule 5/1/2007
  • APV 21 Day 14 Day 7 Day
  • Tier 6 70,000,000 1.00 1.10 1.20
  • Tier 5 50,000,001- .95 1.05 1.15
  • 70,000,000
  • Tier 4 30,000,001- .85 .95 1.05
  • 50,000,000
  • Tier 3 20,000,001- .75 .85 .95
  • 30,000,000
  • Tier 2 10,000,001- .65 .75 .85
  • 20,000,000
  • Tier 1 5,000,001- .55 .65 .75
  • 10,000,000

27
Billing and Payment
  • Monthly Billing Statements
  • Consolidated Billing Statement (Available online)
  • Cardmember Report (available online)
  • Individual Reports
  • Payment Methods
  • Electronic Funds Transfer
  • Automated Clearing House
  • Check

28
Why was MasterCard selected?
  • Superior vision with technology and
  • e-commerce
  • Fraud Protection insurance
  • Dedicated group to sign up suppliers
  • Customized card design displaying the name of
    card holder, school district and/or tax exempt
    number

29
Why was MasterCard selected? (Continued)
  • Individualized training
  • Global acceptance at over 35 million locations
  • Retailers benefit from low transaction charge

30
Online Capabilities (7-24)
  • Online Program Management
  • Submit, approve, and cancel Card accounts
  • Instant Account Activation
  • Adjust spending limits/manage Cardmember profiles
  • View Cardmember charges
  • Change accounting information
  • Online Information Services
  • View/Manage Program Information
  • Access to Web reporting tools

31
Vendor Benefits
  • Reduces vendor transaction costs
  • Vendor paid by Harris within 48 hours of
    shipment/pick-up
  • Reduces the issues of partially filled orders

32
Benefits of a p-Card Program for Management
  • Easier on Accounts Payable
  • Submit one monthly payment vs. multiple payments
    to multiple vendors
  • Reduction in paperwork
  • Fraud prevention and protection through the Bank
    and MasterCard
  • Detailed reporting available 24 x 7
  • Easy online administration and dedicated customer
    support
  • Control on spending limits and accepted vendors

33
How to Get Started
  • Request information packet from State Affiliate
    ASBO or click here for printable version
  • Submit resolution to local board of education for
    purchasing card participation
  • Identify local p-Card administrators
  • Complete application packet send to Illinois
    ASBO

34
Our Sponsors (Click to visit website)
  • IPA
  • IASA
  • IASB
  • Partner States
  • Wisconsin
  • Indiana
  • Oregon
  • Minnesota (PMA)
  • Washington
  • Alaska

35
The Next Step
  • Order Cards
  • Training with Harris Bank/BMO
  • Distribute Cards
  • Reconcile Bills

36
Side Benefits
  • More time on task
  • Less wasted time
  • Reduction in the publication of the annual
    Statement of Affairs
  • Reduction in time/cost of monthly bank statement
    reconciliation
  • Better investing/cash management

37
A Sampling of Major Textbook Companies who accept
the p-Card
38
Sample of Suppliers who accept the p-Card
39
  • For more information, word
    documents and other tools, or to
    download all available files, please go to
    www.iasbo.org.

40
Kim Lamansky815.753.9083 (tel)815.753.9367
(fax)lamansky_at_niu.edu
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