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Purchasing_Card_Principles1-9-200851

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					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

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How it all works Behind the Scenes
Purchase is made with P-Card

Pay on Order

Transaction goes to vendor and into their Merchant Bank

Vendor creates Payment is made with P-Card to vendor – Receipt of Buyer receives purchase online Receipt via email

Payment

Bank of America

email

Vendors that accept P-Card

Audit

GSW – P-Card Administrator Spend Procurement Analysis Productivity

Supplier Performance
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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

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Consider the Benefits of the Purchasing Cards

Manually Search Paper Catalog

Fax, Phone, or In-House Mail Paper Requisitions

Requisition Input

Fax, Phone, Traditional EDI Purchase Orders

Supplier Order Fulfillment

Receive Product

LEGACY PROCESS

1 to 2to 1 1/2 Days
Day

½ to 1 DAY 1/2 to 1
Day

1 to 2 Days 1 to 2 Days

Paper Invoice Mailed to AP

Invoice Matched to PO

In-House Mail Invoice Holds to Invoice Approver

Hold Response Sent to AP

Hold Resolved, Invoice Paid

Printed Check Mailed to Supplier

7 Days 5 to 6 Days

3 1-2 Days Days

11Day Days to 2

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Consider the Benefits of the Purchasing Cards

Manually Search Paper Catalog

Fax, Phone, or In-House Mail Paper Requisitions

X X
½ to 1 DAY
1/2 to 1 Day

Requisition Input

Fax, Phone, Traditional EDI Purchase Orders

Supplier Order Fulfillment

Receive Product

LEGACY PROCESS

1 to 2 Days
1/2 to 1 Day

1 to 2 Days

1 to 2 Days

X X X X
5 to 6 Days

Paper Invoice Mailed to AP

Invoice Matched to PO

In-House Mail Invoice Holds to Invoice Approver

Hold Response Sent to AP

Hold Resolved, Invoice Paid

X
1 1 Day to 2 Days

Printed Check Mailed to Supplier

7 Days

1-2 Days

3 Days

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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

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Consider the Benefits of Purchasing Cards
Cost breakdown of Traditional PO and P-Card Transactions*

PO
$31.30

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)

$7.60

$31.75

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

$5.71

$26.16

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

$8.52

$89.21

$21.83
*RPMG Research Group

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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

$67.38

$21.83

=

Resulting cost reduction with PCard

+

Avg. cost of PCard transaction
*RPMG Research Group

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When Do You Use a P-Card?

When you purchase a small-dollar supply item

When you purchase a small-dollar nonequipment item

(Less and equal to $100 with prior approval from IIT. The approval form is available on the Business Forms page)

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
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Where Can You Use a P-Card?

Over the counter (point of sale) By fax

Your monthly limit is based on expected PCard use

By telephone
Your department determines your P-Card limits

Over the internet

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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)
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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
Purchasing same item, but paying in split payments

Purchases

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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

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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

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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

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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

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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

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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
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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
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P-Card Program Resources
• To review WORKS Payment Manager on-line training materials:
https://payment2.works.com/wpm/bookmark

To contact P-Card Administrator: nrooks@gsw.edu To contact P-Card Coordinator: atallent@gsw.edu

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Questions?

25


				
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