PRO-Cards: The next generation of procurement strategies using 21 st Century technology

1. PRO-Cards: The next generation of procurement strategies using 21st Century technology Angie Peterman – Oregon ASBO Executive Director

2. 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

3. Challenges of the Purchasing Process

4. How the Corporate Purchasing Card Works

5. 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 • Institute Of Management & Administration article – 60% of case study purchases less than $1, 000

6. 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) for eProcurement is amazing.” -Deloitte Consulting

7. Real Example of Reducing Paper Work • Fulton County Schools, Georgia • 70,000 Students • Two cards per building • Reduced PO’s from 60,000 to 30,000

8. Key to Success: Get PRO-cards into the hands of those who are currently making small purchases/generating PO’s of less than $1,000.

9. 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 • They control what can be purchased, where and limit amount per transaction

10. Superior Control and Flexibility • Cardmember Spending limits can be established for each card • Transaction limits per charge • Monthly limits • Preferred Supplier Restriction • Cardmembers can only charge at school district’s preferred suppliers

11. Advantages of an Association sponsored program • One contract vs. many • Reduced legal expense • Ability of association to ensure • Adequate controls • Proper audit trail • Customized Card Design • Displaying • User’s name • School District name

12. Advantages of an Association sponsored program (Cont.) • Implementation and inservicing • Rebates • Creates a user group/support network • Gives the program contract negotiation clout • Creates a database on a statewide basis of what schools are purchasing and the quantity

13. Number of Cards

14. Volume

15. 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 on-line usage reports

16. Billing and Payment • Monthly Billing Statements • Consolidated Billing Statement (Available online) • Cardmember Report (available online) • Payment Methods • Electronic Funds Transfer • Automated Clearing House • Check

17. Why was MasterCard selected? • Global acceptance at over 35 million locations • “Few if any other cards are more widely accepted.” • Retailers benefit from low transaction charge. • One of the lowest rates in the industry

18. Why was MasterCard selected? (cont.) • Superior vision around technology and e-commerce • MasterCoverage fraud protection insurance • Dedicated Merchant Group (Moneris) to sign up suppliers • Customized card design displaying the name of card holder, school district, tax exempt number • Individualized Training

19. 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

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

21. Benefits of a Purchasing 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

22. Steps Necessary to Participate in the Procurement Card Program • Request information packet from Oregon ASBO • Submit resolution to local school board for purchasing card participation/last 3 year’s audits/other packet information • Identify local Purchasing Card administrators • Complete application packet – send to Oregon ASBO • Schedule and complete training

23. Steps Necessary to Participate in the Procurement Card Program (Cont.) • Identify Cardholders • Designate individual parameters • Establish internal control process for statement reconciliation • Have individual users sign usage agreement • Distribute cards • Monitor the program

24. Angie PetermanDirector of Admin. Support Services Oregon School Boards AssociationP.O. Box 1068Salem, OR 97308-1068503.588.2800 (Tel)503.588.2813 (Fax)apeterman@osba.org

25. PACKETS