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 University’s 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

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Your NameYour Entity’s Name

Bank of America

How it all works Behind the Scenes

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Transaction goes to vendor and into their

Merchant Bank

Payment is made with P-Card to vendor –

Buyer receives Receipt via email

Vendor creates Receipt of

purchase online

Pay on Order

Payment

Purchase is made with P-Card

Vendors that accept P-CardBank of AmericaBank of America email

AuditAudit SpendAnalysisSpendAnalysis

ProcurementProductivityProcurementProductivity

SupplierPerformanceSupplierPerformance

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

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Consider the Benefits of the Purchasing Cards

6

LE

GA

CY

PR

OC

ES

S

½ to 1 DAY 1 to 2 Days1 to 2 Days

7 Days 3 Days 1 Day

ManuallySearch Paper

Catalog

Fax, Phone,or In-HouseMail Paper

Requisitions

RequisitionInput

Fax, Phone,Traditional EDI

PurchaseOrders

SupplierOrder

Fulfillment

ReceiveProduct

Paper InvoiceMailed to AP

InvoiceMatched to

PO

In-House MailInvoice Holds

to InvoiceApprover

HoldResponseSent to AP

HoldResolved,

Invoice Paid

Printed CheckMailed toSupplier

1/2 to 1 Day

1/2 to 1 Day

1 to 2 Days

5 to 6 Days 1-2 Days 1 to 2 Days

Consider the Benefits of the Purchasing Cards

7

LE

GA

CY

PR

OC

ES

S

½ to 1 DAY 1 to 2 Days1 to 2 Days

7 Days 3 Days 1 Day

Manually Search Paper

Catalog

Fax, Phone, or In-House Mail Paper

Requisitions

Requisition Input

Fax, Phone, Traditional EDI

Purchase Orders

Supplier Order

Fulfillment

Receive Product

Paper Invoice Mailed to AP

Invoice Matched to

PO

In-House Mail Invoice Holds

to Invoice Approver

Hold Response Sent to AP

Hold Resolved,

Invoice Paid

Printed Check Mailed to Supplier

1/2 to 1 Day

1/2 to 1 Day

1 to 2 Days

5 to 6 Days 1-2 Days 1 to 2 Days

X

X X X X

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 48-72 hours of a posted transaction• Employees receive goods/services faster

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9.26 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 daysAvg. cycle time of P-

Card transaction

2.96 daysAvg. cycle time of P-

Card transaction

Procurement cycle is reduced by 68%* (determination of employee need until the receipt of ordered goods

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

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$89.21Avg. cost of

traditional PO method

$89.21Avg. cost of

traditional PO method

$67.38Resulting cost

reduction with P-Card

$67.38Resulting cost

reduction with P-Card

$21.83

Avg. cost of P-Card transaction

$21.83

Avg. cost of P-Card transaction

A process cost reduction of $68,000+ for every 1000 transactions migrated to P-Card

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?

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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)

Where Can You Use a P-Card?

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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

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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

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Personal Purchases or Foundation Purchases

Food / Gift Cards Gift Cards are considered Cash

You cannot use your card to pay for:

Split Purchases

Purchasing same item, but paying in split payments

Things You Must Do Regarding Your P-Card…

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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

Renew your P-Card every two years

Every 2 Years

Review and reconcile the Bank of America billing information within WORKS

Review and reconcile the Bank of America billing information within WORKS

Follow the established single transaction limit: less than $5,000

Follow the established single transaction limit: less than $5,000

$4,999.99

Notify P-Card Program Administrator/ Coordinator if you need to raise your limits or need an exception to established P-Card Policy

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 GSW’s 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 10th of each month by 3

PM

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Things to Watch For…

Make sure that Sales Tax is not charged on your purchases

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Sales Tax

What happens if you realize you were charged for Sales Tax:a. Contact the vendor immediately and document your actionsb. Have the Vendor issue a credit for the sales tax amountc. 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

When Is Your P-Card Suspended?

• you do not follow the State’s and GSW’s policy and procedures

• you do not complete your reconciliation process in a timely manner (due by the 10th of each month by 3 PM)

• of habitual misuse• of fraudulent activity. When this is

the case, you will be terminated and prosecuted

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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 vendor’s 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

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Who is in the Chain of Command?

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Entity Cardholder

Entity’s Purchasing Card Program Administrator (APO or CUPO)

Statewide Purchasing Card Program Manager

Entity Reviewer/Approver

Entity’s Purchasing Card Program Coordinator

Entity Accountant

P-Card Program Resources

To review GSW’s Purchasing Card Policy, go to the Business Forms page and click on Procurement Card Policy

To review Georgia State Purchasing Card Policy and on-line resources:

http://statepurchasing.doas.ga.gov/00/channel_title/0,2094,35226973_36298628,00.html

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P-Card Program Resources

• To review WORKS Payment Manager on-line training materials:

https://payment2.works.com/wpm/bookmark

To contact P-Card Administrator: nrooks@gsw.eduTo contact P-Card Coordinator: atallent@gsw.edu

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Questions?

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