1. For Schools: Current Best Practice for Procurement and Accounts Payable Ronald Everett Summer 2007

2. Myth: The more paper, the better the paper trail

3. The Traditional PO Process Can Be Painful… Paper Intensive / Mountains of Paper Multiple Departments Involved Same Process Regardless of Transaction Value High Average Per Transaction Cost to School District High Average Per Transactions Cost to the Vendor Not Cost-Effective for Small Purchases

6. What does it actually cost to complete a PO? From requisition to receiving item? From requisition to paying for item?

7. What are the Experts Saying? “The average cost of processing a purchase order manually is between $75 - $200. Automating procurement reduces that cost to between $10 - $40... The Return-On-Investment (ROI) is amazing.” Deloitte Consulting Accenture US Bank Fifth/Third Bank American Express Chicago Public Schools - Elgin U-46 - Rockford

8. Bench Marking Questions How many non-payroll checks are written each month? What % are for less than $1,000? What % are for less than $500?

9. Real example of reducing paperwork Fulton County Schools, Georgia  70,000 Students  2 cards per building  Reduced PO’s from 60,000 to 30,000

10. Another example of reducing paperwork Naperville 203  2001 - 9,847 PO’s  2006 – 4,724 PO’s  Saved 5,123 PO’s 5,123 x $75 = $384,225 in man-hours 5,123 x $2.50 = $12,807 in postage What can you eliminate? What can you save?

11. Why is the Streamlining of Small Purchases Significant? The majority of transactions in most organizations are for relatively small amounts District 203 – 58% of AP checks are for less than $500 District 204 – 58% of AP checks are for less than $500 IOMA article – 60% of case study purchases less than $1, 000

12. Bench Marking Questions How many “petty cash” transactions per year? How many “emergency/reimbursement” checks written per year? How many “imprest fund” checks written each year?

13. Could all of these small transactions each month be consolidated into one payment?

14. Who are the employees creating all of these small purchases?

15. Key to Consolidating Small Purchases into one payment: Get p-Cards into the hands of those who are currently making small purchases/ generating PO’s of less than $1,000.

16. What are Procurement Cards? They look and operate similar to credit cards They do not carry a revolving line of credit Usage and authorization parameters can be reviewed and managed via the internet by district administration

17. Specific card use parameters can be established for each card Transaction limits per charge Monthly limits Preferred Supplier Restriction You control what can be purchased, where it can be purchased from and limit amount per transaction

18. Customized Card design can display: Card holder name School District name and number and/or Tax ID (up to 24 characters)

19. Advantages of an Association Sponsored Program Single Contract Creates a user group/support network Negotiation clout Due diligence costs eliminated Rebates

20. p-Card Growth - Districts Month2003-042004-052005-062006-07 May54884137 June75388141 July125888145 August166193146 September186699152 October2068103158 November2171106161 December2472109163 January2676113177 February3080114183 March3681117187 April4183133194 4183133194

21. p-Card Growth – Number of Cards Month2003-042004-052005-062006-07 May568623232356 June2495723232742 July24108824202659 August170110024772799 September187114124772799 October311147521563336 November354158523363307 December362164721593362 January395214926853532 February448214930713585 March489217929004711 April618218629674825 618218629674825

22. p-Card Growth – Purchasing Volume Month2003-042004-052005-062006-07 May 1,200 355,4051,025,0042,562,422 June 30,500 420,5691,018,7732,558,846 July 24,300 356,8351,140,3602,354,778 August 24,700 452,1711,499,6263,374,260 September 101,400 697,7091,499,3953,376,079 October 186,900 664,3931,405,3282,622,251 November 192,100 623,6871,448,1022,719,870 December 217,000 733,7801,374,4972,607,935 January 194,200 709,2561,606,1362,534,792 February 254,700 987,4781,763,8802,466,692 March 357,400 885,2332,257,2053,227,319 April 318,600 1,181,7062,454,1143,475,371 1,903,0008,068,22218,492,42034,344,057

23. Rebate History 2003-04$0 2004-05$46,101.51 2005-06$125,522.01 2006-07$295,899.63 2007-08$??

24. Customized Card Design Individual Card Department Card – No Fraud Coverage Ghost Card – No Plastic

25. Billing Cycle Requirements School District may choose a billing cycle cut-off of the 5 th or the 20 th Payment is due at Harris Bank within 21 days of billing cycle cut-off  Penalty for late payment (Prime + 7%) on all transactions in the billing cycle Penalties can be avoided with pre-planning and monitoring online usage reports

26. Current Rebate Schedule 5/1/2007 APV21 Day14 Day7 Day Tier 6 $70,000,000+1.00%1.10%1.20% Tier 5$50,000,001-.95%1.05%1.15% $70,000,000 Tier 4$30,000,001-.85%.95%1.05% $50,000,000 Tier 3$20,000,001-.75%.85%.95% $30,000,000 Tier 2$10,000,001-.65%.75%.85% $20,000,000 Tier 1$5,000,001-.55%.65%.75% $10,000,000

27. Billing and Payment Monthly Billing Statements  Consolidated Billing Statement (Available online)  Cardmember Report (available online)  Individual Reports Payment Methods  Electronic Funds Transfer  Automated Clearing House  Check

28. Why was MasterCard selected? Superior vision with technology and e-commerce Fraud Protection insurance Dedicated group to sign up suppliers Customized card design displaying the name of card holder, school district and/or tax exempt number

29. Why was MasterCard selected? (Continued) Individualized training Global acceptance at over 35 million locations Retailers benefit from low transaction charge

30. Online Capabilities (7-24) Online Program Management  Submit, approve, and cancel Card accounts  Instant Account Activation  Adjust spending limits/manage Cardmember profiles  View Cardmember charges  Change accounting information Online Information Services  View/Manage Program Information  Access to Web reporting tools

31. Vendor Benefits Reduces vendor transaction costs Vendor paid by Harris within 48 hours of shipment/pick-up Reduces the issues of partially filled orders

32. Benefits of a p-Card Program for Management Easier on Accounts Payable Submit one monthly payment vs. multiple payments to multiple vendors Reduction in paperwork Fraud prevention and protection through the Bank and MasterCard Detailed reporting available 24 x 7 Easy online administration and dedicated customer support Control on spending limits and accepted vendors

33. How to Get Started 1. Request information packet from State Affiliate ASBO or click here for printable versionhere 2. Submit resolution to local board of education for purchasing card participation 3. Identify local p-Card administrators 4. Complete application packet – send to Illinois ASBO

34. Our Sponsors: (Click to visit website) IPA IASA IASB Partner States: Wisconsin Indiana Oregon Minnesota (PMA) Washington Alaska

35. The Next Step Order Cards Training with Harris Bank/BMO Distribute Cards Reconcile Bills

36. Side Benefits More time on task Less wasted time Reduction in the publication of the annual “Statement of Affairs” Reduction in time/cost of monthly bank statement reconciliation Better investing/cash management

37. A Sampling of Major Textbook Companies who accept the p-Card:

38. Sample of Suppliers who accept the p-Card:

39. For more information, word documents and other tools, or to download all available files, please go to www.iasbo.org.

40. Kim Lamansky 815.753.9083 (tel) 815.753.9367 (fax) lamansky@niu.edu