Transcript Introduction to Purchasing Card Principles

Introduction To Purchasing Card Principles
Objectives
At the end of this training session, you will be able to:
•
•
•
•
•
•
Define what a Purchasing Card (P-card) is
List the benefits of using a P-Card
List the instances when you use a P-Card
List restrictions of using the P-Card
List your responsibilities regarding the P-Card
List the steps to follow when the products order are defective or
incorrect
• List the people involved in the Purchasing Card Approval Process
• List available Purchasing Card resources
What is a Purchasing Card (P-Card)?
• It is a Visa credit card with your
name and GSW State University’s
name embossed on the card
• The credit card is issued by Bank of
America to purchase goods/items on
behalf of GSW
• GSW is responsible for the payment
of the goods/items you purchase on
the credit card
3
How it all works Behind the Scenes
Purchase is made
with P-Card
Transaction goes
to vendor and
into their
Merchant Bank
Bank of
America
Audit
Pay on Order
Vendor creates Payment is made with
P-Card to vendor –
Receipt of
Buyer receives
purchase online
Receipt via email
email
Payment
Vendors that accept P-Card
GSW – P-Card Administrator
Spend
Procurement
Analysis
Productivity
Supplier
Performance
4
What are the Benefits of Using a P-Card?
•
•
•
•
Offer the opportunity to streamline the processes of procuring and paying
for goods and services
Reduces the administrative process costs
Reduces the volume of accounts payable transactions
Reduce costs associated with small dollar purchases
– Streamline purchasing and payment procedures
– Reduce the administrative burden
•
•
•
•
•
•
•
Simplifies and automates the purchasing and payment process
Reduces purchasing cycle time and expedites delivery
Provides management information
Allows reallocation of resources to more “mission critical” needs
Expands number of possible merchants
Increases competition
Typically, 80% of transactions only represent 20% of total dollars spent
5
Consider the Benefits of the Purchasing Cards
LEGACY PROCESS
Manually
Search Paper
Catalog
Fax, Phone,
or In-House
Mail Paper
Requisitions
1 to
Days
1/22to
1
½ to1/2
1 DAY
to 1
Invoice
Matched to
PO
Days
57to
6 Days
Supplier
Order
Fulfillment
Receive
Product
11 to
to 22 Days
Days
Day
Day
Paper Invoice
Mailed to AP
Fax, Phone,
Traditional EDI
Purchase
Orders
Requisition
Input
In-House Mail
Invoice Holds
to Invoice
Approver
Hold
Response
Sent to AP
3 1-2
Days
Days
Hold
Resolved,
Invoice Paid
Printed Check
Mailed to
Supplier
11Day
to 2 Days
6
Consider the Benefits of the Purchasing Cards
LEGACY PROCESS
Manually
Search Paper
Catalog
Fax, Phone,
or In-House
Mail Paper
Requisitions
1 to 2 Days
1/2 to 1
Day
Paper Invoice
Mailed to AP
Invoice
Matched to
PO
Requisition
Input
Fax, Phone,
Traditional EDI
Purchase
Orders
X X
½ to 1 DAY
1 to 2 Days
Hold
Response
Sent to AP
X X X X
7 Days
5 to 6 Days
Receive
Product
1 to 2 Days
1/2 to 1
Day
In-House Mail
Invoice Holds
to Invoice
Approver
Supplier
Order
Fulfillment
3 Days
1-2 Days
Hold
Resolved,
Invoice Paid
Printed Check
Mailed to
Supplier
X
11
toDay
2 Days
7
Consider the Benefits of Purchasing Cards
Purchasing Cards improve procurement
cycle times
•
•
•
According to the 2005 Purchasing Card Benchmark Survey*, the average procurement cycle is
reduced by 6.3 days
Suppliers are paid within 48-72 hours of a posted transaction
Employees receive goods/services faster
Procurement cycle is reduced by 68%*
(determination of employee need until the receipt of ordered goods
9.26 days
Avg. cycle time
with traditional
PO method
=
6.3 days
2.96 days
Resulting cycle
time reduction
with P-Card
Avg. cycle
time of PCard
transaction
+
*RPMG Research
Group
8
Consider the Benefits of
Purchasing Cards
Cost breakdown of Traditional PO and P-Card Transactions*
PO
$31.30
$31.75
$26.16
$89.21
Purchasing Card
The total cost associated with payment for good and services
(including receipt and matching of invoices, purchase orders,
receiving documents; approval workflow for payment,
disbursement of funds; mailing/transmitting payment; postpurchase accounting for transactions; and reconciliation of
disbursement with bank records)
The total cost of the purchasing process (including
activities to requisition a good, approve a purchase, and
generate and deliver a purchase order to supplier
The total cost of sourcing (including specification of
requirements, supplier pre-selection, transmittal of
requirements to suppliers, receipt and evaluation of
supplier quotations, supplier selection, and contracting
$7.60
$5.71
$8.52
$21.83
*RPMG Research Group
9
Consider the Benefits of Purchasing Cards
The elimination of process steps results in
transaction cost savings
•
According to the 2005 Purchasing Card Benchmark Survey*, the average cost of a traditional PO
based process was reported by respondents to be about $90
•
The average cost of a Purchasing Card transaction was estimated to be about $22
A process cost reduction of $68,000+ for every
1000 transactions migrated to P-Card
$89.21
Avg. cost of
traditional PO
method
$21.83
$67.38
=
Resulting cost
reduction with PCard
+
Avg. cost of PCard transaction
*RPMG Research
Group
10
When Do You Use a P-Card?
When you
purchase a
small-dollar
supply item
When you
purchase a
small-dollar nonequipment item
When you pay
for a minor
repair on office,
warehouse, or
lab equipment
When you
purchase off a
statewide or
agency contract
that accepts the
purchasing card
(Less and equal to $100 with
prior approval from IIT. The
approval form is available on
the Business Forms page)
11
Where Can You Use a P-Card?
Over the
counter (point
of sale)
Your monthly
limit is based on
expected PCard use
By fax
By telephone
Your department
determines your
P-Card limits
Over the
internet
12
Some of the Restrictions
You cannot use your card to pay for:
Cash Advances
Authorized personnel with approved travel can purchase
airline tickets and in-state SWC car rentals as well as preapproved athletic and team travel with the
P-Card
Travel,
Entertainment
Motor Vehicle Fuel
Professional Services
(doctors, lawyers)
13
Some of the Restrictions
You cannot use your card to pay for:
Food / Gift Cards
Gift Cards are considered Cash
Personal Purchases or
Foundation Purchases
Split
Purchases
Purchasing same item, but
paying in split payments
14
Things You Must Do Regarding Your P-Card…
Sign an Employee
Agreement Form
Contact P-Card Program
Administrator/Coordinator if…
•
Your name changed
•
Department Changed
•
Phone Number Changed
Keep your card in a
secure location at
all times
Never share
your card
15
What Rules Do You Follow?
Every 2
Years
Renew your P-Card every two
years
Review and reconcile the Bank of America
billing information within WORKS
$4,999.99
Follow the established single
transaction limit: less than $5,000
Notify P-Card Program Administrator/
Coordinator if you need to raise your
limits or need an exception to
established P-Card Policy
Things You Must Do Regarding Your P-Card…
•
•
•
•
•
•
•
•
Ensure complete understanding of GSW’s reconciliation
process
Maintain a copy of all receipts
Review and maintain reconciliation documents
Follow the procedures regarding Cardholder approvals
Follow the established purchasing guidelines
Maintain adequate documentation (WHAT, WHY,
WHERE/location)
Tape ALL small receipts to an 8-1/2 x 11 sheet of paper
Summary Sheets due by the 10th of each month by 3
PM
17
Things to Watch For…
Make sure that Sales Tax is not
charged on your purchases
Sales
Tax
What happens if you realize you were charged for Sales Tax:
a.
b.
c.
Contact the vendor immediately and document your
actions
Have the Vendor issue a credit for the sales tax amount
If the Vendor refuses or is unable to refund the sales tax,
document their response and keep with your receipts. The
Tax and Use Form is available on the Business Forms page
18
When Is Your P-Card Suspended?
Your P-Card can be suspended because…
•
•
•
•
you do not follow the State’s and
GSW’s policy and procedures
you do not complete your
reconciliation process in a timely
manner (due by the 10th of each
month by 3 PM)
of habitual misuse
of fraudulent activity. When this is
the case, you will be terminated and
prosecuted
19
When Do You Cancel Your P-Card?
Your can cancel your P-Card when…
• you are leaving
employment
• you are taking
extended leave from
your job
What Happens When the Product is Broken or You Did not Order
It?
• Contact the vendor immediately and
document your actions
• If you are unhappy with the vendor’s
response, contact your Purchasing Card
Program Coordinator to initiate a Dispute
• If you do not recognize a charge, contact
the vendor for a proof of purchase or
delivery
• If you suspect fraudulent activity –
contact your Purchasing Card Program
Coordinator immediately for further
instructions
21
Who is in the Chain of Command?
Statewide Purchasing Card Program
Manager
Entity’s Purchasing Card Program
Administrator (APO or CUPO)
Entity’s Purchasing Card Program
Coordinator
Entity Accountant
Entity Reviewer/Approver
Entity Cardholder
22
P-Card Program Resources
To review GSW’s Purchasing Card Policy, go to
the Business Forms page and click on
Procurement Card Policy
To review Georgia State Purchasing Card Policy
and on-line resources:
http://statepurchasing.doas.ga.gov/00/channel_
title/0,2094,35226973_36298628,00.html
23
P-Card Program Resources
• To review WORKS Payment Manager on-line
training materials:
https://payment2.works.com/wpm/bookmark
To contact P-Card Administrator: [email protected]
To contact P-Card Coordinator: [email protected]
24
Questions?
25