EasyProcure, The Education Procurement Card What can this program do for your school? Sponsored by:...

EasyProcure,EasyProcure,The Education Procurement The Education Procurement

CardCardWhat can this program do for What can this program do for

your school?your school?Sponsored by:

Pennsylvania Association of School Business Officials (PASBO)Pennsylvania Association of School Administrators (PASA)

Pennsylvania School Boards Association (PSBA)Pennsylvania School District Liquid Asset Fund (PSDLAF)

March 15, 2007 52nd PASBO Annual Conference and Exhibits

EasyProcureThe Education Procurement Card

EasyProcure Program – PASBO Conference, 2007March 15, 2007

EasyProcure:EasyProcure:The Education Procurement The Education Procurement

CardCard 54 participating school entities; 40 school 54 participating school entities; 40 school

entities currently using cards; 14 are in the entities currently using cards; 14 are in the application stagesapplication stages

Participants earned 37.5 basis points on Participants earned 37.5 basis points on their EasyProcure purchases in first term their EasyProcure purchases in first term ending May 31, 2006; Goal for 2007 is 42.5 ending May 31, 2006; Goal for 2007 is 42.5 basis pointsbasis points

Bonus added to regular rebate schedule: Bonus added to regular rebate schedule: participants who reach over $1 million in participants who reach over $1 million in purchases will receive $1,000 per every $1 purchases will receive $1,000 per every $1 million spent with the EasyProcure Cardmillion spent with the EasyProcure Card



EasyProcure BenefitsEasyProcure Benefits PNC Bank VisaPNC Bank Visa©© purchasing card purchasing card Accepted anywhere VisaAccepted anywhere Visa©© commercial cards commercial cards

are acceptedare accepted No card feesNo card fees Rebates – rate determined by the EasyProcure Rebates – rate determined by the EasyProcure

program’s participants’ aggregate purchase program’s participants’ aggregate purchase totaltotal

Online access to transactions, typically, 48 Online access to transactions, typically, 48 hours after card usagehours after card usage

Integration of card purchases into your Integration of card purchases into your existing accounting systemexisting accounting system

Sponsored by PASBO, PASA, PSBA and PSDLAFSponsored by PASBO, PASA, PSBA and PSDLAF



EasyProcure EasyProcure Applicants/ParticipantsApplicants/Participants

Aliquippa SDAliquippa SD Allegheny IU #3Allegheny IU #3 Baldwin-Whitehall SDBaldwin-Whitehall SD Blast IU #17Blast IU #17 Burrell SDBurrell SD Canon-McMillan SDCanon-McMillan SD Carbondale Area SDCarbondale Area SD Central Susquehanna IU #16Central Susquehanna IU #16 Chartiers Valley SDChartiers Valley SD Chichester SDChichester SD Clarion County Career CenterClarion County Career Center Erie County Technical SchoolErie County Technical School

Fleetwood Area SDFleetwood Area SD Freedom Area SDFreedom Area SD Garnet Valley SDGarnet Valley SD Gettysburg Area SDGettysburg Area SD Governor Mifflin SDGovernor Mifflin SD Great Valley SDGreat Valley SD Kennett Consolidated Kennett Consolidated

SDSD Kutztown Area SDKutztown Area SD Lackawanna County Lackawanna County

CTCCTC Lakeland SDLakeland SD Leechburg Area SDLeechburg Area SD Lehigh Career & Tech Lehigh Career & Tech

InstituteInstitute



EasyProcure Applicants/Participants EasyProcure Applicants/Participants Con’tCon’t

Lower Merion SDLower Merion SD Mars Area SDMars Area SD Methacton SDMethacton SD Millcreek Twp. SDMillcreek Twp. SD Morrisville Borough SDMorrisville Borough SD Muncy SDMuncy SD Norristown Area SDNorristown Area SD North Hill SDNorth Hill SD Oxford Area SDOxford Area SD PASBOPASBO Penn Manor SDPenn Manor SD Penn-Trafford SDPenn-Trafford SD

Pine Grove Area SDPine Grove Area SD Pittsburgh SDPittsburgh SD PSBAPSBA Rose Tree Media SDRose Tree Media SD Salisbury-Elk Lick SDSalisbury-Elk Lick SD Shenango Area SDShenango Area SD South Side Area SDSouth Side Area SD State College Area State College Area

SDSD Tunkhannock Area Tunkhannock Area

SDSD Tyrone Area SDTyrone Area SD Western Area CTCWestern Area CTC Williamsport Area Williamsport Area

SDSD



EasyProcure Rebate TiersEasyProcure Rebate Tiers

*Annual Dollar Volume = Combined participants’ 12-month total volume of purchases minus returns minus cash advances. Dollar Volume shall not include (i) any “unauthorized use” as defined in the Commercial Card Agreement with Participants, or (ii) any outstanding balances on cardholder accounts of Participants not paid on or before each payment due date set forth in such Commercial Card Agreements. Terms run June 1 – May 31.** Rebate Incentives are listed in basis points. One basis point equals .0001.

Goal for second Term ending May 31, 2007

Rebate Tiers**

$75,000,000 52.5 $393,750

$50,000,000 to $74,999,999 50 $250,000 to $375,000

$35,000,000 to $49,999,999 47.5 $166,250 to $237,500

$20,000,000 to $34,999,999 45 $90,000 to $157,500

P $15,000,000 to $19,999,999 42.5 $63,750 to $85,000

$10,000,000 to $14,999,999 40 $40,000 to $60,000

$5,000,000 to $9,999,999 37.5 $18,750 to $37,500

$2,500,000 to $4,999,999 35 $8,750 to $17,500

$0 to $2,499,999 0 $0 to $0

Rebate Ranges in $

or greater or greater

Annual Dollar Volume*



Procurement Card BenefitsProcurement Card Benefits Extend float through incremental card payment Extend float through incremental card payment

termsterms Reduce individual invoice processing Reduce individual invoice processing

– Industry averages between $5 - $10 per invoiceIndustry averages between $5 - $10 per invoice Reduce bank services and check feesReduce bank services and check fees Reduce regular & overnight mail costs associated Reduce regular & overnight mail costs associated

with check payments with check payments Reduce buying cycle time by allowing the employee Reduce buying cycle time by allowing the employee

to deal directly with the supplierto deal directly with the supplier Obtain vendor discounts for quicker payment Obtain vendor discounts for quicker payment Penetrate higher spending volume for larger bank Penetrate higher spending volume for larger bank

revenue sharerevenue share



Procurement Card FeaturesProcurement Card Features Controls allow customized limitations on each Controls allow customized limitations on each

card based on the cardholder’s purchasing needscard based on the cardholder’s purchasing needs

Provides spending analysis reports grouping Provides spending analysis reports grouping charges by industry/vendor based on merchant charges by industry/vendor based on merchant category codes (MCCs)category codes (MCCs)

Enhanced data provided for ease of reconciliation Enhanced data provided for ease of reconciliation and allocation of chargesand allocation of charges

Automated G/L interface availableAutomated G/L interface available

Web based reporting capabilityWeb based reporting capability



Acquirer/ ProcessorAcquirer/ Processor

Accept commercial cards Exchange authorization,

financial information and enhanced data with Acquirer/Processor

Sign/set-up merchants

Pass authorization, financial information and enhanced data between merchant and Visa

Develop and support products Provide brand presence Provide interchange infrastructure to

facilitate authorization, clearing and settlement among all Issuers

Set-up/maintain client contracts

Apply card authorization controls

Provide reporting, billing,payment services for clients

Use cards for purchases Enter transactions into financial

systems Utilize reports to review card

purchases/negotiate with suppliers

3 Stages

Authorization

Clearing

Settlement

MerchantMerchant

Issuer/ ProcessorIssuer/

Processor

CompanyCompany

VisaVisa

Overview of Program Overview of Program MechanicsMechanics

OverviewCommercial Solutions Basics



Payment EconomicsPayment Economics

CustomerCustomer

Average Cost Per Transaction*Average Cost Per Transaction*

CardCard Incremental Incremental Revenue ShareRevenue Share::

$1.87$1.87

(37.5 basis points)(37.5 basis points)

ACHACH Incremental Expense: $0.12Incremental Expense: $0.12

CheckCheck Incremental Expense: $0.64 Incremental Expense: $0.64

(bank fees and estimated mail remittance (bank fees and estimated mail remittance fees)fees)

WireWire Incremental Expense: $7.00 Incremental Expense: $7.00

* Assumes average transaction size of $500 and based on PNC representative pricing

Material differences in the economics of various payment alternatives create opportunities to pursue an optimum payment

mix and a winning proposition !



Joining the Program 1Joining the Program 1 Step One:Step One:

One Page application – accessible online One Page application – accessible online or provided by PSDLAF representativeor provided by PSDLAF representative

Contact Information sectionContact Information section Entity Information section, most important isEntity Information section, most important is

#3 - Monthly credit limit requested for your #3 - Monthly credit limit requested for your program - must be providedprogram - must be provided

#4 - PSDLAF and PNC account information (if #4 - PSDLAF and PNC account information (if applicable at this point)applicable at this point)

Three years of audited annual financial Three years of audited annual financial reportsreports

Already a PNC procurement card user?Already a PNC procurement card user? Same one-page application as aboveSame one-page application as above Letter of authorization on school letterhead Letter of authorization on school letterhead

to transfer; no need for reportsto transfer; no need for reports



Joining the Program 2 & 3Joining the Program 2 & 3 Step Two:Step Two:

After credit limit is approved by PNC, PSDLAF After credit limit is approved by PNC, PSDLAF representative will make an appointment with representative will make an appointment with you to complete:you to complete:

PNC Resolution for Extensions of CreditPNC Resolution for Extensions of Credit PNC Master Resolution and Signature Card for New PNC Master Resolution and Signature Card for New

PNC Account (if applicable)PNC Account (if applicable) PSDLAF account documents (if applicable)PSDLAF account documents (if applicable)

Step Three:Step Three: Card program setup process - PNC Card program setup process - PNC

Implementation Team will contact program Implementation Team will contact program administrator directlyadministrator directly



SuccessSuccess FactorsFactors

• Obtain Senior Management SupportObtain Senior Management Support• Change Management FocusChange Management Focus

• Establish Realistic and Achievable Goals Establish Realistic and Achievable Goals

• Liberal Distribution and Use of CardsLiberal Distribution and Use of Cards

• Appropriate Use of ControlsAppropriate Use of Controls

• Establish Communication & Training Establish Communication & Training ActivitiesActivities

• Utilize Available TechnologyUtilize Available Technology



Typical Procurement and Payment Typical Procurement and Payment CycleCycle

Purchase Requisition w/Principals’ approval

Business Office (Negotiate Price)

Purchase Order

Supplier

Shipment of Materials

School Receiving

Delivery of Merchandise

Copy of PO

Copy of Packing Slip

Invoice

Accounts Payable

Post to A/P or G/L

Accounting Department

Check Approval



Procurement Card CycleProcurement Card Cycle

Shipment of Materials

Manual OR Automated posting to G/L or A/P

After employee reconciles statement, statement(s) and receipt(s) are forwarded to supervisor(s) for review and approval

PNC Bank

Supplier

Average Cost for this process is under $15-A savings of close to 90% per Transaction

Statements mailed to cardholder or accessed

online for reconciliation

Supplier charges procurement card



Policies, Procedures, Policies, Procedures, GuidelinesGuidelines

Tom DelaneyTom Delaney

Chuck LindermanChuck Linderman

Dolores D’AmoreDolores D’Amore



More Benefits/AdvantagesMore Benefits/Advantages

Ease of PurchasingEase of Purchasing Thorough record keepingThorough record keeping Better Management ControlsBetter Management Controls



When to Use ItWhen to Use It

Making small purchasesMaking small purchases As replacement for petty cash As replacement for petty cash

systemsystem Phone orders (eliminates the need Phone orders (eliminates the need

for mailing purchase ordersfor mailing purchase orders Mail OrdersMail Orders On-line ordersOn-line orders



Policies/ControlsPolicies/Controls

Written policies and proceduresWritten policies and procedures Merchant controlsMerchant controls Establish credit limits/controlsEstablish credit limits/controls Reconciliations (monitor account Reconciliations (monitor account

activity)activity)



Risky Areas to MonitorRisky Areas to Monitor

Use of cards at unauthorized vendorsUse of cards at unauthorized vendors Types of purchases (Bid Types of purchases (Bid

requirements)requirements) Personal usePersonal use Exceeding credit limitExceeding credit limit



Set-Up ProcessSet-Up Process Outline your needsOutline your needs

Number of cardsNumber of cards Who gets a cardWho gets a card What can be purchased with the cardWhat can be purchased with the card

Administration of Process/ProgramAdministration of Process/Program Approving official at building, department Approving official at building, department

levellevel Staff to perform reconciliations and Staff to perform reconciliations and

monitor activitymonitor activity



Set-Up ProcessSet-Up ProcessContinuedContinued

Approving Official at District LevelApproving Official at District Level Signs off on statement certifying the Signs off on statement certifying the

legitimacy of the purchases with regard legitimacy of the purchases with regard to District policies/controlsto District policies/controls

Takes appropriate action for violationsTakes appropriate action for violations



Cardholder ResponsibilityCardholder Responsibility Identify needed purchasesIdentify needed purchases Obtain original receipts showing purchase Obtain original receipts showing purchase

detailsdetails Verify all charges—reconciling receipts to Verify all charges—reconciling receipts to

monthly statementmonthly statement Give statements, receipts to Building Give statements, receipts to Building

Approving Official for review and sign offApproving Official for review and sign off Statement and receipts are then forwarded Statement and receipts are then forwarded

to the District Approving Official.to the District Approving Official.



Closing CommentsClosing Comments

Identify concerns or risks associated Identify concerns or risks associated with the District needswith the District needs

Review account activity ….Review account activity ….

(monitor, monitor, monitor)(monitor, monitor, monitor) Develop written policies and Develop written policies and

proceduresprocedures



EasyProcure ResourcesEasyProcure Resources www.easyprocure.orgwww.easyprocure.org

– Application – one pageApplication – one page– Auditor General GuidanceAuditor General Guidance– Review by CounselReview by Counsel– Sample Board ResolutionSample Board Resolution– Merchant Category Code Groups (MCC Groups)Merchant Category Code Groups (MCC Groups)– www.pasboerc.org (downloadable documents)www.pasboerc.org (downloadable documents)

– Guidelines, procedures, user agreements, etc.Guidelines, procedures, user agreements, etc.– Frequently Asked QuestionsFrequently Asked Questions

Documents available Upon requestDocuments available Upon request– PSBA Board Policy – Procurement CardsPSBA Board Policy – Procurement Cards– VisaVisa©© Purchasing Card Agreement and Resolution of Extension of Credit Purchasing Card Agreement and Resolution of Extension of Credit

available upon requestavailable upon request

EasyProcure, The Education Procurement Card What can this program do for your school? Sponsored by:...

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