1. TRAVEL CARD The Good, the Bad and the Ugly??? Sandy English, CPCP West Chester University West Chester, PA

2. West Chester University Founded in 1871 –Institute for teacher preparation Became a University in 1983 when it joined the Pennsylvania State System of Higher Education (PASSHE) –4 th largest university in the Philadelphia region –1,300 employees –15,800+ degree seeking students from 36 states and 64 countries

3. What Is A Travel Card Travel & Entertainment Card (T&E) –Diners Club in 1950 –American Express in 1958 Charge card used to pay for hotel, airline and other business-related expenses Typically a 30-day account Business travel remains one of the largest variable expenses for most organizations

4. Four types of liability for card spending 1.Corporate – organization pays the entire bill for reimbursable expenses 2.Individual – cardholder is responsible to remit payment 3.Joint & Several –both the organization and traveler are responsible for payment of the bill 4.Split -- Issuer uses merchant category codes to literally split the bill (cardholder liable for non T&E) Who Pays the Bill? Individual Joint & Several Other RPMG Research 2012 Purchasing Card Benchmarking Survey

5. Who Has A Travel Card Program?

6. WCU >5000 Employees <5000 Employees Fortune 500 % active 63%74%72%78% Avg Trans Size $228$258$246$171 Monthly spend per card $533$757$374$770 Transactions per card 1.262.941.524.49 Total Travel Spend on Card 47%62%63%77% Travel Card Dashboard RPMG Research 2012 Purchasing Card Benchmarking Survey Colleges & Universities

7. The “Good”…Traveler Better benefits –Travel accident insurance –Emergency ticket replacement –Hotel/Motel burglary insurance –Medical and legal referral assistance –Primary auto rental insurance –Delayed & lost luggage reimbursement –Travel & emergency assistance –Worldwide cash access program Easier expense reporting Convenient way to pay for business expenses

8. The “Good”…Universities Simplify administrative, payment and reconciliation processes –Hotel folio, Airline itinerary, Auto rental –Sales/VAT tax –TIN –Carbon emission data Improve compliance with travel policies Increase efficiency by reducing cash advances Leverage consolidated transaction information to negotiate more favorable rates with vendors

9. “To be most effective, travel cards must integrate into an organization’s process to procure (travel) services and reimburse (where applicable) employees for those expenditures” * Simplify *2013 RPMG Corporate Travel Card Benchmark Survey Results pg 86 Expense Reporting Methods

10. 44% time reduction to complete & process an expense report 8% shorter expense report cycle 7% improvement in “”first-pass” Simplify…the “Bad” news *2013 RPMG Corporate Travel Card Benchmark Survey Results pg 86 Expense Reporting Methods vs.

11. Spending controls put policy in place at the point of sale Merchant category code authorizations Spending limits Eliminate the need for more costly alternative payments Improve Compliance The Accounts Payable Network Benchmarks: Travel and Entertainment Expense Reimbursement Practices 2013

12. Policy into place at the point of sale Alerts for usage by vendor name, transactions around place of work Investigate declined transactions Data mine/audit transactions to identify potential misuse Mandate usage Improve … the “Bad” news The Accounts Payable Network Benchmarks: Travel and Entertainment Expense Reimbursement Practices 2013

13. Traditional cash advances result in: Increased administration Reduced control Fragmented management data Lost float Organizations that offer cash advances for travel report: 5% of total travel spend is via cash advance Median dollar amount per cash advance is $1080 42% have a goal to eliminate cash advances within next 12-18 months Increase Efficiency *2013 RPMG Corporate Travel Card Benchmark Survey Results pg 86

14. “Each cash advance for travel requires, on average, $46 of administrative activities” * Fortune 500 Large Market Government & Not for Profit % of organizations that provide employees with cash advances 41%43%72% Median cost to process cash advance $46$40$50 Increase …the “Bad” news *2013 RPMG Corporate Travel Card Benchmark Survey Results pg 86

15. Capture detailed transaction data on every travel transaction –Mandate travel card usage –Eliminate cash advances Enhance management reporting Negotiate favorable rates with preferred vendors Leverage Transaction Information

16. Organizations that negotiate discounts Leverage… the Bad” news RPMG Research 2012 Purchasing Card Benchmarking Survey

17. Let’s Talk about Fraud… The “Ugly?” Internal – unauthorized/non-compliant purchases made by an employee –Card used for personal use –Using the card for unauthorized meal expenses –Buying first class instead of coach airfare External – purchases made by a third party –Data compromises (skimming, computer breaches) –Phishing

18. Fraud Dashboard All Corporations Government & Not For Profit Internal Fraud Fraud loss as a % of annual travel spend0.003%0.001% Annual fraud incidents per 1,000 cards0.920.073 Annual fraud incidents per 10,000 transactions0.160.17 External Fraud Fraud loss as a % of annual travel card spending0.003%0.004% Annual fraudulent incidents per 1,000 cards4.903.61 Annual fraudulent incidents per 10,000 transactions0.860.85

19. Fraud… Best Practices Block merchant category codes on travel cards (i.e. department stores, jewelry stores, etc) Monitor for excessive ATM usage Train, train, re-train Review and update policies and procedures on a regular basis Refer misuse to the traveler’s supervisor as soon as it is detected Refer delinquencies to the cardholder at 1-30 days past due and to the supervisor at 31-60+ days past due Keep records of the referrals –Require written follow up from either the supervisor or the cardholder Send a list of accounts to the College/Department Business Manager so that they can review and ensure that travelers should continue to have access to the card Close inactive accounts Do not use cash advances to fund travel of employees who have lost the privilege of having a travel card

20. 1.Card-based spending produces an electronic record of transaction activity so there is a greater ability to monitor spend and detect fraud 2.Currently our industry segment(as a whole) does not engage in some key best practices, policy choices and technology investments 3.Our goal is to… Let’s All Agree