Introduction To Purchasing Card Principles

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 At the end of this training session, you will be able to: Objectives

What is a Purchasing Card (P-Card)? It is a Visa credit card with your name and GSW State Universitys 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 Your Name Your Entitys Name Bank of America

How it all works Behind the Scenes 4 Transaction goes to vendor and into their Merchant Bank Payment is made with P-Card to vendor – Buyer receives Receipt via Vendor creates Receipt of purchase online Pay on Order Payment Purchase is made with P-Card Vendors that accept P-Card Bank of America Audit Spend Analysis Procurement Productivity Supplier Performance GSW – P-Card Administrator

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 6 1/2 to 1 Day 1 to 2 Days 5 to 6 Days1-2 Days1 to 2 Days

Consider the Benefits of the Purchasing Cards 7 1/2 to 1 Day 1 to 2 Days 5 to 6 Days 1-2 Days 1 to 2 Days X XXXX X X

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 hours of a posted transaction Employees receive goods/services faster days Avg. cycle time with traditional PO method 9.26 days Avg. cycle time with traditional PO method 6.3 days Resulting cycle time reduction with P-Card 6.3 days Resulting cycle time reduction with P-Card 2.96 days Avg. cycle time of P- Card transaction 2.96 days Avg. cycle time of P- Card transaction Procurement cycle is reduced by 68%* (determination of employee need until the receipt of ordered goods *RPMG Research Group = +

Consider the Benefits of Purchasing Cards Cost breakdown of Traditional PO and P-Card Transactions* PO Purchasing Card 9 *RPMG Research Group $31.30 $31.75 $26.16 $7.60 $5.71 $8.52 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; post- purchase 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 $89.21 $21.83

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 10 $89.21 Avg. cost of traditional PO method $89.21 Avg. cost of traditional PO method $67.38 Resulting cost reduction with P- Card $67.38 Resulting cost reduction with P- Card $ Avg. cost of P- Card transaction $ Avg. cost of P- Card transaction A process cost reduction of $68,000+ for every 1000 transactions migrated to P-Card *RPMG Research Group =+

When Do You Use a P-Card? 11 When you purchase a small-dollar supply 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 When you purchase a small-dollar non- equipment item (Less and equal to $100 with prior approval from IIT. The approval form is available on the Business Forms page)Business Forms

Where Can You Use a P-Card? 12 Over the counter (point of sale) By fax By telephone Over the internet Your department determines your P-Card limits Your monthly limit is based on expected P- Card use

Some of the Restrictions 13 You cannot use your card to pay for: Travel, Entertainment Authorized personnel with approved travel can purchase airline tickets and in-state SWC car rentals as well as pre- approved athletic and team travel with the P-Card Motor Vehicle Fuel Professional Services (doctors, lawyers) Cash Advances

Some of the Restrictions 14 Personal Purchases or Foundation Purchases Food / Gift Cards Gift Cards are considered Cash You cannot use your card to pay for: SplitPurchases Purchasing same item, but paying in split payments

Things You Must Do Regarding Your P-Card… 15 Contact P-Card Program Administrator/Coordinator if… Your name changed Department Changed Phone Number Changed Employee Agreement Sign an Employee Agreement Form Keep your card in a secure location at all times Never share your card

What Rules Do You Follow? Renew your P-Card every two years Every 2 Years Review and reconcile the Bank of America billing information within WORKS Follow the established single transaction limit: less than $5,000 $4, 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 GSWs 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 10 th of each month by 3 PM 17

Things to Watch For… Make sure that Sales Tax is not charged on your purchases 18 Sales Tax What happens if you realize you were charged for Sales Tax: a. Contact the vendor immediately and document your actions b.Have the Vendor issue a credit for the sales tax amount c.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 Tax and Use Form

When Is Your P-Card Suspended? you do not follow the States and GSWs policy and procedures you do not complete your reconciliation process in a timely manner (due by the 10 th of each month by 3 PM) of habitual misuse of fraudulent activity. When this is the case, you will be terminated and prosecuted 19 Your P-Card can be suspended because…

When Do You Cancel Your P-Card? you are leaving employment you are taking extended leave from your job Your can cancel your P-Card when…

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 vendors 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? 22 Entity Cardholder Entitys Purchasing Card Program Administrator (APO or CUPO) Statewide Purchasing Card Program Manager Entity Reviewer/Approver Entitys Purchasing Card Program Coordinator Entity Accountant

P-Card Program Resources To review GSWs Purchasing Card Policy, go to the Business Forms page and click on Procurement Card Policy Procurement Card Policy To review Georgia State Purchasing Card Policy and on-line resources: title/0,2094, _ ,00.html 23

P-Card Program Resources To review WORKS Payment Manager on-line training materials: To contact P-Card Administrator: To contact P-Card Coordinator: 24

Questions? 25