Transcript For schools: Current Best Practice for Procurement and

For Schools: Current Best
Practice for Procurement
and Accounts Payable
Ronald Everett
Summer 2007
Myth:
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The more paper, the better the paper trail
The Traditional PO Process Can
Be Painful…
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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
What does it actually cost to
complete a PO?
From requisition to receiving
item?
 From requisition to paying for
item?
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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
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Accenture
US Bank
Fifth/Third Bank
American Express
Chicago Public Schools - Elgin U-46 - Rockford
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?
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Real example of reducing
paperwork
Fulton County Schools, Georgia
 70,000 Students
 2 cards per building
 Reduced PO’s from
60,000 to 30,000
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Another example of reducing
paperwork
Naperville 203
 2001 - 9,847 PO’s
 2006 – 4,724 PO’s
 Saved 5,123 PO’s
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?

Why is the Streamlining of Small
Purchases Significant?
The majority of transactions in most
organizations are for relatively small amounts
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
 District
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?
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Could all of
these small
transactions
each month be
consolidated into
one payment?
Who are the employees creating all
of these small purchases?
Key to Consolidating
Small Purchases into
one payment:
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Get p-Cards into the hands of those who
are currently making small purchases/
generating PO’s of less than $1,000.
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
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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
Customized Card
design can display:
Card holder name
 School District name and
number and/or
 Tax ID (up to 24 characters)
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Advantages of an Association
Sponsored Program
Single Contract
 Creates a user group/support network
 Negotiation clout
 Due diligence costs eliminated
 Rebates
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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
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
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
Rebate History
2003-04
 2004-05
 2005-06
 2006-07
 2007-08
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$0
$46,101.51
$125,522.01
$295,899.63
$??
Customized Card Design
Individual Card
 Department Card – No Fraud Coverage
 Ghost Card – No Plastic
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Billing Cycle Requirements
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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
Current Rebate Schedule 5/1/2007
Tier 6
Tier 5
Tier 4
Tier 3
Tier 2
Tier 1
APV
$70,000,000+
$50,000,001$70,000,000
$30,000,001$50,000,000
$20,000,001$30,000,000
$10,000,001$20,000,000
$5,000,001$10,000,000
21 Day
1.00%
.95%
14 Day
1.10%
1.05%
7 Day
1.20%
1.15%
.85%
.95%
1.05%
.75%
.85%
.95%
.65%
.75%
.85%
.55%
.65%
.75%
Billing and Payment
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Monthly Billing Statements
 Consolidated Billing Statement (Available
online)
 Cardmember Report (available online)
 Individual Reports
Payment Methods
 Electronic Funds Transfer
 Automated Clearing House
 Check
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
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Why was MasterCard selected?
(Continued)
Individualized training
 Global acceptance at over 35 million
locations
 Retailers benefit from low transaction
charge
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Online Capabilities (7-24)
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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
Vendor Benefits
Reduces vendor transaction costs
 Vendor paid by Harris within 48 hours of
shipment/pick-up
 Reduces the issues of partially filled
orders
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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
How to Get Started
1.
2.
3.
4.
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
Our Sponsors: (Click to visit website)
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IPA
IASA
IASB
Partner States:
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Wisconsin
Indiana
Oregon
Minnesota (PMA)
Washington
Alaska
The Next Step
Order Cards
 Training with Harris Bank/BMO
 Distribute Cards
 Reconcile Bills
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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
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A Sampling of Major Textbook
Companies who accept the p-Card:
Sample of Suppliers who accept the
p-Card:
For more information, word
documents and other tools, or to download
all available files, please go to
www.iasbo.org.
Kim Lamansky
815.753.9083 (tel)
815.753.9367 (fax)
[email protected]