TRAVEL CARD The Good, the Bad and the Ugly??? Sandy English, CPCP West Chester University West...
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TRAVEL CARD The Good, the Bad and the Ugly???
Sandy English, CPCP
West Chester University
West Chester, PA
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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
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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
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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
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Who Has A Travel Card Program?
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Travel Card Dashboard
RPMG Research 2012 Purchasing Card Benchmarking Survey
Colleges & UniversitiesColleges & Universities
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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
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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
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“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
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• 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.
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• 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
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• 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
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• 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
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“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
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• 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
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Organizations that negotiate discounts
Leverage… the Bad” news
RPMG Research 2012 Purchasing Card Benchmarking Survey
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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
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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
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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
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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