Best Practices October 2011 Strictly Private and Confidential

Best Practices Agenda Define Best Practices Federal Agencies Define Best Practices Understand the Value of Best Practices Policies and Procedures vs. Best Practices How to implement and Standardize Best Practices Improved Program Management and Performance ®

Best Practices Best Practices Defined Wikipedia says: Federal Agencies Wikipedia says: Best practices are generally accepted, informally standardized techniques, methods or processes that have proven themselves over time to accomplish given tasks Often based upon common sense, these practices are commonly used where no specific formal methodology is in place or the existing methodology does not sufficiently address the issue. The idea is that with proper processes, checks and testing, a desired outcome can be delivered more effectively with fewer problems and unforeseen complications In addition, a “best” practice can evolve to become better as improvements are discovered Best practice is considered by some as a business buzzword, used to describe the process of developing and following a standard way of doing things that multiple organizations can use ®

Understanding the Value of Best Practices

Best Practices Understand the Value of Best Practices Federal Agencies Goals and Best Practices Efficiency in program and process management The best way to make payments Cost and time savings Operate within compliance requirements Government mandated Agency policy Ease of program administration Impacts you and your field program administrators Simplify payment process and requirements for cardholders ®

Best Practices Balancing Risk and Efficiency Managing Risk Federal Agencies Managing Risk Maintain internal controls to meet objectives Effectiveness and efficiency of operations Reliable financial reporting Compliance with applicable laws and regulations Minimize waste, fraud and misuse ®

Best Practices Five Standards for Internal Control Objectives Federal Agencies Control Environment Organizational structure and culture Risk Assessment Identify internal and external risk jeopardizing objectives Control Activities Policies, procedures and mechanisms to achieve objectives Information and Communications Information shared vertically and horizontally Monitoring Continuous and periodic reviews of data and performance ®

Best Practices Best Practices apply to internal and external processes Federal Agencies Lay groundwork for sound program structure Develop reporting for minimum standards for program effectiveness Established policies and procedures can drive how you transact and interact with vendors Remain open to alternate processes Understand the organization culture Senior management role and impact on overall administration ®

Policies and Procedures

Best Practices Policies and Procedures vs. Best Practices Federal Agencies Clearly Identify Organization Goals and Objectives Goals will drive practices to create efficiency and can include: Increased card usage Static or decreased AP head count Vendor discounts Centralized payables reporting Shift focus to larger dollar transactions Improve cash flow Provide definition of Policy vs. Procedure Policy is strategic as in goals Procedure is tactical as in how to step by step achieve the goal ®

Best Practices Policies and Procedures vs. Best Practices Federal Agencies Different meanings for different organizations Card use controls can impact results Categories of spend Transaction limits Number of cardholders High-value purchases Alternative payments mechanisms to capture spend Analyze current check payments – AP file match – Optimization Span of control – Approvers ®

Best Practices Individual Bill Travel Best Practices Federal Agencies Card Controls are still a major factor: Deactivate when not traveling Split disbursements Delinquency management Consistent administrative/disciplinary actions Authority to take action Tell stories about people using cards when they aren’t on travel, maybe claim mistakenly took wrong card from account. Or figured they would just pay it like it was a consumer card. Talk about the reports available in CCRS to see delinquency, can subscribe so it is there same day each month. ®

Best Practices Central Bill Travel Best Practices Federal Agencies Centralize travel management and reconciliation are challenging: Policy for use Tracking expense reporting Travel Management Company (TMC) participation and enhanced data Speed of pay Discuss reporting available in CCRS to assist with program management. Can use dashboards and canned queries already built in the tool. ®

Best Practices There are common practices that apply to both payment and travel Balance of internal controls Internal communication – Training Detection tools for misuse and abuse Split transactions Restaurants in home city Weekends or Holidays Audits and data mining PA time constraints Primary metric – spend or transaction volume Senior management support Periodic review of internal controls ®

Implementing and Reviewing Best Practices

Best Practices How to Implement and Standardize Best Practices Federal Agencies Create a Vision for the Program Model Ingredients for Implementation: Entity Mission and Policy & Procedures Derived from agency parameters Includes external requirements Internal controls and documentation Requirements to manage risk Establish practices for compliance Narrative for plan Understanding credit card processing Full comprehension of transaction processing Poll the audience if they attended the morning session that went through the life cycle of a transaction. If not, then review it briefly. ®

Best Practices How to Implement and Standardize Best Practices Federal Agencies Create a Vision for the Program Model (cont.) More Ingredients for Implementation: Cardholder management Card profiles Cardholder training Administrative/disciplinary actions Non-Cardholder roles and responsibilities Span of control Cardholder processing Risk management Delinquency, misuse, abuse Clarify that delinquency is an IB travel concern, but the misuse and abuse are applicable to payment and travel ®

Best Practices How to Implement and Standardize Best Practices Federal Agencies Vision for Program Model Final Ingredients for Implementation: Reporting requirements Operational Tracking Management reporting Review and adjust Periodic updates Evolving program Legislative environment ®

Best Practices Do’s and Don’ts for Best Practice Implementation Federal Agencies Consider the need for change to policies and procedures Track your program performance using the reporting tools available Review program processes with field PA Solicit cardholder feedback Understand your organizational culture and how to operate within Gather senior management feedback and support Network at this conference and any other conferences Don’t operate in a vacuum Don’t assume the current way is the best Refer to CCRS for tracking program performance, Dashboards are perfect for that. But there are also queries that help review your program performance. Reviewing program with field PA is two way discussion to find their best practices that can be shared entity wide. ®

Improved Program Performance

Recommendations for Program Growth Best Practices Recommendations for Program Growth To increase program growth, it is important to continuously monitor program performance and explore new opportunities for card use. Convert paper check payments to P-card payments – optimization analysis Establish appropriate policies Overcome resistance to change – switching behavior Target spend categories Establish meaningful goals Travel Advance cards Eliminate Petty Cash Discuss the fact that this is all meant to drive efficiency from top to bottom of the program.

Best Practices Key Action Steps Increase awareness and education of the program through webinars and marketing initiatives Use Citi training tools for continuing system training for all program administrators Make P-Card easy decision to use for employees - dollar threshold for micro purchases – many states use $5,000, but depends on entity policies Supplier enablement – work with Citi to assist vendors in meeting your purchasing needs

Best-in-class Purchase Card Programs Include Best Practices Best-in-class Purchase Card Programs Include Strong executive endorsement Cross-functional collaboration (Acquisition, Finance, Logistics, Internal Controls, etc.) Correct distribution of cards Correct utilization of cards (payment and purchase) Connection to comprehensive cost management agenda (strategic sourcing) Mandated card use The establishment of appropriate policies Enforcement of established policies Correct refers to making certain the right people have the cards and they know how to properly use them.

Purchasing Card Benchmark Statistics Best Practices Purchasing Card Benchmark Statistics Average administrative cost savings using Purchase Card is $70 Paper process averages $90 Purchase card process averages $20 Purchase cards reduce procurement cycle time by approximately 12 days Reduce the number of suppliers managed in Accounts Payable (AP) databases by an average of 16 Result in a reduction or redeployment of staff in AP and Procurement functions Twenty-six percent of all organizations report the use of purchasing card data to obtain a higher discount for goods or services Ghost Accounts have increased usage for procurement Increased spending limits and categories promote higher program spend to include larger average transaction amounts * Statistics provided by the 2010 Purchasing Card Benchmark Survey Results by Richard Palmer and Mahendra Gupta, RPMG Research Corporation

Travel Card Benchmark Information Best Practices Travel Card Benchmark Information Mandating the use of the Travel card results in positive outcomes for the organization Higher capture of travel spend on card Spend capture enabled discount negotiations Received senior management program support Drove technology development for expense management systems Trend to provide a single type card with similar spend features Goals include process efficiency and cost reduction and data integration into financial systems Broader card distribution resulted in higher penetration of travel budget payments with the card * Information provided by the 2009 Corporate Travel Card Benchmark Survey Results by Richard Palmer and Mahendra Gupta, RPMG Research Corporation

Next Steps with Citibank Best Practices Next Steps with Citibank Discuss your goals with your Account Manager Review current processes and policies Work with Account Manager to establish a plan Consider check payment vendor match-Optimization

Federal Agencies ® 26

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