1. Federal Acquisition Service U.S. General Services Administration GSA SmartPay2 Basic Charge Card Payment Reconciliation Perry Hampton Bradley Forrestel Office of Charge Card Management (OCCM) 12 th Annual GSA SmartPay Training Conference August 10 – 12, 2010 Perry Hampton Bradley Forrestel Office of Charge Card Management (OCCM) 12 th Annual GSA SmartPay Training Conference August 10 – 12, 2010

2. Federal Acquisition Service Agenda  Program Background & Basics  The Importance of Payment Reconciliation  General Payment Reconciliation Step-by-Step Process  General Payment Reconciliation Best Practices  Resources  Questions 2

3. Federal Acquisition Service Value to the customer After this course, participants should be able to:  Identify ways to improve payment reconciliation processes at your agency/organization  Understand how to apply payment reconciliation best practices to your charge card program  Collaborate with payment reconciliation experts who provide information/tools for enhancing payment reconciliation 3

4. Federal Acquisition Service Program Background & Basics

5. Federal Acquisition Service Polling the Audience  How many audience members are: A. Level 1 A/OPCs B. Level 2 A/OPCs C. Level 3 A/OPCs D. I’m not an A/OPC E. Unsure  Is your role as an A/OPC your: A. Primary Duty B. Collateral Duty C. Not Applicable ? 5

6. Federal Acquisition Service Polling the Audience  How many audience members are new to the GSA SmartPay Training Conference this year? A. Yes, this is my first year B. No, I have attended before  What business line are you affiliated with? A. Purchase B. Travel C. Fleet D. All E. Unsure ? 6

7. Federal Acquisition Service GSA SmartPay2 Program Overview  Enables over 350 Federal agencies/organizations to obtain charge card products and services through master contracts that GSA established with three banks: Citibank, JPMorgan Chase, and U.S. Bank  Agencies/organizations issued task orders against these master contracts to obtain charge card products and services  Agencies/organizations pay no direct fees to use the program  Period of performance for existing contracts is through 2018 DID YOU KNOW… $943 was spent using Federal charge cards every second in FY09 7

8. Federal Acquisition Service Office of Charge Card Management  Provide a comprehensive and flexible master contract  Offer strong customer orientation and frequent customer contact/support through:  Test and share best practices  Engage in continuous market research and regular meetings with industry  Deliver “Beyond Plastics” strategy and conferences  Provide balanced customer advocacy and program leadership  Training workshops, guides and GSA SmartPay Annual Training Conference  GetSmart quarterly newsletters  Monthly meetings  Agency POCs  Strong web presence  Ad hoc working groups  Customer satisfaction surveys  Social Networking exploration 8

9. Federal Acquisition Service The Importance of Payment Reconciliation

10. Federal Acquisition Service Benefits of Payment Reconciliation Why Reconcile?...especially if the invoice/payment Is automated?  Avoid out of balance conditions between agencies/ organizations and issuers  Maximize refunds by ensuring payments are accurate and timely  Identify problems quickly and act upon them  Avoid hidden delinquencies  Frequent reconciliations lead to smooth program close-out  Reconciling frequently is a best practice 10

11. Federal Acquisition Service Reconciliation Issues  Payment made to the wrong account  Checks recorded as a lesser or greater amount than what was presented to the bank  Balance transferred to the wrong account  Payments taken from the bank account without the agency’s/organization’s knowledge  Rolling balances – payment is applied to oldest balance first  Documentation is not retained, or lost  Payments posting to the transaction account versus the central account 11

12. Federal Acquisition Service Payment Reconciliation step-by-step process

13. Federal Acquisition Service Traditional Payment Reconciliation Process Flow  Account management and reconciliation process flows vary among agencies/ organizations due to different organizational structures, roles/responsibilities, and established policies/procedures 13

14. Federal Acquisition Service Polling the Audience  How does your agency/organization perform payment reconciliation? A. Through an automated system B. Through a manual system C. Through a system that is automated, but includes manual components D. I don’t know ? 14

15. Federal Acquisition Service Polling the Audience  For those who use a manual system, how long (on average) does it take for your agency/organization to perform payment reconciliation? A. 1 – 7 Days B. 7 – 14 Days C. 14 – 30 Days D. 30+ Days D. I don’t know ? 15

16. Federal Acquisition Service Polling the Audience  For those who use an automated system, how long (on average) does it take for your agency/organization to perform payment reconciliation? A. 1 – 7 Days B. 7 – 14 Days C. 14 – 30 Days D. 30+ Days D. I don’t know Depending on A/OPC diligence, automated processes generally takes less time than a manual process (several days to several weeks, rather than months) ? 16

17. Federal Acquisition Service Sample Timeline - Payment Reconciliation Process Flow (Manual) SP2 Contractor Bank Sends invoice to A/OPC Reviews bank invoice A/OPC Reconciles and verifies transactions A/OPC Sends invoice report to Payment Office for payment Payment Office Certifies report and makes payment Notification Day 1 Review 2-5 Days Reconciliation 4-6 Days Transmission 3-10 Days Payment 2-8 Days Send transaction statements to cardholders. Stamps date of receipt (date serves as the prompt payment start date) with 30 days to make payment. Reconciles transaction invoices against bank statements. Verifies all matched transactions. Prepares packets containing transaction invoices and bank statements and mails to Payment Office. Certifies all documents and makes payments to the bank. Sample timeline  Sample TOTAL TIME: 12 - 30 days  Manual reconciliation process takes several weeks up to a month or more  Manual processing for payment reconciliation is a common practice and can be cumbersome by nature  Potential risk of human error in manual processing could delay payments 17

18. Federal Acquisition Service Sample Timeline - Payment Reconciliation Process Flow (Automated) SP2 Contractor Bank Sends invoice to A/OPC Reviews bank invoice in automated system and sends to Payment Office for payment Payment Office Certifies report and makes payment Sample timeline Notification Day 1 Review 1-3 Days Reconciliation 1-3 Days Transmission 1-3 Days Payment 2-8 Days Sends transaction statements to cardholders. System acknowledges date of receipt (date serves as the prompt payment start date) with 30 days to make payment. System reconciles transaction invoices against bank statements. Verifies all matched transactions. System automatically submits transaction invoices and bank statements to Payment Office. Certifies all documents and make payments to the bank.  Sample TOTAL Time: 6 – 18 days  Depending on A/OPC diligence, automated processes generally takes less time than a manual process ( 6 – 18 days versus 12 – 30 days)  System automation and increased training helps to improve and streamline the payment reconciliation process  Success is highly dependent on the diligence of individual A/OPCs and availability of time devoted to payment reconciliation 18

19. Federal Acquisition Service Polling the Audience  True or False: there are penalties for delinquent accounts that are not paid on time. A. True B. False ANSWER: TRUE. According to the Prompt Payment Penalty Act (PL 97-177), there are penalty implications for not reconciling in a timely manner, which can lead to delinquent accounts. Did you know…The frequency of payment reconciliation greatly reduces the risk of delinquencies. ? 19

20. Federal Acquisition Service Penalties  The Prompt Payment Penalty Act (PL 97-177) states that interest penalty must be paid if payment is not made within 30 days of receiving a proper invoice  Agencies/organizations are required to pay the interest rate under criteria established by the Renegotiation Act (PL 92-41)  There are penalties for delinquent accounts, and the frequency of payment reconciliation greatly reduces the risk of delinquencies 20

21. Federal Acquisition Service Late Payment Penalty Letters  Required to pay off outstanding balances on government accounts within 30 days of their due date  The date stamping of invoices is a key step in determining the prompt payment status of an account  This largely manual process can be inconsistently practiced, leading to uncertainty and/or disputes about when interest payments are due and the period used to calculate interest  When payments are not made in a timely fashion, interest penalty letters and non-payment interest claims may be generated  Interest accrues on accounts starting 31 days past the prompt payment start date based on the Applicable Federal Rate (AFR)*  Interest penalty letters are generated by the bank (timeline for generating interest penalty letters vary depending on agency/organization)  Non-payment can place agencies/organizations at financial and legal risk *Applicable Federal Rate (AFR) refers to the interest rate published by the US Treasury to calculate imputed interest charges 21

22. Federal Acquisition Service Polling the Audience  Does your agency/organization have a Prompt Payment Act (PPA) process established? A. Yes B. No C. I don’t know Did you know…establishing a Prompt Payment Act (PPA) process at your agency/organization is a best practice. ? 22

23. Federal Acquisition Service Sample Penalty Letters and Claims Monitoring Process 31 Days Bank Accrues Interest 61 Days Account Delinquent 120 Days Initial Penalty Letter 180 Days Final Penalty Letter 210 Days Bank Files Claim Prompt Payment Act (PPA) Initial Penalty LetterFinal Penalty LetterClaims  PPA starts when the date of receipt is stamped on the bank invoice  At 60 days, SP2 contractor bank sends initial penalty letter to the Contracting Officer and A/OPC  A/OPCs work with bank to resolve penalty letters  Bank sends list of all outstanding penalty letters and claims to A/OPC and Contracting Officer  After about 60 days (at 120 days), bank sends final penalty letter to the Contracting Officer and A/OPC  At 180 days, bank files a non-payment interest claim on the interest penalty letter  Contracting Officer works with Payment Office to resolve claims  Bank terminates delinquent accounts at 210 days  Note: the PPA process can differ among agencies/organizations depending on the established policies and procedures they have with their SP2 contractor bank  Agencies/organizations with a strong PPA process have a greater change of alleviating a non-payment interest claim to the government 23

24. Federal Acquisition Service General Payment Reconciliation Best Practices

25. Federal Acquisition Service Best Practices  Reconcile frequently – ideally weekly, but at least once a month  Reconcile interface files/mappers* to statement invoices  Confirm payment by Designated Billing Office (DBO) and generate invoice status reports  Review payment reconciliations to ensure agency/organization and bank records agree  Notify GSA SmartPay2 contractor bank of disputes as quickly as possible, and monitor the status of disputed transactions  Contact your GSA SmartPay2 contractor bank to learn about the tools they provide you with to assist in the payment reconciliation process *Mappers are used in JPMorgan Chase’s PaymentNet system and can be customized. For more details, contact your JPMorgan Chase account manager 25

26. Federal Acquisition Service Reconciling interface files/mappers to statement invoices  If paying based on cycle date (once per month), compare mapper file to statement/invoice Generate Account Statement and Summary Report Notify issuer of any discrepancies  If paying semi-monthly, weekly, daily, etc., reconcile mappers to statement/invoice generated at cycle Ensure totals match including dollar amount and transaction counts Notify issuer of any discrepancies  Confirming payment Generate Invoice Status Report Confirm Payment and follow up with Designated Payment Office 26

27. Federal Acquisition Service Managing Disputes To avoid reconciliation issues when managing disputes, agencies/organizations should allow the dispute process to work as designed:  Under the GSA SmartPay2 Master Contract, cardholders must notify the issuer of dispute within 90 calendar days from the transaction date  The bank provides a temporary provisional credit for a charge that is under dispute while the bank simultaneously researches the dispute; upon resolution:  If dispute is settled in favor of the cardholder the provisional credit(s) remains issued to the account  If dispute is settled in favor of the merchant, the provisional credit(s) is removed and the bank will bill the cardholder by applying a debit transaction  Avoid deducting disputed transactions from the balance due as provisional credit will be or has been issued  Note: refer to your agency/organization policies on the process for reconciling disputed transactions 27

28. Federal Acquisition Service Resources

29. Federal Acquisition Service General Resources  GSA SmartPay Website: www.gsasmartpay.gov  For a listing of definitions as they related to the Master Contract, see section C.1.4 Definitions (available on the GSA SmartPay website)  Federal Acquisition Regulations (FAR): www.acquisition.gov/far  Agency/organization specific policies and established procedures  Bank Contact Info  Citibank: http://www.cards.citidirect.com/welcome.asp 1-800-790-7206 (customer service)  JP Morgan Chase: https://www.paymentnet.com/Login.asp 1-888-297-0781 (customer service)  U.S. Bank: https://access.usbank.com/cpsApp1/index.jsp 1-888-994-6722 (customer service) 29

30. Federal Acquisition Service Other Reconciliation-related Courses being offered at Conference  Reconcile Now, Relax Later (JPMorgan Chase)  DTS (Defense Travel System) CBA Reconciliation Module Training (Citibank)  CBA Reconciliation (U.S. Bank)  Department of the Navy (DON) Purchase Card – Managing Delinquencies and Credit Balances (Citibank)  Delinquency and Dispute Management (U.S. Bank)  WEX Online Data Analysis Reporting Tools (Citibank) 30

31. Federal Acquisition Service Other GSA SmartPay Courses being offered  GSA SmartPay2 Purchase Card Basics  GSA SmartPay2 Travel Card Basics  GSA SmartPay2 Fleet Card Basics  GSA SmartPay2 Master Contract Basics  GSA SmartPay Program Update  GSA SmartPay in More than One Flavor: Innovative Products & Services  Effective Oversight of Your GSA SmartPay Program  Navigating the GSA SmartPay Website 31

32. Federal Acquisition Service Question & Answer Session

33. Federal Acquisition Service Thank you! Contact Us Perry Hampton, perry.hampton@gsa.gov Bradley Forrestel, bradley.forrestel@gsa.gov GSA SmartPay Program Support Phone: (703) 605-2808 E-mail: gsa_smartpay@gsa.gov www.gsasmartpay.gov 33