Going for the Gold with a Commercial Card Program. Robert "Bob" Breard Eckhart & Associates Inc. Lisa Huff, VP Commercial Card Services

Transcription

1 Going for the Gold with a Commercial Card Program Robert "Bob" Breard Eckhart & Associates Inc. Lisa Huff, VP Commercial Card Services

2 Agenda LaSalle Bank/ABN-AMRO Who Are We? Commercial Cards Definition Cards as a Payables Solution Pilot Challenges and Implementing Changes High Performing Programs and Solutions for Growth Case Study The Eckhart Rewards Solution Questions & Answers 1

3 LaSalle Bank/ABN AMRO Who We Are Card Experience > 11 years Sustained Growth: Min 25% Growth Over Last Three Years Respectively Global/Multiple Currency Program: Canadian, Euro, Pound Sterling Cards Solutions include Commercial Card (Multi- Card) and Stored Value Suite of Products (i.e., Budget, Project, and Payroll Cards) 2

4 Cards - What s The Difference? Purchasing, Travel & Entertainment, and Fleet Cards Travel & Entertainment Card a card offering that streamlines and facilitates procurement of travel and entertainment expenses. --Cash Cash Advances --Travel Card Card Purchasing Card a card offering/payables tool that streamlines and facilitates procurement of goods and services. --Card Card Controls --Enhanced Data Data --Reinvent PO PO Process Fleet Card an integrated card offering for both fuel and maintenance on one card. --Driver or or Vehicle Assigned --Odometer Reading --Fuel Fuel Grade Capture 3

5 Three in One The Commercial Card A multi-function expense management and payables solution for travel & entertainment (T&E), purchasing, and fleet. Common Uses for Commercial Cards: Paper & Office Supplies Cell Phone Subscriptions Small Dollar purchases (i.e., <$2,500) MRO transactions Recurring Payments Fleet The Multi-Card provides flexibility to expand one s card program. 4

6 5 Why Use Cards as a Payables Solution?

7 Why Use Cards as a Payables Solution? Electronic Payments Migration 2004 Federal Reserve Payments study confirmed a 4.3% annual decline in the number of checks Check Cost Reduction Average cost to issue a paper check (inc. systems, check, and labor cost is $ $12.54)* Card Spend is expected to double within the next five years** Reduce A/P Costs Improve Administrative Efficiencies Elimination of paperwork associated with requisitions, PO s, and invoices 68% reduction in procurement cycle time*** Manage Payables in less time fewer payments to make Better data, card management, fleet purchases, real-time tools 6 *IAPP 2004 Benchmark Survey Results (0 8,000 employees) **Packaged Facts The US Market for Corporate Credit Cards and Purchasing Cards, January 2005 ***RPMG Research Corporation 2005 Purchasing Card Benchmark Survey Results

8 Why Use Cards as a Payables Solution? Float Management Revenue Sharing or Rewarding Control Spending Vendor Management Data Integration Sarbanes-Oxley (SOX) Audit Trails and Controls in Place 7

9 Post Pilot Challenges Were goals and objectives met? Were cards given to the correct people? Is the program micromanaged? Is technology being used to drive efficiencies Did you understand program successes and failures Was an analysis of the program completed? How involved is your card provider? Resources: Were the correct type and amount of resources properly allocated? Did employees embrace change? 8

10 Implementing Changes Consider changing approach to how to use, instead of how NOT to use Research shows that there is no loss of control with good blocking features in place Loosen controls simple is better Reduce MCC profiles Transaction Limits Improve accountability Recognize fear, but address it Review vendor analysis Review A/P File Contact strategic suppliers for acceptance Enhanced data Reinforce company policies Communicating updates Changes in card policy information Mandatory card training and introduction 9

11 10 Racing Out of Pilot

12 Organizations with high capture of travel spending on travel cards focus on program goals relating to what the card can do for them. Organizations with low capture of travel spending on travel cards focus on controlling inappropriate card use Corporate Travel Card Benchmark Survey Results RPMG Research Corporation 11

13 Characteristics of High Performing Card Programs Top Management Support & Support for the Program Administrator Strategic supplier relationship Mandate Usage of Cards Integrated cards with preferred vendor initiatives Broad dissemination of cards Direct link between number of cards and size of company programs Beyond those who are in purchasing Include other departments such as manufacturing Use of Technology Refuse requisitions where cards could have been used Send memos (or sticky notes ) back to employees Formal Audits 12

14 13 Card Penetration by Spend Category* 34.8% 24.4% 18.7% 19.0% 14.3% 12.0% 12.0% 9.4% 8.5% 7.3% 2.9% 1.5% 1.6% 3.9% 3.9% 2.7% 2.0% 3.0% 1.2% 1.0% 5.8% 24.5% Utilities Other Lease and rental payments *RPMG Research Corporation, 2004Copyrighted Palmer and Gupta General MRO goods Office products Travel and entertainment expenses Computer and peripherals Direct materials (inventory) Contract or professional services Capital purchases Freight and shipping

15 Simple Solutions for Growth - Where Else Can The Card Be Used? Ghost Cards Department Cards Inventory Cards Recurring Payments Capital Purchases Lease/Rental Purchases 14

16 15 Case Study

17 Case Study: The Global Response Multi-National provider of advisory/consulting services with locations across North America, United Kingdom and Czech Republic. Problem: Decentralized domestic petty cash; lack of petty cash controls Significant small dollar transactions Offices consistently requested checks from A/P Tedious reimbursement process 16

18 Case Study: The Global Response Solution: Sell Management on Merits of Card Program Cards initially assigned to office managers Additional issuance of Department Cards to Tax, Telecommunications, Recruiting, Corporate Communications Efficiencies Gained Elimination of invoices for small dollar purchases No approval form for every purchase CONTROL for petty cash purchases SAVINGS on overnight packages/mail Ledger allocation coding for purchases Spending increased from $10,000/mo to $80,000/mo Next Steps: Implementation of a Global Travel Program & Global Purchasing Program Growth to global operations Multi-currency travel and purchasing program Utilize online tools globally Similar processes as domestic no new learning involved 17

19 18 The Eckhart Rewards Solution

20 IS IT RIGHT FOR ME? Purchase Volume Supplier Acceptance Monthly payments due in full 19

21 ADVANTAGES Reward Points Short term Line of Credit Float Benefit (Interest Free) Credit limit can grow with program Cardholder account access on line Card usage easily monitored by Manager Points earned by each cardholder can be bundled into one total Payment is automatically withdrawn from Company Checking Account 20

22 COSTS Annual Fee per card Points Redemption Fee CSOL Maintenance Fee 21

23 IMPLEMENTING THE PROGRAM Request LaSalle to provide a list of vendors that accept payment by credit card Verify supplier participation Establish a list of company cardholders and set a credit limit per card Have managers and purchasing personnel listen to LaSalle s 30 minute training session for on-line use of Rewards Program Set up accounting software to recognize those suppliers that can be paid by credit card 22

24 REWARDS POINTS 1 point earned for every dollar spent Householding Expiration 3 years 23

25 REDEEMING POINTS Redeem points on-line or by 800 number 7 days a week View merchandise on-line or in color brochure Travel Assistance available 24

26 REDEMPTION OPTIONS Employee Rewards Gift cards for office, plant and computer supplies Airfare, Car Rental and Hotels Per transaction fee for gift cards and other merchandise, plus shipping and handling Per transaction fees for Domestic and International Airfare How to minimize fees 25

27 26 Questions?