Implementation - General Info:

• Team – Core team has representation from Purchasing, AP, and Finance. When necessary pull in folks from IS, Auditing (internal Corporate Compliance, external auditor), Legal, HR, & Receiving.
• Develop Justification/ROI
• Justification - added value / benefits. Examples include:
  • Potential for reduction of low-value transactions in Purchasing and AP, allowing for staff focus on more value-added processes.
  • Potential for increased end user satisfaction.
  • Potential reduction in acquisition cycle time.
  • Potential reduction in total cost of acquisition.
  • Suppliers receive payment more promptly. Potential for reduced supplier costs that may result in increased discounts
• Potential negatives include:
  • Fraud (risk can be mitigated by proper controls and tight processes, proper attention by managers and administrators).
  • Possible tax and 1099 reporting issues.
  • Potential fragmentation of information on purchasing trends and functional spending (this risk dependent on vendor’s reporting capabilities – if these are robust this may not be an issue).
• Business needs assessment.
• Note: Program will require central card administrator and point of contact.
• Requires senior management endorsement for success.

Implementation - Steps:

1. Organize team.
2. Assess Current Purchasing Processes and Costs: Identify different types of purchases that might be included. Estimate number of potential transactions. Establish baseline data to allow for calculation of cost savings per transaction (e.g. number of non-PO transactions below $500, below $1,000, below $1,500, which departments make most of these transactions, number of different vendors involved, percentage of these transactions that would move to new process, current cost per transaction, etc.)
3. Determine Program Strategy: What are we trying to accomplish? Decide card and card utilization strategy. Define goals and metrics.
4. Select Provider: Establish program requirements (controls, account structure for card use, GL mapping, reporting requirements, etc.), develop vendor evaluation tool, initial selection of vendors, vendor presentations, etc.
5. Work with Chosen Provider. Establish processes and policies/procedures, create support infrastructure, ensure expense control, program validation by internal and external auditors. Choose trial area, conduct trial.
6. Develop communication plan.
7. Supplier seminars. Ensure supplier acceptance.
8. Develop Rollout Strategy.
9. End User Training.
10. Measure and report performance. Ongoing program monitoring and tracking.
11. Possible future modifications for new/innovative programs.

Possible Card/Program Requirements:

1. Types Of Card Controls:
   • Credit limits - $$ per month / $$ per transaction.
   • Limits to # transactions per day / per billing cycle.
   • ATM blocking (no cash advances/withdrawals allowed)
   • Set lifetime w/ renewals.
   • Card activation/inactivation.
   • Avoidance of sales tax. (Tax exemption certs vs. info embossed on card)
   • Restrictions on purchases by item types & SIC Codes.
   • Purchases restricted to defined list of suppliers vs. any supplier.
   • Acceptable ordering methods – in-store vs. phone vs. online.
2. Possible Card Combinations:
• Department cards vs. individual cards.
• Different types/levels of cards (e.g. a standard card and a separate travel card, vs. combined standard + travel card, etc.)
• Each card tied to one accounting unit / account combination vs. one card to one accounting unit + multiple accounts depending on SIC code.
3. Program Costs:
   • Program fees – startup costs, ongoing fees.
   • Any fees assessed to suppliers.
4. Reporting Capabilities:
• Level of detail available (map to one account unit / account vs. multiple accounts, etc.)
• Web/Online report access for statement, usage, etc.
• Mail delivery of statements.
• Electronic summary file each month (can this be interfaced/uploaded into ERP Financial suite?)
• Can card company provide minority business information?
5. Change Management:
• Add/change/delete users and cards.
6. Miscellaneous questions:
• How long has program been available, existing number of card users.
• Numbers of suppliers that accept purchasing cards.
• Settlement process.
• 800 line support 24/7?

Processes to be established::

• Who gets card?
• Who authorizes applications?
• Application form.
• Card pickup, sign statement of responsibilities.
• Card activation.
• Individual responsibilities, departmental responsibilities.
• Change management (Terminations, transfers, etc.)

• Lists of appropriate (e.g. office supplies, books, appropriate dues and membership fees, etc./ inappropriate items (e.g. capital, services, etc.)
• Transaction logs, itemized receipts, direct delivery, etc.
• Don't forget returns/credits!

• Monthly statement verification, approval signatures, billing dispute resolution, forward paperwork to AP/Finance, record retention.

• Lost/stolen cards.
• Periodic audits.

Policies to be developed:

• General Procurement Card Policy
• Application policy
• Infraction Policy (what to do when rules/guidelines broken)

Forms to be developed:

• Proc Card Application
• Cardholder Agreement
• Spending Limit Change Form
• Disputed Transaction Form
• Lost/Stolen Notification Form
• Replacement Receipt Form
• Procurement Card Activity Log

© SNi 08/20/2002