Procurement cards in the P2P environment at UCT Natalie Pitcher

General Leading research university in Africa and globally 25,000 students; 30% postgraduates; 18% foreign 5,000 staff; 20% academics Procurement at UCT ERP system: SAP Centralised supplier negotiation Decentralised purchasing (approx. 200 purchasers) Total spend in 2011: R1,4bn Diverse spend due to research activity Historical Background

2002: First cards issued with BoE Low value high volume (LVHV) purchases Convenient payment tool for field trip expenses Piloted MasterCard PCards in SA Piloted SAP-integrated ‘SmartLink’ software 2004: Move to Nedbank with takeover of B oE Historical Background

Stationery and office consumables (LVHV) Line item detail enabled from preferred suppliers Online payments Local and foreign air tickets and accommodation Conference fees Membership subscriptions Books and software Convenient alternative to: Travel allowance Reimbursement or cash advance e.g. field trips Common application of Pcard

Cardholders in December (current - 677) Transaction volumes 32,627 – total no of transactions 6,407 – foreign currency transactions Transaction values R57m – annual spend R4,7m – ave monthly spend (2012 – R5,2m) R15m – foreign transactions Pcard statistics

Spend by GL account for 2011

Cardholder Profile Cardholders are selected based on role not rank, which is determined by need : – Used by UCT executives for travel and entertainment – Departmental purchasers can use the pcard as a primary payment tool – Miscellaneous purchasing such as refreshments and catering – Project managers for daily expenses – Field workers paying travelling expenses – Academics paying for travel, conferences, online payments – Any staff member requiring reimbursements or advances on a regular basis

Pcard Daily Roles Pcard Administrator Card Processor Card Holder Card Processor Card Holder Daily transaction downloading Transaction processing Makes a purchase

Pcard process Daily Cardholder Creates online order Makes payment by swiping card Sends supporting docs to card processor Card Administrator Upload daily files received from Bank Card Processor Match supporting docs to transactions listed in SAP Allocate the transaction to cost centre, fund and general ledger Monthly Card Administrator Upload statement file from Bank Run statement match report against daily files Payment to Bank Bank reconciliation Line Manager Cardholder reports to LM LM will review all expenses made via pcard Sign off expense report Finance Manager CP reports to the LM Unapproved transactions are reviewed Expense voucher report is reviewed

Comparative Analysis Traditional purchase order payment Create purchase order Enter GRV/Amend purchase order Process Invoice AP account reconciliation Pay the vendor Pcard payment Create online order/ swipe card Vendor delivers goods & invoices/Bank pays Vendor Post allocation of cost

Bank pays vendor immediately Organisation Supplier Order supplies Vendor delivers/ invoice received Organisation pays one vendor = Bank Summary

Benefits of the Pcard Cost saving : – Processing cost relating to card transactions cost about 25% of traditional purchase orders – Purchase order do not need to be amended to match the GRV and Invoice – There are no “open” purchase orders which need to be investigated and resolved – Card belongs to an individual, they are accountable for every transaction – Pin chipped cards ensure latest encryption technology is applied – Card holders are able to process transactions, thus relieving purchaser workload – Improved cashflow for supplier

Controls Pcard policy is approved by UCT council Application process requires appropriate authorisation and accountability Monthly credit limits can be increased/decreased Transacting for another staff member requires an authorised requisition

Monitoring and Reporting – Monthly Card Holder expense voucher report must be signed off by the Line Manager – All Card Holders pcard expenses are reviewed by Finance manager checking budget compliance amongst maintaining other financial disciplines – Internal and external audits – Systematic structured audit program – future development

Fraud & Corruption All financial processes carry risk but with the correct reasonable controls this can be managed Fraudulent transactions are charged back by the Bank provided they are disputed in time Card transactions are very transparent and visible, which often reveal if cardholders have been corrupt in other areas of business

Future Developments Increase spend via card with more vendors Encourage online transactions especially office consumables which account for the highest number of transactions Upgrade pcard software to Xponential Provides improved reporting tool Enables change to Visa which has better acceptance in the world, especially Africa Allows payment of traditional purchase orders/invoices by card

Implementation consideration Research Choose your issuing bank carefully Bank needs to understand needs and provide full solution Ensure adequate resources are available Identify appropriate use - costly and time consuming business processes Investigate data integration solutions to ensure: – All transactions reach the financial system – Does the solution allow for flexible cost allocation

Conclusion Pcard is powerful payment tool Provides convenient payment solution in Global village environment We know where most of the creativity, the innovation, the stuff that drives productivity lies - in the minds of those closest to the work. - Jack Welch It is not your aptitude, but your attitude, that determines your altitude. - Zig Ziglar