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p-Cards for Schools: Streamline Your Procurement and Accounts Payable Process

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Title: For schools: Current Best Practice for Procurement and Accounts Payable. Author: COE Last modified by: COE Created Date: 4/20/2007 6:28:26 PM – PowerPoint PPT presentation

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Title: p-Cards for Schools: Streamline Your Procurement and Accounts Payable Process


1
p-Cards for Schools Streamline Your Procurement
and Accounts Payable Process
  • Spring 2008
  • Ronald E. Everett

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
  • (Less than 2500)

4
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5
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6
What does it actually cost to process a PO from
start to finish?
  • Requisition
  • Approval
  • Purchasing
  • Receiving
  • Accounts Payable

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
Real example of reducing paperwork
  • Naperville 203
  • 2001 - 9,847 POs
  • 2006 4,724 POs
  • Saved 5,123 POs

9
Savings of Time and Money for Naperville 203
  • POs Eliminated
  • 5123 75 384,225
  • POs Still Used But With Improved Efficiency
  • 4724 35 165,340
  • Total 549,565
  • Assumes MINIMUM savings rate based on cited
  • research studies.

10
P-Cards Should Not
  • Eliminate all of the Purchase Orders a district
    uses whether paper or electronic!
  • Only the many small POs will be eliminated.

11
Bench Marking Questions
  • How many non-payroll checks are written each
    month?
  • What percentage are for less than 1,000?
  • What percentage are for less than 500?

12
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
  • Private Sector Business case study
  • 60 of purchases for less than 1, 000

13
The reduction of POs has also resulted in the
reduction of checks written
  • Naperville 203 (Contd)
  • 2001 16,954 Checks Written
  • 2006 8,689 Checks Written
  • Savings of 8,265 Checks!
  • Postage savings alone 3,388

14
Savings for Naperville 203 caused by writing
fewer checks
  • Actual Savings from Checks NOT Written
  • 2.50 5123 12,807
  • Postage to mail each check
  • 0.41 5123 2100
  • Total 14,907
  • Cost of check, envelope, stuffing and mailing.

15
Ask yourself
  • What can you eliminate?
  • What can you save?

16
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?

17
Could all of these small transactions each month
be consolidated into one payment?
18
Who are the employees creating all of these small
purchases?Get the cards into the hands of people
who do the purchasing.
19
Key to Consolidating Small Purchases into one
payment
  • As a minimum
  • Get p-Cards into the hands of as many employees
    as you can who are currently making small
    purchases/ generating POs of less than 1,000.

20
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

21
  • 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

22
  • Customized Card
  • design can display
  • Card holder name
  • School District name and number and/or
  • Tax ID
  • 2 Lines of text per card

23
Advantages of an Association Sponsored Program
  • Single Contract
  • Creates a user group/support network
  • Negotiation clout
  • Due diligence costs eliminated
  • Rebates

24
Rebate Distribution
  • Rebates are calculated in May and distributed in
    June to Illinois ASBO
  • We then turn around and distribute to each
    district

25
Rebate History
  • 2003-04 0
  • 2004-05 46,101.51
  • 2005-06 125,522.01
  • 2006-07 295,899.63
  • 2007-08 ??

26
Current Rebate Schedule 5/1/2007
  • Tier 6 70,000,000
  • Tier 5 50,000,001- 70,000,000
  • Tier 4 30,000,001- 50,000,000
  • Tier 3 20,000,001- 30,000,000
  • Tier 2 10,000,001- 20,000,000
  • Tier 1 5,000,001- 10,000,000

27
p-Card Growth - Districts
Month 2003-04 2004-05 2005-06 2006-07 2007-08
May 5 48 84 137 205
June 7 53 88 141 207
July 12 58 88 145 213
August 16 61 93 146 217
September 18 66 99 152 220
October 20 68 103 158 220
November 21 71 106 161 220
December 24 72 109 163 246
January 26 76 113 177 265
February 30 80 114 183 265
March 36 81 117 187 287
April 41 83 133 194 295
41 83 133 194 295


28
p-Card Growth Purchasing Volume
2003-04 2004-05 2005-06 2006-07 2007-08
May 1,200 355,405 1,025,004 2,562,422 3,512,633
June 30,500 420,569 1,018,773 2,558,846 3,806,285
July 24,300 356,835 1,140,360 2,354,778 3,392,511
August 24,700 452,171 1,499,626 3,374,260 5,023,218
September 101,400 697,709 1,499,395 3,376,079 4,270,506
October 186,900 664,393 1,405,328 2,622,251 5,203,320
November 192,100 623,687 1,448,102 2,719,870 4,617,983
December 217,000 733,780 1,374,497 2,607,935 4,057,096
January 194,200 709,256 1,606,136 2,534,792 4,341,755
February 254,700 987,478 1,763,880 2,466,692 5,264,745
March 357,400 885,233 2,257,205 3,227,319 5,059,284
April 318,600 1,181,706 2,454,114 3,475,371 6,398,865
1,903,000 8,068,222 18,492,420 34,344,057 55,017,907
29
Customized Card Design
  • Individual Card
  • Department Card No Fraud Coverage
  • Ghost Card No Plastic No Fraud Coverage

30
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

31
Only 3 Possible costs to participating school
  • Late fee
  • ATM Charge IF cash advance option is selected
  • Interest owed on any cash advance

32
Billing and Payment
  • Monthly Billing Statements
  • Consolidated Billing Statement (Available online)
  • Cardmember Report (available online)
  • Individual Reports
  • Payment Methods
  • Automated Clearing House
  • Check

33
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

34
Why was MasterCard selected? (Continued)
  • Individualized training
  • Global acceptance at over 35 million locations
  • Retailers benefit from low transaction charge

35
Online Capabilities (24/7)
  • 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

36
Vendor Benefits
  • Reduces paper processing/billing
  • Reduces vendors time/costs of processing/depositi
    ng payments
  • Reduces vendor transaction costs
  • Vendor paid by Harris within 48 hours of
    shipment/pick-up
  • Reduces the issues of partially filled orders
  • Reduces vendors time/costs of processing
    depositing of payments

37
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

38
How to Get Started
  • Download documents www.illinois-pcard.com
  • Submit resolution to local board of education for
    purchasing card participation
  • Identify local p-Card administrators
  • Complete application packet send to State ASBO
    affiliate

39
The Next Step
  • Order Cards
  • Training with Harris Bank/BMO
  • Distribute Cards/Train Cardholders
  • Reconcile Bills

40
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

41
A Sampling of Major Textbook Companies who accept
the p-Card
42
Sample of Suppliers who accept the p-Card
43
Partners
  • Illinois Principal Association (IPA)
  • Illinois Association of School Administrators
    (IASA)
  • Illinois Association of School Boards (IASB)

44
  • For more information, word
    documents and other tools, or to
    download all available files, please go to
    www.illinois-pcard.com.

45
Holly Wallace815.753.9083 (tel)815.753.9367
(fax)hwallace_at_niu.edu
46
p-Cards for Schools Streamline Your Procurement
and Accounts Payable Process
  • Spring 2008
  • Ronald E. Everett
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