for schools: current best practice for procurement and accounts payable
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For Schools: Current Best Practice for Procurement and Accounts Payable. Ronald Everett Summer 2007. Myth:. The more paper, the better the paper trail. The Traditional PO Process Can Be Painful…. Paper Intensive / Mountains of Paper Multiple Departments Involved - PowerPoint PPT PresentationTRANSCRIPT
For Schools: Current Best Practice for Procurement and Accounts Payable
Ronald EverettSummer 2007
Myth:
The more paper, the better the paper trail
The Traditional PO Process Can The Traditional PO Process Can Be Painful…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
What does it actually cost to complete a PO? From requisition to receiving
item? From requisition to paying for
item?
What are the Experts Saying?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
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?
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
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?
Why is the Streamlining of Small Why is the Streamlining of Small Purchases Significant?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
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?
Could all of these small transactions each month be consolidated into one payment?
Who are the employees creating all of these small purchases?
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.
What are Procurement Cards?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
Specific card use parameterscan be established for each card
Transaction limits per chargeMonthly limitsPreferred Supplier RestrictionYou control what can be purchased, where
it can be purchased from and limit amount per transaction
Customized Card design can display:
Card holder name School District name and
number and/or Tax ID (up to 24 characters)
Advantages of an Association Sponsored Program Single Contract Creates a user group/support network Negotiation clout Due diligence costs eliminated Rebates
p-Card Growth - DistrictsMonth 2003-04 2004-05 2005-06 2006-07
May 5 48 84 137
June 7 53 88 141
July 12 58 88 145
August 16 61 93 146
September 18 66 99 152
October 20 68 103 158
November 21 71 106 161
December 24 72 109 163
January 26 76 113 177
February 30 80 114 183
March 36 81 117 187
April 41 83 133 194
41 83 133 194
p-Card Growth – Number of CardsMonth 2003-04 2004-05 2005-06 2006-07May 5 686 2323 2356
June 24 957 2323 2742
July 24 1088 2420 2659
August 170 1100 2477 2799
September 187 1141 2477 2799
October 311 1475 2156 3336
November 354 1585 2336 3307
December 362 1647 2159 3362
January 395 2149 2685 3532
February 448 2149 3071 3585
March 489 2179 2900 4711
April 618 2186 2967 4825
618 2186 2967 4825
p-Card Growth – Purchasing VolumeMonth 2003-04 2004-05 2005-06 2006-07May 1,200 355,405 1,025,004 2,562,422
June 30,500 420,569 1,018,773 2,558,846
July 24,300 356,835 1,140,360 2,354,778
August 24,700 452,171 1,499,626 3,374,260
September 101,400 697,709 1,499,395 3,376,079
October 186,900 664,393 1,405,328 2,622,251
November 192,100 623,687 1,448,102 2,719,870
December 217,000 733,780 1,374,497 2,607,935
January 194,200 709,256 1,606,136 2,534,792February 254,700 987,478 1,763,880 2,466,692
March 357,400 885,233 2,257,205 3,227,319
April 318,600 1,181,706 2,454,114 3,475,371
1,903,000 8,068,222 18,492,420 34,344,057
Rebate History
2003-04 $0 2004-05 $46,101.51 2005-06 $125,522.01 2006-07 $295,899.63 2007-08 $??
Customized Card Design
Individual Card Department Card – No Fraud Coverage Ghost Card – No Plastic
Billing Cycle Requirements
School District may choose a billing cycle cut-off of the 5th or the 20th
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
Current Rebate Schedule 5/1/2007APV 21 Day 14 Day 7 Day
Tier 6 $70,000,000+ 1.00% 1.10% 1.20%Tier 5 $50,000,001- .95% 1.05% 1.15%
$70,000,000Tier 4 $30,000,001- .85% .95% 1.05%
$50,000,000Tier 3 $20,000,001- .75% .85% .95%
$30,000,000Tier 2 $10,000,001- .65% .75% .85%
$20,000,000Tier 1 $5,000,001- .55% .65% .75%
$10,000,000
Billing and Payment
Monthly Billing StatementsConsolidated Billing Statement (Available online)Cardmember Report (available online) Individual Reports
Payment MethodsElectronic Funds TransferAutomated Clearing HouseCheck
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
Why was MasterCard selected? (Continued) Individualized training Global acceptance at over 35 million
locations Retailers benefit from low transaction
charge
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
Vendor Benefits
Reduces vendor transaction costs Vendor paid by Harris within 48 hours of
shipment/pick-up Reduces the issues of partially filled
orders
Benefits of a p-Card Program for ManagementEasier 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
How to Get Started1. Request information packet from State
Affiliate ASBO or click here for printable version
2. Submit resolution to local board of education for purchasing card participation
3. Identify local p-Card administrators4. Complete application packet – send to Illinois
ASBO
Our Sponsors: (Click to visit website) IPA IASA IASB
Partner States: Wisconsin Indiana Oregon Minnesota (PMA) Washington Alaska
The Next Step
Order Cards Training with Harris Bank/BMO Distribute Cards Reconcile Bills
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
A Sampling of Major Textbook Companies who accept the p-Card:
Sample of Suppliers who accept the p-Card:
For more information, word documents and other tools, or to download all available files, please go to www.iasbo.org.
Kim Lamansky815.753.9083 (tel)815.753.9367 (fax)[email protected]