Angie Peterman – Oregon ASBOExecutive Director

PRO-Cards: The next generation of procurement

strategies using 21st Century technology

The Traditional PO Process Can The Traditional PO Process Can Be Painful…Be Painful…

Paper Intensive / Mountains of PaperPaper Intensive / Mountains of Paper Multiple Departments InvolvedMultiple Departments Involved Same Process Regardless of Transaction Same Process Regardless of Transaction

ValueValue High Average per transaction cost to High Average per transaction cost to

School DistrictSchool District High average per transactions cost to the High average per transactions cost to the

vendorvendor Not Cost-Effective for Small PurchasesNot Cost-Effective for Small Purchases

Challenges of the Purchasing Challenges of the Purchasing ProcessProcess

How the Corporate Purchasing How the Corporate Purchasing Card WorksCard Works

Why is the Streamlining of Why is the Streamlining of Small Purchases Significant?Small Purchases Significant?

1.1. The majority of transactions in most The majority of transactions in most organizations are for relatively organizations are for relatively small amounts:small amounts:

District 203 – 58% of AP checks are for District 203 – 58% of AP checks are for less than $500less than $500

District 204 – 58% of AP checks are for District 204 – 58% of AP checks are for less than $500less than $500

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

What are the Experts What are the Experts Saying?Saying?

““The average cost of processing a The average cost of processing a purchase order manually is between purchase order manually is between $75-$200. Automating procurement $75-$200. Automating procurement reduces that cost to between $10-reduces that cost to between $10-$40…. The Return-On-Investment (ROI) $40…. The Return-On-Investment (ROI) for eProcurement is amazing.” for eProcurement is amazing.” -Deloitte Consulting -Deloitte Consulting

Real Example of Reducing Real Example of Reducing Paper WorkPaper Work

Fulton County Schools, GeorgiaFulton County Schools, Georgia– 70,000 Students70,000 Students– Two cards per buildingTwo cards per building– Reduced PO’s from 60,000 to 30,000Reduced PO’s from 60,000 to 30,000

Key to Success:Key to Success:

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

What are Procurement What are Procurement Cards?Cards?

They look and operate similar to credit They look and operate similar to credit cardscards

They They do not do not carry a revolving line of carry a revolving line of creditcredit

Usage and authorization parameters Usage and authorization parameters can be reviewed and managed via the can be reviewed and managed via the internet by district administrationinternet by district administration

They control what can be purchased, They control what can be purchased, where and limit amount per where and limit amount per transactiontransaction

Superior Control and Superior Control and FlexibilityFlexibility

Cardmember Spending limits can be Cardmember Spending limits can be established for each cardestablished for each card– Transaction limits per chargeTransaction limits per charge– Monthly limitsMonthly limits– Preferred Supplier RestrictionPreferred Supplier Restriction– Cardmembers can only charge at school Cardmembers can only charge at school

district’s preferred suppliersdistrict’s preferred suppliers

Advantages of an Association Advantages of an Association sponsored programsponsored program

One contract vs. manyOne contract vs. many Reduced legal expenseReduced legal expense Ability of association to ensureAbility of association to ensure

– Adequate controlsAdequate controls– Proper audit trailProper audit trail

Customized Card Design Customized Card Design – DisplayingDisplaying

1.1.User’s name User’s name 2.2.School District nameSchool District name

Advantages of an Association Advantages of an Association sponsored program (Cont.)sponsored program (Cont.)

Implementation and inservicingImplementation and inservicingRebatesRebates Creates a user group/support Creates a user group/support

networknetwork Gives the program contract Gives the program contract

negotiation cloutnegotiation clout Creates a database on a statewide Creates a database on a statewide

basis of what schools are purchasing basis of what schools are purchasing and the quantityand the quantity

Number of CardsNumber of Cards

0

500

1000

1500

2000

2500

3000

# of Cards 03-04

# of Cards 04-05

# of Cards 05-06

VolumeVolume

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

May

June Ju

ly

Augus

t

Septe

mbe

r

Octo

ber

Novem

ber

Decem

ber

Janu

ary

Febru

ary

Mar

chApr

il

$ Volume 03-04

$ Volume 04-05

$ Volume 05-06

Billing Cycle RequirementsBilling Cycle Requirements

School District may choose a billing cycle School District may choose a billing cycle cut-off of the 5cut-off of the 5thth or the 20 or the 20thth

Payment is due at Harris Bank within 21 Payment is due at Harris Bank within 21 days of billing cycle cut-off days of billing cycle cut-off – Penalty for late payment Penalty for late payment (Prime + 7%)(Prime + 7%) on all on all

transactions in the billing cycletransactions in the billing cycle Penalties can be avoided with pre-planning Penalties can be avoided with pre-planning

and monitoring on-line usage reportsand monitoring on-line usage reports

Billing and PaymentBilling and Payment

Monthly Billing StatementsMonthly Billing Statements– Consolidated Billing Statement Consolidated Billing Statement

(Available online)(Available online)– Cardmember Report (available online)Cardmember Report (available online)

Payment MethodsPayment Methods– Electronic Funds TransferElectronic Funds Transfer– Automated Clearing HouseAutomated Clearing House– CheckCheck

Why was MasterCard selected?Why was MasterCard selected?

Global acceptance at over 35 million Global acceptance at over 35 million locationslocations– ““Few if any other cards are more widely Few if any other cards are more widely

accepted.”accepted.” Retailers benefit from low transaction Retailers benefit from low transaction

charge.charge. One of the lowest rates in the One of the lowest rates in the

industryindustry

Why was MasterCard selected?Why was MasterCard selected? (cont.) (cont.)

Superior vision around technology and Superior vision around technology and e-commercee-commerce

MasterCoverage fraud protection MasterCoverage fraud protection insuranceinsurance

Dedicated Merchant Group (Moneris) to Dedicated Merchant Group (Moneris) to sign up supplierssign up suppliers

Customized card design displaying the Customized card design displaying the name of card holder, school district, tax name of card holder, school district, tax exempt numberexempt number

Individualized TrainingIndividualized Training

Online Capabilities (7-24)Online Capabilities (7-24)

Online Program ManagementOnline Program Management– Submit, approve, and cancel Card accountsSubmit, approve, and cancel Card accounts– Instant Account ActivationInstant Account Activation– Adjust spending limits/manage Cardmember Adjust spending limits/manage Cardmember

profilesprofiles– View Cardmember chargesView Cardmember charges– Change accounting informationChange accounting information

Online Information ServicesOnline Information Services– View/Manage Program InformationView/Manage Program Information– Access to Web reporting toolsAccess to Web reporting tools

Vendor BenefitsVendor Benefits

Reduces vendor transaction costsReduces vendor transaction costs Vendor paid by Harris within 48 Vendor paid by Harris within 48

hours of shipment/pick-uphours of shipment/pick-up Reduces the issues of partially filled Reduces the issues of partially filled

ordersorders

Benefits of a Purchasing Card Benefits of a Purchasing Card Program for ManagementProgram for Management

Easier on Accounts PayableEasier on Accounts Payable– Submit one monthly payment vs. multiple Submit one monthly payment vs. multiple

payments to multiple vendorspayments to multiple vendors– Reduction in paperworkReduction in paperwork– Fraud prevention and protection through the Fraud prevention and protection through the

Bank and MastercardBank and Mastercard– Detailed reporting available 24 x 7Detailed reporting available 24 x 7– Easy online administration and dedicated Easy online administration and dedicated

customer supportcustomer support– Control on spending limits and accepted Control on spending limits and accepted

vendorsvendors

Steps Necessary to Participate Steps Necessary to Participate in the Procurement Card in the Procurement Card

ProgramProgram

1.1. Request information packet from Oregon Request information packet from Oregon ASBOASBO

2.2. Submit resolution to local school board Submit resolution to local school board for purchasing card participation/last 3 for purchasing card participation/last 3 year’s audits/other packet informationyear’s audits/other packet information

3.3. Identify local Purchasing Card Identify local Purchasing Card administratorsadministrators

4.4. Complete application packet – send to Complete application packet – send to Oregon ASBOOregon ASBO

5.5. Schedule and complete trainingSchedule and complete training

Steps Necessary to Participate Steps Necessary to Participate in the Procurement Card in the Procurement Card

Program (Cont.)Program (Cont.)

6.6. Identify CardholdersIdentify Cardholders7.7. Designate individual parametersDesignate individual parameters8.8. Establish internal control process for Establish internal control process for

statement reconciliationstatement reconciliation9.9. Have individual users sign usage Have individual users sign usage

agreementagreement10.10. Distribute cardsDistribute cards11.11. Monitor the programMonitor the program

Angie PetermanDirector of Admin. Support Services Oregon School Boards Association

P.O. Box 1068Salem, OR 97308-1068

503.588.2800 (Tel)503.588.2813 (Fax)

apeterman@osba.org

PACKETSPACKETS