TRAVEL CARD The Good, the Bad and the Ugly???

Sandy English, CPCP

West Chester University

West Chester, PA

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)

– 4th largest university in the Philadelphia region– 1,300 employees– 15,800+ degree seeking students from 36 states and 64

countries

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

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

Who Has A Travel Card Program?

Travel Card Dashboard

RPMG Research 2012 Purchasing Card Benchmarking Survey

Colleges & UniversitiesColleges & Universities

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

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

“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

• 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.

• 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

• 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

• 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

“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

• 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

Organizations that negotiate discounts

Leverage… the Bad” news

RPMG Research 2012 Purchasing Card Benchmarking Survey

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

Fraud Dashboard

All Corporations

Government & Not For Profit

Internal Fraud

Fraud loss as a % of annual travel spend 0.003% 0.001%

Annual fraud incidents per 1,000 cards 0.92 0.073

Annual fraud incidents per 10,000 transactions 0.16 0.17

External Fraud

Fraud loss as a % of annual travel card spending 0.003% 0.004%

Annual fraudulent incidents per 1,000 cards 4.90 3.61

Annual fraudulent incidents per 10,000 transactions 0.86 0.85

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

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