2012 Electronic Accounts Payable Benchmark Survey Results · 73% of programs were two years old or less. Based on respondent experience, ... In comparison to the types of goods and

2012 Electronic Accounts PayableBenchmark Survey Results

Richard Palmer and Mahendra Gupta

2012 Electronic Accounts Payable

Benchmark Survey Results

by

Richard J. Palmer Professor of Accounting

Southeast Missouri State University

Mahendra Gupta

Professor of Accounting and Management

Washington University in St. Louis

© 2012, Richard J. Palmer and Mahendra Gupta

No part of this manuscript may be duplicated, reproduced, or quoted without the express

written permission of Richard J. Palmer and Mahendra Gupta. To request permission; contact

Professor Palmer by phone (618) 559-5137 or e-mail [email protected].

mailto:[email protected]

[This page intentionally left blank]

Table of Contents

4 Preface 5 Executive Summary KEY TRENDS IN EAP ADOPTION AND USE 24 Introduction, Definitions, and Description of Sample 33 EAP Program Goals, Account Types, and Purchasing Behavior 40 EAP Spending Basics 48 EAP Spending Growth 54 EAP and Suppliers 65 EAP Program Management BEST PRACTICE 72 Best Practice: Key Program Performance Measures 79 Best Practice: Control and Integration 84 Best Practice: Allowable Spend Categories and Program Optimization 88 Best Practice: Program and Relationship Management EAP BY AGE OF PROGRAM AND DEGREE OF USE 98 EAP Programs by Age: Maturation and Change 111 Degrees of EAP Use: Moderate, Advanced and High EAP

Organizations 124 Degree of EAP Use and the Interaction with Plastic Card and Ghost

Account Spending CUSTOMER ISSUES 136 Customer Satisfaction with EAP 145 Switching Behavior and Barriers to EAP Growth PROGRAM NORMS BY MARKET SEGMENT 152 Card Program Performance of Fortune 500-Size Corporations 161 Card Program Performance of Large Market Corporations 167 Card Program Performance of Middle Market Corporations 173 Card Program Performance of Government and Not-for-Profit

Organizations CONCLUSION, ACKNOWLEDGEMENTS, AND APPENDIX 180 Conclusion 181 Acknowledgements 182 Appendix

Table of Contents | 3

4 | Preface

Preface

We are pleased to present the 2012 Electronic Accounts Payable Benchmark Survey

Results (the “Report”). This is our first edition of the Report and it offers a variety of insights

and information to benefit the reader with respect to a relatively new phenomenon in the

commercial card market—dynamically adjustable cardless accounts used by businesses

and government agencies to pay for invoiced goods and services (hereafter referred to as

“electronic accounts payable” or “EAP”). This Report presents data and analysis from over

1,400 EAP users across North America to identify and understand market trends and the

factors that contribute to or detract from purchasing card program success. As in our

previous studies, the objective of the Electronic Accounts Payable Benchmark Survey is to

provide organizations with purchasing card programs and their card issuers with information

that will help them to maximize the benefits they receive from using EAP. The information

contained in this document includes:

Analyses and highlights of current trends in EAP use,

Benchmark data to evaluate the success of card programs that use EAP, broken down

within the Corporate (by size) and the Government and Not-for-Profit sectors,

In-depth examination of factors associated with the success of EAP programs, and

Future trends and opportunities for EAP use.

Financial institutions began marketing EAP accounts around 2005. Overall, the growth of

EAP in the past seven years has been consistent and strong in both good and poor

economic conditions. However, the patterns of EAP use and benefits received by EAP-

using organizations still vary widely.

While many organizations advance their purchasing card program to the “next level” with

EAP, some organizations lag behind. This Report examines the drivers that facilitate an

organization’s ability to derive the greatest benefits available from purchasing cards and

EAP.

We want to express our sincere thanks to the organizations and card issuers that

participated in the Survey and offered so much valuable input. We hope that the unselfish

commitment of their time results in more friendly and efficient means to acquire and pay for

goods in the business and not-for-profit worlds.

Richard J. Palmer Mahendra Gupta

Southeast Missouri State University Washington University in St. Louis

Executive Summary | 5

Executive Summary

In November 2011, a 40-page web-based “2012 Purchasing Card/Electronic Accounts

Payable Benchmark Survey” was released to over 14,000 purchasing card program

administrators at organizations that were either customers of one of twenty major card

issuers (including Bank of America, Bank of the West, BB&T, BMO/Harris Bank, Commerce

Bank, JPMorgan Bank, Comerica, Fifth Third Bank, FNBO, HSBC, M&T Bank, PNC Bank,

Regions Bank, Scotiabank, SunTrust, UMB, U.S. Bank, U.S. Bank Canada, Wells Fargo,

and Wright Express) or members of the National Association of Purchasing Card

Professionals, the National Institute of Government Purchasing, or the Accounts Payable

Network. Four thousand and three hundred and seventy-five responses were received for a

response rate of over 29%. All major purchasing card issuing brands (American Express,

MasterCard, and Visa) are represented in the survey response. Of the response to the 2012

Survey, 34.9% of respondents indicated that they currently use “electronic accounts

payable” accounts to pay for invoiced goods and services. The survey defined Electronic

Accounts Payable (EAP) cards as “non-plastic purchasing card accounts used to pay for

goods and services after an invoice has been received for those goods or services (in other

words, card payment did not occur at the point or time of sale.” The responses of EAP-

using organizations are the focus of the 2012 Electronic Accounts Payable Benchmark

Report. The report will also examine plastic card and ghost account use by EAP-using

organizations.

The 2012 Electronic Accounts Payable Benchmark Survey Results

provides one of the most comprehensive independent examinations

of organizational use of electronic accounts payable (EAP) card

accounts to date. The benchmarks and analyses in this report are

designed to provide readers with facts and tools to help them

maximize the benefits they derive from EAP card technology.

6 | 2012 EAP Benchmark Survey Results

Introduction, Definitions, and Description of Sample

Fifty-five percent of EAP-using survey respondents are corporations, 11% are

universities, 10% are city or county governmental units, 4% are federal or state

government agencies, 8% are school districts, and 12% are not-for-profit

organizations.

Twenty-seven percent of Corporations using EAP are “Fortune 500-Size”

companies (annual sales revenue greater than or equal to $2 billion), 23% are

“Large Market” companies (annual sales revenue greater than or equal to $500

million but less than $2 billion), and 50% are “Middle Market” companies (annual

sales revenue greater than or equal to $25 million but less than $500 million).

Corporate respondents represent a wide range of industries.

Currently, 34.9% of 4,375 respondents

to our 2012 Purchasing Card

Benchmark Survey employ EAP

accounts. This figure is up from

16.1% in our 2009 Survey, 14.5% in

our 2007 Survey, and 8.3% in our

2005 Survey.

The use of EAP is expected to rise

from 34.9% of purchasing card users in

2011 to 55.6% in 2014.

The largest growth of EAP over the past two years has been in the Middle Market

and Government and Not-for-Profit segments.

Compared to other market segments, about 10% more Fortune 500-Size

respondents expect to use or adopt EAP over the next three years.

EAP use is beginning to move from its formative stage to early maturity as a

product. In 2011, 22% of respondents reported having used EAP for less than one

year, 28% between one and two years, and 50% for three or more years. In 2009,

73% of programs were two years old or less.

Based on respondent experience, a typical organization (with $1 million of monthly

purchasing card spending) that adopted EAP experienced EAP spending growth to

almost $900,000 at the end of the first year, $1.51 million at the end of two years,

and $2.06 million by the end of four years.

Actual and projected trends in EAP Adoption, 2005-2014


EAP Program Goals, Account Types, and Purchasing Behavior

Primary EAP program goals currently include obtaining rebates and financial

incentives, reducing reliance on checks, reducing the transaction-processing

workload for the organization, and improving cash flow by extending the time to

payment.

Respondents are less likely to identify the obtaining of rebates and incentives or

improving cash flow by extending the time to payment as a projected primary EAP

program goal three years from now. Respondents are more likely to identify the

obtaining of better data to enhance leverage with vendors and increasing supplier

acceptance of EAP payment as primary EAP program goals three years from today.

The preferred technology of EAP is still evolving, with straight-through processing

(46%), virtual accounts maintained by the buyer (41%), virtual accounts maintained

by the supplier (41%), and single-use accounts (30%) all reasonably popular

choices among respondents.

The most common reasons for selecting a particular type of EAP account are the

“expansion of an on-going relationship with the purchasing card issuer” and the

“perceived ability … to enhance control over payments and minimize exposure to

card misuse.”

About 18% of EAP-using organizations have an EAP issuer that is different from

their plastic purchasing card issuer.

The majority of organizations use EAP accounts to buy office equipment, office

suppliers, computers, and software. Maintenance, repair, and operating (MRO)

goods are also common EAP purchases.

In comparison to the types of goods and services acquired with plastic and ghost

accounts at traditional card programs, EAP-using organizations are more likely to

use EAP to pay for inventory, capital assets, and lease and rental payments.


EAP Spending Basics

The average EAP program has been in use for almost three years.

Average monthly EAP account spending is $1,070,751. The average number of

EAP transactions per month is 454 and the average EAP transaction amount is

$2,359. Organizations are using EAP to pay for, on average, 14% of their under

$2,500 transactions, 18% of their $2,500 to $10,000 transactions, and 19% of their

$10,000 to $100,000 transactions. Average monthly EAP spending per employee is

$136. Annual EAP spending per $1 million of annual sales revenue (or budget if a

Government or Not-for-Profit organization) is $18,892. Thus, an organization with $1

billion dollars in sales revenue would be expected to

generate $18.9 million of EAP spending per year, or $1.6

million per month.

On average, respondents report that EAP spending

accounts for 49% of their total purchasing card program

spending (including combined spending on plastic cards,

ghost accounts, and EAP).

Fortune 500-Size corporations report the highest average monthly EAP spending

among corporate respondents ($4 million), followed by Large Market ($825,952),

and Middle Market corporations ($339,618). Government and Not-for-Profit

organizations report average monthly EAP spending of $719,677.

Monthly EAP spending per employee rises for smaller corporate respondents, going

from $118 at Fortune 500-Size corporations to $186 at Large Market corporations to

$472 at Middle Market corporations. Government and Not-for-Profit respondents

report average monthly EAP spending per employee of $154.

Annual EAP spending per $1 million of revenue also rises for smaller corporate

respondents, going from $5,388 at Fortune 500-Size corporations to $10,652 at

Large Market corporations to $25,520 at Middle Market corporations. Government

and Not-for-Profit respondents report average annual EAP spending per $1 million

of budget of $21,142.

The majority (73%) of respondents indicate that EAP spending has had “little or no

impact” on plastic purchasing card spending. However, 5% of respondents indicate

that EAP spending has had a “significant” impact on plastic purchasing card

spending, up from 3% in 2009.

$1.1 M The average monthly EAP spending of respondents


Cost savings of $10 per transaction occurs when payment for a manually-invoiced

transaction is made with EAP (as opposed to a check). A cost savings of $16 per

transaction occurs when payment for an electronically-invoiced transaction is made

with EAP (as opposed to check). The cost savings reported are most likely a result

of the elimination of activities associated with matching the invoice with the order,

check writing, filing, mailing, and reconciliation.

EAP Spending Growth

About 82% of EAP-using organizations report growth in EAP spending in the two-

year period between 2009 and 2011; a smaller percentage report no change (12%)

or a decrease (6%) in EAP spending.

EAP spending grew, on an average, by 67% (or about 33% per year) in the two-year

period between 2009 and 2011. This change only reflects growth in spending of

those who used EAP in 2009; if those who began using EAP during the 2009-2011

time period were included, the average growth in EAP spending would be 134%.

The EAP spending growth rate in the two-year period between 2009 and 2011 was

stronger among Government and Not-for-Profit organizations (74%) than among

Corporations (60%). The higher growth rate among Government and Not-for-Profit

organizations may be explained by the fact that a higher percentage of these

organizations recently adopted EAP.

Going forward, 72% of all EAP-using respondents expect increases in EAP account

spending over the three-year period from 2011 to 2014. A higher percentage of

Corporations expect EAP spending growth (76%) than Government and Not-for-

Profit organizations (66%), a likely result of larger economic struggles facing many

governmental entities.

Overall, EAP account spending is expected to increase, on

average, by 8.0% per year over the next five years (a 40%

increase over five years) across all organizations that use

EAP. The expected average annual growth rate of EAP

spending is lower for Government and Not-for-Profit

organizations (at 6.0% per year, or an increase of 30% over

the next five years) than for Corporations (at 9.2% per year,

or an increase of 46% over the next five years).

EAP acceptance by suppliers is a key reason for both past and expected future

growth in EAP spending.

67% Growth in EAP spending in the two-year period from 2009 to 2011


EAP and Suppliers

About 65% of EAP-using respondents indicate that EAP purchases are for “goods

and services that are different” from plastic card purchases. The most commonly

cited difference between plastic card and EAP purchases is that EAP purchases are

for a higher dollar amount (53%). Many organizations also indicate that EAP

purchases are from vendors with whom the organization conducts a high number of

transactions (40%), are for goods and services which are not allowed to be paid for

with plastic purchasing cards (35%), or are for transactions that require additional

approvals/controls prior to payment (31%).

The majority of respondents (55%) have the EAP account number charged at the

due date of the invoice. A significant minority of organizations pay at or near the

time the invoice is received.

The average percent of suppliers paid by EAP has grown from 8% in 2009 to 17% in

2011. Further, the percentage of suppliers that decline to accept EAP has fallen

from 28% in 2009 to 22% in 2011.

The average monthly spending per supplier paid with EAP is $22,546 and the

average number of monthly EAP transactions per supplier is 5.3.

About 24% of respondents require EAP use for the

purchase of particular types of goods and services and

19% require EAP use for purchases from preferred

vendors. Respondents identified high value,

international, recurring, and “e-procurement punch-out”

purchases as those required to be paid with EAP,

among others.

About 31% of organizations using EAP to pay for 50%

or more of their purchasing card program purchases use EAP spending data to

obtain a discount for goods or services from a vendor. At these organizations, the

use of EAP data results in higher negotiated discounts 73% of the time.

17% of suppliers are paid with EAP


The improvement in the price discount negotiated with EAP data is affected by the

timing of the payment. Respondents paying suppliers on or about the date that the

invoice is received report an average improvement in the price discount of 1.7%

(thus, a buyer that had been getting a 2% discount on the price paid for goods now

receives a 3.7% discount). By contrast, respondents that process charges at the

due date specified on the invoice report an average improvement in the price

discount of 1.1%.

The vast majority of respondents report that their use of EAP has had little or no

effect on the prices charged by suppliers accepting EAP.

EAP Program Management

Of respondents that use EAP to pay for the majority of their purchasing card

program purchases, 45% provide in-person EAP training, 41% provide a copy of a

policies and procedures manual for EAP use, and 46% support card program

administrator attendance at user conferences to identify new ways to use EAP.

Less frequently, organizations track completion of EAP training, have an on-going

method of communicating EAP information to managers, or have a website that

answers EAP questions.

The majority of respondents have an EAP per transaction limit above $2,500. The

average EAP per transaction spending limit is $18,903.

About 49% of respondents have monthly EAP account spending limits in excess of

$50,000. The average EAP monthly spending limit is $268,343.

Among respondents that use EAP to pay for the majority of their purchasing card

program purchases, 94% report that a complete and timely reconciliation of

employee receipts to EAP spending occurs routinely with little or no problems.

About 45% use of one or more performance measure to evaluate EAP performance.

The vast majority of respondents (91%) evaluate EAP performance by the dollar

amount of EAP purchases.

Notwithstanding the significant EAP spending occurring at many organizations with

relatively higher average transaction amounts or the tendency to purchase goods

and services that require additional approvals, 94% believe that EAP provides the

same or stronger evidence than other payment methods that the organization is

meeting its internal control objectives related to purchasing.


Best Practice: Key Program Performance Measures

We define “best practice” EAP programs (hereafter, BP) as those that have reported

at least one top quartile (and no bottom quartile) metric across four key EAP

performance measures, including (a) the percentage of $2,500 to $10,000

transactions paid by EAP, (b) the percentage of $10,000 to $100,000 transactions

paid by EAP, (c) EAP spending as a percent of annual sales revenue (or budget),

and (d) EAP spending per employee. The actions, decisions, choices, and policies

of this group define the core of “best practices” throughout this Report and will be

compared against a “needs improvement” (NI) programs of similar size

organizations (based on employee count). A NI EAP program has at least one of

the four performance metrics in the bottom quartile and none in the top quartile of

responses.

BP programs average nearly 18 times the average monthly EAP spending as the NI

group ($2.02 million versus $113,525), accounting for over four times the number of

monthly EAP transactions as the NI group.

BP programs report an average EAP transaction amount of $3,070, notably higher

than the NI group average ($782).

BP programs use EAP to pay for a significantly higher

percentage of under $2,500 transactions (25% versus 4%

for NI), $2,500 to $10,000 transactions (36% versus 2%

for NI), and $10,000 to $100,000 transactions (38%

versus 1% for NI).

Size-adjusted performance metrics such as monthly EAP

spending per employee ($389 for BP and $21 for NI) and annual EAP spending per

$1 million of annual sales revenue (or budget) ($52,685 for BP and $1,796 for NI)

highlight the focus and success of the “best practice” approach.

“Best practice” EAP programs are more likely to reside in organizations with strong

overall purchasing card programs, with total purchasing card spending (on all card

platforms combined) that is nearly three time as much as that of NI counterparts,

A higher percentage of EAP organizations identify supplier acceptance, improved

cash flow, reduced administrative costs, reduced reliance on checks, and the

obtaining of better data to increase control over spending as primary goals of their

EAP program.

$2 M

1.1m The average monthly EAP spending of “best practice” respondents


Best Practice: Control and Integration

The average EAP per transaction spending limit for the BP group is 121% higher

than the NI group ($29,597 BP versus $13,408 NI). Further, average monthly EAP

spending limits at BP organizations are notably higher (56%) than at NI counterparts

($351,935 versus $226,289).

BP programs are more likely to require Accounts Payable to maintain a logbook of

EAP account activity and track and resolve disputed EAP transactions.

The majority (64%) of BP organizations have significantly or completely integrated

EAP data into their accounting or ERP system. Only 40% of NI programs have

done the same.

About 78% of BP but only 65% of NI programs have some level of integration of

their EAP account spending with their organization’s spending approval process.

Among NI programs, 29% report no integration with the spend approval process,

compared to only 11% of BP programs.

Best Practice: Allowable Spend Categories and Program Optimization

“Best practice” organizations use EAP to pay for a wider array of goods (in

particular, computers, capital assets, and inventory) and services (of all types, but in

particular for printing and duplication, professional services, and temporary help)

than their NI counterparts. Differences in the types of goods and services bought

with EAP payment may explain why BP organizations report a higher average

transaction amount and higher per transaction and monthly EAP spending limits

than NI counterparts.

BP organizations are more likely than NI organizations to report that, in comparison

to plastic purchasing card purchases, EAP is used to purchase goods and services

that are different from plastic card purchases. For BP organizations, the differences

relate primarily to higher dollar values and additional approvals/controls required

prior to payment.

BP organizations are more likely than their NI counterparts to optimize EAP

spending by targeting specific commodities, services, and vendors for EAP

payment.


Best Practice: Program and Relationship Management

BP EAP programs report significantly higher “vocal support” by a top management

sponsor for the use of EAP and are in greater agreement that “a strong business

case was made to employees about the benefits of EAP use.”

About 57% of BP (but only 24% of NI) organizations use formal measures to

evaluate EAP performance. For both groups, the primary measure of performance

is the dollar amount of spending conducted on EAP.

BP programs are more likely to maintain sound training practices related to EAP. In

comparison to the NI group, BP programs are more likely to provide web-based or

in-person EAP training, support administrator attendance at conferences to identify

new ways to use EAP, track completion of EAP training and training updates by

employees, have an on-going method of communicating EAP information to

employees and managers, and have a website that answers EAP questions.

BP organizations pay a higher number (and percentage) of their suppliers with EAP

than their NI counterparts and, on average, direct more dollars to those suppliers

through EAP on a monthly basis.

BP organizations are notably more satisfied with the economic relationship they

have with their EAP issuer, the bank technology they use to support EAP program

management, and their reporting package than their NI counterparts. They are also

less likely to be considering switching EAP issuers.

EAP Programs by Age: Maturation and Change

Average monthly EAP spending at organizations with “Older” EAP programs (three

years of age or older) is 151% higher than with “Younger” (less than three years old)

EAP programs ($1.3 million versus $531,872).

Monthly EAP spending per employee at Older EAP programs ($271) is 161% higher

than at Younger EAP programs ($104).

Organizations with Older EAP programs use EAP to pay for a higher percentage of

their under $2,500 transactions, between $2,500 and $10,000 transactions, and

between $10,000 to $100,000 transactions than organizations with Younger EAP

programs.


The percentage of employees given plastic purchasing cards in organizations with

Younger (Older) EAP is 8.6% (10.4%). Thus, experience with the use of EAP does

not appear to result in a reduction in the number of plastic cards given to

employees.

Total average monthly purchasing card program spending (all card platforms

combined) at organizations with Older EAP programs is 49% higher than at

organizations with Younger EAP programs ($2.04 million versus $1.37 million per

month). Thus, the use of and experience with EAP appears to complement the total

purchasing card program, enhancing the overall suite of purchasing and payment

tools.

Older EAP programs have enlisted a higher number of and percentage of their

supply base to accept EAP payment than Younger counterparts.

One key aspect of a developing EAP program appears to be its integration within

the organization. A higher percentage of Older EAP programs have significantly or

completely integrated EAP spending with the organization’s (a) accounting

information or ERP system and (b) spend approval process.

Older EAP programs are more likely to identify primary EAP goals that include

obtaining better data to increase control over spending or enhance leverage with

vendors, increasing convenience for employees, and improving cash flow by

extending time to payment. Interestingly, Older programs are less likely than

Younger programs to identify “rebates and incentives” as a primary EAP program

goal.

Younger EAP account spending is expected to increase, on average, by about

10.8% per year over the next five years (a 54% increase over five years). By

contrast, Older EAP program account spending is expected to increase, on average,

by about 6.6% per year over the next five years (a 33% increase over five years).

Degrees of EAP Use: Moderate, Advanced, and High EAP

Organizations

To understand the effect of differences in the organizational use of EAP, we break

down organizational use of EAP into three main categories: (a) Moderate EAP –

where most of the respondent’s total purchasing card spending is placed on plastic

cards and a low to moderate percentage of spending (between 1% and 49%) is on

EAP accounts, (b) Advanced EAP – a significant percentage of the respondent’s

total purchasing card spending is on EAP accounts (between 50 and 74%) and the

remainder on plastic cards, and (c) High EAP – a high percentage of the


respondent’s total purchasing card spending is on EAP accounts (between 75% and

100%) and the remainder (if any) is on plastic cards.

About 50% of respondents charge less than 50% of all their purchasing card

spending to EAP accounts (Moderate EAP group), 19% charge between 50% and

74% to EAP accounts (Advanced EAP group), and about 31% charge 75% to 100%

of their total purchasing card spending to EAP purchasing card accounts (High EAP

group).

The degree of EAP use increases with the average length of time that an

organization has used EAP accounts, with High EAP organizations having used

EAP for 3.3 years, while Advanced and Moderate EAP organizations have used

EAP for 2.9 and 2.6 years, respectively. This pattern is a positive reflection on EAP

inasmuch as the more experience an organization has with EAP, the more they are

likely to use it.

Moderate, Advanced, and High EAP organizations report monthly EAP spending per

employee of $47, $216, and $385, respectively. Similarly, annual EAP spending per

$1 million of annual sales revenue (or budget if a Government or Not-for-Profit

organization) rises from $7,049 among Moderate to $29,280 among Advanced to

$42,200 among High EAP organizations.

Per-transaction and monthly spending limits on EAP spending increase steadily to

support the increased percentage of spending on EAP accounts. Thus, Moderate

EAP organizations report average per transaction spending limits of $15,308 while

Advanced ($20,096) and High EAP ($27,493) organizations use higher limits.

Similarly, average monthly EAP spending limits rise from $238,579 at Moderate to

$286,406 at Advanced and $349,792 at High EAP organizations.

As organizations pay for a higher percentage of their spending with EAP accounts,

they become less likely to purchase goods and services with EAP that are of the

“same type and dollar amount” as those bought with plastic cards. Thus, 42% of

Moderate EAP organizations report that they use EAP to buy the same types of

goods and services as bought on plastic cards, but only 26% (25%) of Advanced

(High) EAP organizations do the same.

The higher the proportion of EAP spending as a percent of total purchasing card

spending, the more likely it is that the organization is buying goods and services that

require additional approvals or controls prior to payment. This finding reflects the

desire of many organizations with ERP systems (such as SAP or Oracle) to make


card-based payments compatible with their ERP data requirements and workflow

rules.

The number of suppliers and percentage of invoices paid with EAP increases as the

organization pays for a higher percentage of its total card spending with EAP. And,

organizations are more likely to have a policy requiring EAP payment for purchases

from specific vendors with increases in their use of EAP.

The expected growth rate of EAP account spending is higher for Moderate and

Advanced EAP organizations than for High EAP organizations.

Degree of EAP Use and the Interaction with Plastic Card and Ghost

Account Spending

The percentage of employees given plastic purchasing cards is highest for the

Moderate EAP group (at 13.5%), up from 11.8% among Traditional card programs

(which only use plastic cards and ghost accounts). In Advanced and High EAP

organizations we find a lower percentage of employees are provided with plastic

cards (11.0% and 3.5%, respectively). Based on the fact that Older EAP programs

do not have fewer plastic cards than Younger programs and that repeat

respondents to the Survey (before and after involvement with EAP) did not reduce

plastic card distribution, it appears that High EAP organizations in all likelihood had

low card distribution prior to their involvement with EAP and that the adoption of

EAP did not drive a decision to reduce plastic card distribution.

Total average monthly purchasing card spending (on all purchasing card accounts

combined) is higher for higher degrees of EAP use, with High EAP organizations

reporting average spending that is over twice as high as Traditional card programs

($1.8 million versus $846,442). Average monthly purchasing card spending at

Moderate and Advanced EAP organizations is $1.3 million and $1.5 million,

respectively.

Traditional card programs report $207 in monthly purchasing card spending per

employee; that figure rises to $285, $363, and $437 at Moderate, Advanced, and

High EAP organizations, respectively.

Traditional card programs report an average transaction amount of $289. This

figure rises to $376 among Moderate to $569 among Advanced to $1,377 among

High EAP organizations.


Traditional card programs report an average purchasing card spending as a percent

of revenue of 2.3%. This figure rises to 3.7% among Moderate EAP organizations,

to 3.8% among Advanced EAP organizations, and to 4.2% among High EAP

organizations.

About 14% of the EAP-using response had completed Benchmark Surveys prior to

their adoption of EAP. For these repeat respondents to the survey, plastic card

spending and the card-to-employee ratio remained basically flat after the

introduction of EAP. The card distribution ratio prior to EAP was 14.7% and after

was 15.1%. Average monthly spending on plastic cards was $1.2 million before

adoption of EAP and $1.2 million after the adoption of EAP.

The majority of EAP-using organizations remain very supportive of the use and

distribution of plastic purchasing cards. There is however, a sliver of them that

want to limit the distribution of plastic cards to employees on an “as needed” basis,

mostly among those who report increased spending on EAP.

Customer Satisfaction with EAP

This section provides customer ratings of the importance of and satisfaction with

respect to: (1) economic elements of EAP account use, (2) EAP issuer service and

support of the EAP account product, (3) capture and transfer of EAP transaction

data, (4) integration of EAP data with business information systems, (5) EAP

program management technology, and (6) capabilities of EAP reporting software.

EAP-using organizations place relatively greater emphasis on the capture of

transactional data than their plastic and ghost account-focused counterparts.

The largest gap between importance and satisfaction is associated with the “overall

integration of EAP data with organizational information systems.”

In comparison to those that do not have significant or complete integration of EAP

data into their accounting/ERP system, organizations that have complete or

significant integration of EAP data into their accounting or ERP system report higher

average monthly spending on EAP accounts ($1.2 million versus $629,023), higher

monthly EAP spending per employee ($202 versus $152), and notably higher

satisfaction across a wide variety of card issuer performance dimensions.


Switching Behavior and Barriers to EAP Growth

Across the sample of EAP-using respondents, 6% report that they are currently

considering switching their EAP issuer. By contrast, 12% of “traditional” purchasing

card programs (that only use plastic and ghost accounts) report that they are

considering switching their card issuer.

The most prominent reason for switching is the need for “greater revenue sharing in

rebates.” Other important reasons for considering switching card issuers include the

desire for “lower fees or service charges” and “better card spend reporting

capabilities.”

The greatest barrier to EAP use is not regulatory compliance, accounting, or even

security-related issues—rather it is the concern that suppliers will not accept EAP as

a method of payment.

Card Program Performance of Fortune 500-Size Corporations

Fortune 500-Size corporations that use EAP report average monthly EAP spending

of $4.0 million and total purchasing card program spending (on all platforms

combined) of $7.6 million. By contrast, Traditional card programs (using only plastic

cards and ghost accounts) in the Fortune 500-Size segment report average monthly

purchasing card spending of $5.4 million.

The percentage of under $2,500 transactions paid with card technology is almost

the same for Traditional card and EAP-using programs. The difference lies in

“higher value” transactions, where EAP-using organizations pay for a significantly

higher percentage of $2,500 to $10,000 and $10,000 to $100,000 transactions with

card technology than Traditional programs.

Total purchasing card spending (on all card platforms combined) as a percentage of

revenue and monthly card spending per employee at Fortune 500-Size corporations

that use EAP (1.27%, $222, respectively) are higher than that reported among

Traditional card programs (0.84%, $207, respectively).

EAP-using Fortune 100-Size corporations (with annual sales revenue of $20 billion

or more) report average monthly EAP spending of $8.7 million and total purchasing

card program spending (on all platforms combined) of $14.9 million.


The percentage of transactions paid with cards is significantly higher among EAP-

using Fortune 100-Size corporations for transactions of under $2,500, between

$2,500 and $10,000, and between $10,000 and $100,000.


revenue and monthly card spending per employee at EAP-using Fortune 100-Size

corporations are 0.75% and $163, respectively.

Card Program Performance of Large Market Corporations

Large Market corporations that use EAP report average monthly EAP spending of

$825,952 and total purchasing card program spending (on all platforms combined)

of $1.6 million. By contrast, Traditional card programs (using only plastic cards and

ghost accounts) in the Large Market segment report average monthly purchasing

card spending of $1.1 million.

The percentage of under $2,500 transactions paid with card technology is almost

the same for Traditional card and EAP-using Large Market programs. The

difference lies in “higher value” transactions, where EAP-using organizations pay for

a significantly higher percentage of $2,500 to $10,000 and $10,000 to $100,000

transactions with card technology than Traditional programs.


revenue and monthly card spending per employee at Large Market corporations that

use EAP (1.79%, $368, respectively) are higher than that reported among

Traditional card programs (0.97%, $282, respectively).

Card Program Performance of Middle Market Corporations

Middle Market corporations that use EAP report average monthly EAP spending of

$339,618 and total purchasing card program spending (on all platforms combined)

of $541,442. By contrast, Traditional card programs (using only plastic cards and

ghost accounts) in the Middle Market segment report average monthly purchasing

card spending of $471,799.

Middle Market EAP-using companies capture a significantly higher percentage of

under $2,500 transactions on card payment as well as a higher percentage of

“higher value” transactions ($2,500 to $10,000 and $10,000 to $100,000) with card

technology.



revenue and monthly card spending per employee at Middle Market corporations

that use EAP (4.32%, $752, respectively) are higher than that reported among

Traditional card programs (3.53%, $537, respectively)

Card Program Performance of Government and Not-for-Profit

Organizations

Government and Not-for-Profit organizations that use EAP report average monthly

EAP spending of $642,374 and total purchasing card program spending (on all

platforms combined) of $1.3 million. By contrast, Traditional card programs (using

only plastic cards and ghost accounts) in the Government and Not-for-Profit

segment report average monthly purchasing card spending of $899,017.

Government and Not-for-Profit organizations that use EAP report a higher capture of

transactions (under $2,500, between $2,500 and $10,000, and between $10,000

and $100,000) than Traditional card programs.


the annual budget is higher among Government and Not-for-Profit organizations that

use EAP (4.9%) than at Traditional card programs (3.3%).


Many great actions are committed in small struggles.

Victor Hugo


Key Trends in EAP Adoption and Use

Chapters in this section

01 Introduction, Definitions, and Description of Sample

02 EAP Program Goals, Account Types, and Purchasing Behavior

03 EAP Spending Basics

04 EAP Spending Growth

05 EAP and Suppliers

06 EAP Program Management

2012 Electronic Accounts Payable Benchmark Survey Results

Section 1


Chapter 1

Introduction, Definitions, and Description of Sample

In November 2011, a 40-page web-based “2012 Purchasing/Electronic Accounts Payable

Card Benchmark Survey” was released to over 14,000 purchasing card program

administrators at organizations that were either customers of one of twenty major card

issuers (including Bank of America, Bank of the West, BB&T, BMO/Harris Bank, Commerce

Bank, JPMorgan Bank, Comerica, Fifth Third Bank, FNBO, HSBC, M&T Bank, PNC Bank,

Regions Bank, Scotiabank, SunTrust, UMB, U.S. Bank, U.S. Bank Canada, Wells Fargo,

and Wright Express) or members of The National Association of Purchasing Card

Professionals, the National Institute of Government Purchasing, or the Accounts Payable

Network. Four thousand and three hundred and seventy-five responses were received for a

response rate of over 29%.1 All major purchasing card-issuing brands (American Express,

MasterCard, and Visa) are represented in the survey response.

1 Occasionally, one or more respondents may have given an incomplete response resulting in a different number

of responses for different questions. Throughout this report, our analysis of any given question will be based on usable responses to each question. In addition, we have purged unusual “outlier” responses to specific questionnaire items when appropriate to facilitate a meaningful understanding of the data.

Highlights

EAP sample description

Sample response by degree of EAP use

EAP adoption and use

EAP adoption by type of organization

Age of EAP programs

The role of EAP in the market

A quick glance at EAP account spending ramp-up

Conclusion

Introduction, Definitions, and Description of Sample | 25

Of the response to the 2012 Survey, 34.9% indicated that they currently use “electronic

accounts payable” accounts to pay for invoiced goods and services. That group will be the

focus of this Report.2

Our survey used the term EAP to describe “non-plastic purchasing card accounts used to

pay for goods and services after an invoice has been received for those goods or services

(in other words, card payment did not occur at the point or time of sale).” The different types

of EAP accounts manifested in the marketplace will be discussed in Chapter 2 of this Report.

The most common application of purchasing card technology is a plastic card given to

employees to buy goods and services. The survey also defined ghost card accounts as “any

arrangement in which a purchasing card account number is held in trust by a vendor who

charges to the account at your instructions. The available credit on the card is a fixed

amount that is not adjusted for each transaction.”3

EAP Sample Description

Exhibit 1 shows a breakdown of

EAP-using survey respondents by

organizational type: 22% are public

corporations, 33% are privately-

owned corporations, 11% are

universities, 10% are city or county

governmental units, 4% are federal

or state government agencies, 8%

are school districts, and 12% are

not-for-profit organizations.

2 Certain questions about EAP throughout the Survey were only asked of respondents who put the majority of their

purchasing card program spending on EAP. Responses to these types of questions will be identified as coming from “organizations that conduct the majority of their purchasing card spending on EAP.”

3 Ghost card accounts may exist in other forms and/or be defined in different ways in the market. Our survey classification of ghost card does not include these other forms or definitions of ghost card accounts.

Exhibit 1 Respondents by Organizational Type

Public corporations 22%

Privately-owned corporations

33%

Federal and state government

4%

City/county government

10%

Universities 11%

Not-for-profit entities 12%

School districts

8%


Exhibit 2 separates the public and private

corporations that use EAP (which represent

55% of the EAP-using response shown in

Exhibit 1) into three size categories: 27%

are “Fortune 500-Size” companies (annual

sales revenue greater than or equal to $2

billion), 23% are “Large Market” companies

(annual sales revenue greater than or equal

to $500 million but less than $2 billion), and

50% are “Middle Market” companies

(annual sales revenue greater than or equal

to $25 million but less than $500 million).

Corporate respondents that use EAP

represent a wide range of industries.

Exhibit 3 breaks down the corporate

respondents by industry using Standard

Industrial Classification (SIC) codes.

Manufacturing is the largest single industry

segment, accounting for 30% of Corporate

participants. No single SIC code within

manufacturing dominates this category.

Sample Response by Degree of

EAP Use

Of those organizations that currently use

EAP, Exhibit 4 shows that 38.8% of

respondents charge less than 25% of all

their purchasing card program spending to

EAP accounts, 10.9% charge between 25%

and 49% to EAP accounts, 19.5% charge

between 50% and 74% to EAP accounts,

and 30.8% charge 75% to 100% of their

purchasing card spending to EAP

purchasing card accounts. Among the

latter group are some organizations that do

not have plastic cards and charge 100% of

their spending to EAP accounts. This group

comprises 4.5% of all EAP-using

organizations.

Exhibit 2 Corporate Respondents by Size

Middle Market 50%

Fortune 500 Size

27%

Large Market 23%

Exhibit 3 Corporate Respondents by Industry

Manufacturing 30%

Finance, insurance, banking and real

estate 13%

Agricultural, mining, and construction

12%

Other service 2%

Wholesale and retail trade

8%

Software and IT 4%

Transportation, warehousing, and delivery service

7%

Telecomm-unications, media, and entertainment

7%

Professional, scientific, and technical service

13%

Utilities 4%

Exhibit 4 Respondent Profile by Degree of EAP Use

50% to 74% of spending 19.5%

Less than 25% of spending

38.8%

25% to 49% of spending 10.9%

75% of spending or more 30.8%


EAP Adoption and Use

As noted above, 34.9% of 4,375

respondents to our 2012 Benchmark

Survey employ EAP accounts. This figure

is up from 16.1% in our 2009 Survey,

14.5% in our 2007 Survey, and 8.3% in

our 2005 Survey. Exhibit 5 shows the

current status and future plans of

respondents regarding EAP use. The

Exhibit indicates that 37.8% of

respondents do not plan to adopt or use

EAP accounts in the near future.

However, 8.7% of respondents plan to

adopt EAP within the next year and

12.0% plan to adopt EAP within the next

three years. Another 6.6% of the

respondents were unsure of their

organization’s plans with respect to EAP. Thus, the overall trend related to EAP use is

upward sloping as shown in Exhibit 6, rising from 8.3% in 2005 to its 2011 level of 34.9%.

Respondent projections would put EAP use at 55.6% by 2014.

Exhibit 6 Actual and Projected Trends in EAP Adoption, 2005-2014

8.3%

14.5% 16.1%

34.9%

43.6%

55.6%

2005 2007 2009 2011 2012 (Projected Use)

2014 (Projected Use)

Exhibit 5 Future Plans for EAP by Organizations that Do Not Currently Use EAP

No plan to adopt use of EAP accounts in the

near future 37.8%

Unsure of plan for EAP 6.6%

Adopted and use EAP 34.9%

Plans to adopt use of EAP accounts in

the next three years

12.0%

Plans to adopt use of EAP accounts by

next year 8.7%


EAP Adoption by Type of Organization

Exhibit 7 indicates the percentage of organizations (by category) that report using EAP

purchasing card accounts every other year from 2005 through 2011 as well as their

projected use for 2014. As shown in the Exhibit, EAP is currently in use by 39.3% of Fortune

500-Size corporations, 33.7% of Large Market corporations, 40.3% of Middle Market

corporations, and 32.5% of Government and Not-for-Profit entities. In all categories, the

percentage of organizations using EAP has grown steadily since 2005. The largest growth

of EAP over the past two years has been in the Middle Market and Government and Not-for-

Profit segments (going from 17.2% to 40.3% and from 12.1% to 32.5%, respectively). By

2014, the percentage of organizations using EAP within the different segments is largely the

same (around 55%), except the Fortune 500-Size category where about 67% of the

respondents expect to be using EAP in the next three years.

Exhibit 7

Percent of Organizations Using EAP Accounts, by Corporations, Government and Not-for-Profit Organizations, and Total Sample, 2005-2014

Age of EAP Programs

Exhibit 8 provides the average age of EAP programs among respondents. The Exhibit

indicates that EAP use is beginning to move from its formative stage to early maturity as a

product. In 2011, 22% of respondents have used EAP for less than one year, 28% between

one and two years, and 50% for three or more years. In 2009, 73% of programs were two

years old or less.

Exhibit 8 Age of EAP Programs, 2009 - 2011

2005 2007 2009 2011 2014

(Projected Use)

Category

Fortune 500-Size 12.2% 24.3% 25.7% 39.3% 66.7%

Large Market 4.9% 16.1% 21.9% 33.7% 56.2%

Middle Market 7.5% 11.6% 17.2% 40.3% 52.3%

Government and Not-for-Profit 7.2% 10.2% 12.1% 32.5% 55.1%

All Respondents 8.3% 14.5% 16.1% 34.9% 55.6%

2009 2011

Organizations with EAP – How Long has EAP Program Been in Place

Less than 1 year 31% 22%

1-2 years 42% 28%

3 or more years 27% 50%


The Role of EAP in the Market

There are a variety of benefits to the use of EAP. First, EAP allows the organization to

increase its purchasing card spending by enabling card-based payment for purchases that

may be impractical with plastic cards. Second, EAP reduces the cost and financial risk

associated with check payment activity. Third, depending on when payment is made, EAP

purchasing card accounts can significantly improve working capital by increasing “float” (the

amount of time between the date a purchase is made and the date payment is made).

Fourth, EAP can reduce any financial risk associated with plastic purchasing cards inasmuch

as the EAP account numbers may be linked to a credit limit designed to support a single

transaction rather than multiple transactions.4 Finally, from the perspective of organizational

demand for specific transaction data, an EAP transaction – since it traverses the traditional

workflow approval routing within the Enterprise Resource Planning (ERP) information

system – can connect with whatever data requirements the organization demands of a

traditional ERP purchase. Further, in the case of single-use cards, the card numbers

themselves can be matched to PO numbers to facilitate the reconciliation and the closing out

of a transaction.

A Quick Glance at EAP Account Spending Ramp Up

Given the benefits of EAP described above, organizations have quickly changed the profile

of their card-based spending with the adoption and use of EAP. Based on growth rates over

the past two years experienced by respondents with EAP programs of different ages,

Exhibit 9 on the next page presents a portrait of the impact of EAP adoption on an average

organization that currently spends $1 million per month on purchasing cards. After one year,

EAP spending will comprise 47% of all purchasing card program spending (or about

$900,000), bringing a significant 90% additional growth to overall purchasing card program

spending. The average growth rate of EAP spending in the second year is 68%, driving EAP

spending to $1.51 million. Thereafter, EAP spending growth begins to slow, with the

average annual growth rate in EAP spending between years two and three at 19%, after

which it falls again to an average of 16% per year. Thus, by year 4, we see that a typical $1

million purchasing card program has tripled in size by virtue of the addition of EAP to its card

program toolkit.

4 Specifically, because account numbers are limited by dollar value, expiration date, and merchant type, any

transaction with attributes that do not match the approved transaction will be declined (Commercial Payments International 2011).


Exhibit 9 Typical EAP Spending Growth over First Six Years

Given the quick ramp-up experienced by many organizations that have adopted EAP, it is

not surprising that EAP-using organizations spend disproportionately more on all types of

purchasing cards (plastic cards, ghost accounts, and EAP) than “traditional” purchasing card

programs using only plastic cards and ghost accounts. Exhibit 10 on the next page

contrasts the percentage of respondents with different card program configurations (i.e.,

traditional card program versus EAP-users) and the percentage of total sample-wide

purchasing card spending by these programs. The Exhibit shows that Traditional purchasing

card programs (that only use plastic cards or ghost accounts and comprise 65% of the

sample response) account for 49% of all purchasing card spending. By contrast, EAP-using

organizations (which comprise 35% of the sample response) account for 51% of all

purchasing card spending.

$0.90

$1.51

$1.79

$2.06

$2.35

$2.63

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

EA

P A

cco

un

t A

ve

rag

e M

on

thly

Sp

en

din

g

(in

$ m

illi

on

s)


Exhibit 10 Percentage of Purchasing Card Program Spending (in Total) by EAP-Using

and Traditional Card Programs in Relation to Their Percentage of the Sample Response

Expanding on the different types of spending by degree of EAP use, Exhibit 11 shows that

Traditional programs (65% of the sample response) account for 67% of all plastic card

spending, 52% of all spending on “ghost accounts”, and 40% of “other card” account activity.

By contrast, EAP-using organizations (which constitute 35% of the sample response)

account for 33% of all plastic card spending, 48% of all spending on “ghost accounts”, 100%

of EAP account spending, and 60% of all “other card” account activity.

Exhibit 11

Respondents’ Purchasing Card Program Account Use Profile and the Distribution of All Purchasing Card Program Spending

49%

51%

65%

35%

Traditional Card Program Organizations

EAP-Using Organizations

% of Respondents

% of Total Spending

% of Respondents

% of Plastic Spending

% of Ghost Card

Spending

% of EAP Spending

% of “Other”

Spending

% of Total P-card

Program Spending

Counties Traditional Card Program Organizations 65% 67% 52% 0% 40% 49%

EAP-Using Organizations 35% 33% 48% 100% 60% 51%


Conclusion

Our survey defines Electronic Accounts Payable (EAP) cards as “non-plastic purchasing

card accounts used to pay for goods and services after an invoice has been received for

those goods or services (in other words, card payment did not occur at the point or time of

sale).”

Currently, 34.9% of 4,375 respondents to our 2012 Purchasing Card Benchmark Survey

employ EAP accounts. This figure is up from 16.1% in our 2009 Survey, 14.5% in our 2007

Survey, and 8.3% in our 2005 Survey.

In addition to the 34.9% of respondents that currently use EAP, another 8.7% of respondents

plan to adopt EAP in the next year and 12% plan to adopt EAP within three years. Thus, if

planned EAP adoptions materialize, EAP use will rise from 34.9% in 2011 to 55.6% in 2014.

EAP is currently in use at 39.3% of Fortune 500-Size companies, 33.7% of Large Market

companies, 40.3% of Middle Market companies, and 32.5% of Government and Not-for-

Profit entities. The largest growth of EAP over the past two years has been in the Middle

Market and Government and Not-for-Profit segments. By 2014, the percentage of

organizations using EAP within the different segments is expected to be largely the same

(around 55%), with the exception being Fortune 500-Size corporations where about 10%

more corporations are expect to use or adopt EAP over the next three years.

EAP use is beginning to move from its formative stage to early maturity. In 2011, 22%

reported having used EAP for less than one year, 28% between one and two years, and

50% for three or more years. In 2009, 73% of EAP programs were two years old or less.

Based on respondent experience, a typical organization (with $1 million of monthly

purchasing card spending) that adopted EAP will experience EAP spending growth to almost

$900,000 at the end of the first year, $1.51 million at the end of two years, and $2.06 million

by the end of four years.

Given the quick ramp-up experienced by many organizations that have adopted EAP, it is

not surprising that EAP-using organizations spend disproportionately more on all types of

purchasing cards (plastic cards, ghost accounts, and EAP) than “traditional” purchasing card

programs using only plastic cards and ghost accounts. Specifically, EAP-using

organizations (which comprise 35% of the sample response) account for 51% of all

purchasing card spending. Thus, it appears that EAP-using organizations “punch above

their weight class” in terms of overall purchasing card spending.

EAP Program Goals, Account Types, and Purchasing Behavior | 33

Chapter 2

EAP Program Goals, Account Types, and Purchasing Behavior

Organizational goals for their EAP program may influence an organization’s choices

regarding the degree of EAP use and, therefore, EAP’s impact on the organization. Further,

once an organization commits to EAP use, it has a menu of EAP account options available.

Finally, depending on how EAP is used and what is bought, it may affect the use of other

card platforms--in particular, plastic cards. The purpose of this chapter is to identify the

goals of organizations using EAP, the types of EAP accounts being employed, and the types

of purchases being made with EAP.

Program Goals

Exhibit 12 on the next page shows the respondents’ current primary EAP program goals

and the primary goals for their EAP programs three years from today. The Exhibit shows

that the primary current goals include (a) obtaining rebates and incentives for the

organization (76%), (b) reducing reliance on checks (65%), (c) reducing the transaction-

processing workload for the organization (62%), and (d) improving cash flow by extending

time to payment (58%).

Respondents are less likely to identify the same primary goals three years from now, to wit:

a smaller percentage of respondents identify the following as primary future goals (a)

obtaining rebates and incentives for the organization (76% current versus 55% three years

Highlights

Program goals

Types of EAP and benefits

EAP purchasing behavior

Conclusion


from now), (b) improving cash flow by extending time to payment (58% versus 40% three

years from now), (c) increasing convenience of purchasing for employees (50% versus 29%

three years from now), and (d) reducing the transaction-processing workload for the

organization (62% versus 43% three years from now). By contrast, respondents are more

likely to identify the obtaining of better data to enhance leverage with vendors and increasing

supplier acceptance of EAP payment as future EAP program goals.

Exhibit 12 Primary EAP Program Goals, Current and Three Years from Today*

* The survey inquired of EAP goals only of those respondents who put the majority of their purchasing card program spending on EAP. The answers to those questions are represented in this Exhibit.

Types of EAP and Benefits

The essence of the EAP account is dynamic adjustability–meaning that the available credit

on the card account is adjusted to match each transaction to be charged to the card. Hence,

after the transaction is consummated, the card number is retired or rendered of little or no

value. The nature of dynamic ghost accounts can vary based on who maintains them. For

example, dynamic ghost accounts can be:

maintained by supplier--Account number assigned to a specific supplier and held in trust

by that supplier, who charges the account to receive payment for approved invoices.

maintained by buyer--Account number is assigned to a specific supplier but not held in

trust by that supplier. Account number is delivered to the supplier at time of payment.

a single-use or rotating pool of accounts--In this arrangement, a randomly generated

account number is delivered to the supplier at the time of payment. The supplier

charges the account number provided by the buyer.

Primary Current EAP Program Goals

Primary EAP Program Goals

Three Years Out


Obtain rebates and incentives for the organization 76% 55%

Reduce reliance on checks 65% 56%

Reduce the transaction-processing workload for the organization 62% 43%

Improve cash flow by extending time to payment 58% 40%

Reduce labor and administrative costs associated with procurement and payables 55% 53%

Increase convenience of purchasing for employees 50% 29%

Increase supplier acceptance of EAP 45% 50%

Obtain better data to increase control over spending 40% 30%

Obtain better data to enhance leverage with vendors 28% 38%


A fourth EAP option is often referred to as “straight-through,” “push,” or “buyer-initiated”

payments. This payment option entails a card account that the buying organization charges

on behalf of the vendor, resulting in funds being deposited in the vendor’s bank account.

This method is the only one in which no action is required on the part of the supplier (other

than agreeing to card payment terms) to be paid via card.

Exhibit 13 shows that the preferred technology of EAP is still evolving, with straight-through

processing (46%), virtual accounts maintained by the buyer (41%), virtual accounts

maintained by the supplier (41%), and single-use accounts (30%) all reasonably popular

choices among respondents. Though not shown in Exhibit 13, it is interesting that 44% of

respondents use more than one type of EAP account. Among respondents who use only

one platform, straight-through processing was the most common (30%), followed closely by

virtual account maintained by the supplier (27%), virtual account maintained by buyer (19%),

single-use accounts (16%), and other (8%).

Exhibit 13

Types of EAP Accounts Used*

* Respondents could identify more than one EAP option, thus the percentages do not add to 100%

Exhibit 14 on the next page indicates that the most common reasons for selecting a

particular type of EAP account are the “expansion of an on-going relationship with the

purchasing card issuer” (49%) and the “perceived ability of this type of EAP arrangement to

enhance control over payments and minimize exposure to card misuse” (34%). Among

organizations with particular types of EAP, there is no clear pattern to indicate why one type

is chosen over another. There is some indication that organizations employing single-use

accounts are more likely to identify its suitability to their supply base and the perceived ability

of this arrangement to enhance control over payments and minimize exposure to card

misuse.5 One advantage of single-use cards is that the card numbers themselves can be

matched to PO numbers in order to facilitate the reconciliation and the closing out of a

5 Among respondents who only used one type of EAP account, those using single-use accounts had a higher

percentage of respondents identify its ability to enhance control over payments and minimize exposure to card misuse as a reason for its selection.

*

Percent of Total EAP-Using

Sample Response

Type of EAP Account

Straight-through processing, push payments, buyer-initiated transactions 46%

Virtual or dynamic ghost account maintained by supplier 41%

Virtual or dynamic ghost account maintained by buyer 41%

Single- use or rotating pool of accounts 30%

Other 10%


transaction. For some organizations, this may be considered an additional element of

efficiency and control over card transactions.

Exhibit 14 Reasons for Adopting EAP Accounts, by Type of EAP Account

To further validate the most common reasons for selecting a particular type of EAP account

as the “expansion of an on-going relationship with the purchasing card issuer,” Exhibit 15 on

the next page shows that only 18% of EAP-using organizations have an EAP card issuer

that is different from their plastic card issuer.

With Dynamic Supplier

With Dynamic

Buyer

With Straight- Through

With Single-Use

Other All

Reason for Adopting Particular Type of EAP Account

Counties

Expansion of an on-going relationship with p-card issuer 53% 52% 44% 60% 44% 49%

Consultant recommendation 11% 9% 9% 8% 12% 11%

Internal analysis of its suitability with our internal information system technology 27% 30% 30% 31% 26% 25%

Analysis of its suitability to our supplier base 23% 24% 25% 31% 15% 22%

Perceived ability of this type of EAP arrangement to enhance control over payments and minimize exposure to card misuse 38% 35% 36% 41% 27% 34%

Other 16% 16% 14% 19% 20% 17%


Exhibit 15

Percent of Organizations with an EAP Issuer Different from their Plastic Card Issuer

EAP Purchasing Behavior

Exhibit 16 on the next page shows the types of goods and services purchased by EAP-

using respondents and by respondents with “traditional” card programs (which use only

plastic cards and ghost accounts). The Exhibit indicates that the majority of EAP-using

organizations use EAP to pay for office equipment and supplies (69%) and computer

hardware, software, and peripherals (62%). Further, a noteworthy percentage use EAP to

pay for maintenance, repair and operating (MRO) goods (48%).

Exhibit 16 also indicates that, in comparison to the types of goods and services acquired

with plastic and ghost accounts at traditional card programs, EAP-using organizations:

are more likely to use EAP to pay for inventory (39% versus 30%), capital assets (38%

versus 23%), and lease and rental payments (36% versus 27%), but

are less likely to use EAP to pay for all other items listed, most notably travel (31%

versus 71%), mail and mail delivery services (21% versus 48%), MRO (48% versus

74%), catering (30% versus 55%), fuel (34% versus 59%), printing and duplicating

services (36% versus 57%), and office equipment and suppliers (69% versus 89%).

Percent of Total EAP-Using Sample

Response

Percent of organizations that have a different EAP issuer than plastic card issuer. 18%


Exhibit 16 Percent of Traditional Purchasing Card/EAP-Using Respondents Using Plastic and

Ghost/EAP to Pay for Types of Goods and Services*

* The survey inquired of goods and services bought with EAP only of those respondents who put the majority of their purchasing card program spending on EAP. The answers to those questions are represented in this Exhibit.

% of EAP-Using Organizations that

Use EAP to Purchase…

% of Traditional Card Programs that

Only Use Plastic and Ghost Accounts to

Purchase...

Category of Goods/Services

Office equipment and supplies 69% 89%

Computer hardware, software, and peripherals 62% 74%

General maintenance, repair and operating (MRO) goods 48% 74%

Inventory 39% 30%

Capital assets 38% 23%

Printing and duplicating services 36% 57%

Lease and rental payments 36% 27%

Fuel 34% 59%

Construction materials 34% 42%

Media and advertising services 33% 48%

Transportation and freight delivery 31% 37%

Travel 31% 71%

Catering 30% 55%

Clothing/uniforms 28% 46%

Telecommunications service 27% 41%

Professional services 26% 34%

Utilities 23% 30%

Mail and mail delivery services 21% 48%

Temporary help services 15% 15%

Government services 14% 22%


Conclusion

Organizations that use EAP identify primary EAP program goals that include the obtaining of

rebates and incentives for the organization, reducing reliance on checks, reducing the

transaction-processing workload for the organization, and improving cash flow by extending

time to payment. Respondents are more likely to identify the obtaining of better data to

enhance leverage with vendors and increased supplier acceptance of EAP payment as

primary EAP program goals three years from today.

The essence of the EAP account is dynamic adjustability– meaning that the available credit

on the card account is adjusted to match each transaction to be charged to the card. At

present, the preferred way in which to operationalize EAP is evolving, with straight-through

processing (46%), virtual accounts maintained by the buyer (41%), virtual accounts

maintained by the supplier (41%), and single-use accounts (30%) all reasonably popular

choices among respondents. Interestingly, 44% of respondents use more than one type of

EAP account.

The most common reasons for selecting a particular type of EAP account are the “expansion

of an on-going relationship with the purchasing card issuer” and the “perceived ability …to

enhance control over payments and minimize exposure to card misuse.” About 18% of EAP

users have an EAP card issuer that is different from their plastic card issuer.

The majority of organizations use EAP accounts to buy office equipment, computer-related

purchases, and MRO. In comparison to the types of goods and services acquired with

plastic and ghost accounts at traditional card programs, EAP-using organizations are more

likely to use EAP to pay for inventory, capital assets, and lease and rental payments.


Chapter 3

EAP Spending Basics

This Chapter will analyze EAP account spending, both across the sample and by type of

organization. We examine the “basic” spending conducted with EAP and how that spending

relates to organizational revenue or budget, the employee base, and the supplier base. In

so doing, we present clear “benchmark” data points for evaluation of current EAP account

spending by an organization. In subsequent sections, we will dissect EAP spending from

different perspectives (age of program, “best practice”, degree of EAP use, and type of

organization). The chapter also presents respondent opinion of the impact of their EAP

activity on plastic card spending.

Highlights

Basic EAP spending data

Distribution of spending

EAP spending by type of organization

EAP spending impact on plastic card spending

EAP impact on cost savings

Conclusion

EAP Spending Basics | 41

Basic EAP Spending Data

Exhibit 17 presents EAP account spending norms for all EAP-using respondents to the

2012 Survey. The Exhibit shows that average (median) monthly EAP account spending is

$1,070,751 ($168,750). The average number of EAP transactions per month is 454 and the

average EAP transaction amount is $2,359. Organizations are using EAP to pay for, on

average, 14% of their under $2,500 transactions, 18% of their $2,500 to $10,000

transactions, and 19% of their $10,000 to $100,000 transactions. Average monthly EAP

spending per employee is $136. Annual EAP spending per $1 million of annual sales

revenue (or budget if a Government or Not-for-Profit organization) is $18,892. Thus, an

organization with $1 billion in sales revenue would be expected to generate $18.9 million of

EAP spending per year, or $1.6 million per month. On average, respondents report that

EAP spending accounts for 49% of their total purchasing card program spending (including

combined spending on plastic cards, ghost accounts, and EAP).

Exhibit 17

EAP Account Spending and Organizational Data across All EAP-Using Organizations

* The average would be modestly higher ($1.240,590) if outliers with significantly high EAP spending were included in the figures above.

Total EAP-Using

Sample Response

Company Statistics

Number of employees 7,868

Age of EAP program (in years) 2.9

Monthly EAP Spending Statistics

Average monthly EAP spending* $1,070,751

Median monthly EAP spending $168,750

Average monthly EAP transactions 454

EAP spending per transaction $2,359

Capture and Spend per Employee

Transactions under $2,500 paid with EAP accounts 14%

Transactions between $2,500 and $10,000 paid with EAP accounts 18%


Monthly EAP spending per employee $136

EAP Spending Relationship Benchmarks

Annual EAP spending per $1 million of annual sales revenue (or budget if a Government or Not-for-Profit organization) $18,892

EAP spending as a percent of total purchasing card spending 49%


Distribution of Spending

As shown above, the average monthly EAP

spending is $1.1 million per month.

Exhibit 18 breaks down average monthly

EAP spending into dollar amount categories

and provides the percentage of respondents

within each category. The Exhibit shows that

30.9% of respondents report monthly EAP

spending that is less than $50,000 per

month, 24.7% report monthly EAP spending

between $50,000 and $249,999, 25.4%

report monthly EAP spending between

$250,000 and $999,999, and 19.0% have

monthly EAP spending equal to or greater

than $1 million.

Organizations with less than $50,000 per month of EAP spending are more likely to be

School Districts and Cities and Counties or City/County agencies. Among corporations with

less than $50,000 per month of EAP spending, a higher percentage are from the Middle

Market “Manufacturing” and “Transportation, Warehouse and Delivery” segments.

Organizations with EAP spending at or above $1 million per month are more likely to be

Fortune 500-Size public corporations or Not-for-Profit entities (many of which are in the

healthcare segment). Among corporations with EAP spending at or above $1 million per

month, a higher percentage of respondents are in the “Professional, Scientific, and Technical

Services” and “Wholesale and Retail Trade” segments.

Exhibit 19 breaks average EAP transactions

down into dollar amount categories and

provides the percentage of respondents

within each category. The Exhibit shows

that 31.9% of respondents report average

EAP transaction amounts of $1,000 or less,

26.0% report average EAP transaction

amounts between $1,001 and $2,500, 17.0%

report average EAP transaction amounts

between $2,501 and $5,000, and 25.1%

report average EAP transaction amounts

above $5,000. Organizations with average

EAP transactions below $1,000 are more

likely to be City or County agencies or

Middle Market corporations.

Exhibit 19 Distribution of Average Transaction Amount on EAP Account

$2,501 to $5,000 17.0%

Less than $1,000 31.9%

$1,001 to $2,500 26.0%

Greater than $5,000 25.1%

Exhibit 18 Distribution by Monthly EAP Account Spending

$250,000 to $999,999 25.4%

Less than $50,000 30.9%

$50,000 to $249,999 24.7%

$1M or greater 19.0%


EAP Spending by Type of Organization

Exhibit 20 below presents EAP account spending norms by type of organizational

respondent.

Age of Program

The average length of time that an organization has used EAP is slightly longer at Fortune

500-Size (3.1 years) and Middle Market corporations (3.0 years); Government and Not-for-

Profit organizations and Large Market corporations have slightly less experience with EAP

(both at 2.8 years).

Average Monthly EAP Spending and Transactions

The Exhibit shows that Fortune 500-Size corporations report the highest average monthly

EAP spending among corporate respondents ($4.0 million), followed by Large Market (at

$825,952), and Middle Market corporations (at $339,618). Government and Not-for-Profit

organizations report average monthly EAP spending of $642,374.

The Exhibit also shows that the number of transactions follows the spending trend, with

Fortune 500-Size corporations reporting the highest average number of monthly EAP

transactions (1,592), followed by Large Market respondents (280), and Middle Market

corporations (142). Government and Not-for-Profit organizations report average monthly

EAP transactions of 424.

Average Transaction Amount

EAP spending per transaction is higher among Fortune 500-Size ($2,541), Large Market

($2,945) and Middle Market corporations ($2,389) and significantly lower among

Government and Not-for-Profit organizations ($1,516).

Capture of Transactions

Under $2,500 Transactions. Fourteen percent of under $2,500 transactions are paid with

EAP accounts at Middle Market corporations. This figure is lower among Fortune 500-Size

Corporations (13%), Government and Not-for-Profit organizations (12%) and Large Market

corporations (11%).

$2,500 to $10,000 Transactions. Government and Not-for-Profit organizations pay for 18%

of their $2,500 to $10,000 transactions with EAP accounts. This figure is modestly lower

among Fortune 500-Size and Middle Market corporations (each at 17%) and at Large Market

corporations (15%).

$10,000 to $100,000 Transactions. Twenty-three percent of $10,000 to $100,000

transactions are paid with EAP accounts at Fortune 500-Size corporations. This figure is


lower among Large Market corporations (19%), Middle Market corporations (17%), and

Government and Not-for-Profit organizations (17%).

Other Benchmark Data Points

In addition to the “overall” EAP spending and transaction numbers above, Exhibit 20

presents some measures of EAP program performance that are naturally size-adjusted. For

example, monthly EAP spending per employee rises for smaller Corporate respondents,

going from $118 at Fortune 500-Size corporations to $186 at Large Market corporations to

$472 at Middle Market corporations. Government and Not-for-Profit respondents report

average monthly EAP spending per employee of $154.

Exhibit 20 also reports annual EAP spending per $1 million of annual sales revenue (or

budget if a Government or Not-for-Profit organization). Like monthly EAP spending per

employee, annual EAP spending per $1 million of revenue rises for smaller Corporate

respondents, going from $5,388 at Fortune 500-Size corporations to $10,652 at Large

Market corporations to $25,520 at Middle Market corporations. Government and Not-for-

Profit respondents report average annual EAP spending per $1 million of budget of $21,142.

EAP Spending in Relation to Total Purchasing Card Spending

On average, respondents report that EAP spending accounts for 49% of their total

purchasing card program spending (including combined spending on plastic cards, ghost

accounts, and EAP). EAP-spending as a percentage of total purchasing card spending is

higher among Middle Market corporations (63%) and lower but similar among Fortune 500-

Size corporations (53%), Large Market corporations (51%) and Government and Not-for-

Profit organizations (50%).6

6 Some observations that are included in the total sample are removed as outliers in the four market segments.

Thus, EAP spending as a percentage of total purchasing card spending may be slightly higher in each of the groups than in the total sample.


Exhibit 20

EAP Spending Data, by Size and Type of Organization

EAP Spending Impact on Plastic Card Spending

Exhibit 21 shows that, notwithstanding the amounts of EAP spending shown in Exhibit 20, it

is having a relatively small impact on plastic card spending. The majority (73%) of

respondents indicate that EAP spending has had “little or no impact” on plastic purchasing

card spending. However, 5% of 2011 respondents do indicate that EAP spending has had a

“significant” impact on plastic purchasing card spending, up from 3% in 2009.

Exhibit 21 Impact of EAP Spending on Plastic Purchasing Card Spending, 2009 and 2011

Fortune 500-Size

Large Market

Middle Market

Government and Not-for-

Profit

Company Statistics Counties

Number of employees 34,343 4,430 658 4,424

Age of EAP program (in years) 3.1 2.8 3.0 2.8


Average monthly EAP spending $4,043,584 $825,952 $339,618 $642,374

Median monthly EAP spending $1,167,000 $480,000 $95,000 $120,000

Average monthly EAP transactions 1,592 280 142 424

EAP spending per transaction $2,541 $2,945 $2,389 $1,516


Transactions under $2,500 paid with EAP accounts 13% 11% 14% 12%

Transactions between $2,500 and $10,000 paid with EAP accounts 17% 15% 17% 18%

Transactions between $10,000 and $100,000 paid with EAP accounts 23% 19% 17% 17%

Monthly EAP spending per employee $118 $186 $472 $145


Annual EAP spending per $1 million of annual sales revenue (or budget if a Government or Not-for-Profit organization) $5,388 $10,652 $25,520 $21,218

EAP spend as a percent of total purchasing card spending 53% 51% 63% 50%

2009 2011

Impact of EAP Spending on Plastic P-Card Spending

Significant reduction 3% 5%

Moderate reduction 6% 7%

Modest reduction 13% 15%

Little or no impact 76% 73%


Exhibit 22 shows that the relatively small impact of EAP on plastic card spending is fairly

uniform across Corporations of different size, to wit: 88% of Fortune 500-Size and 84% of

Large and Middle Market corporations indicate that EAP account spending has had either

“little or no impact” or a “modest reduction” on plastic purchasing card spending.

Government and Not-for-Profit organizations are even more likely to report that EAP has had

“little or no impact” on plastic purchasing card spending than Corporations (at 82% of

respondents).

Exhibit 22 Impact of EAP Spending on Plastic Purchasing Card Spending, by Size and Type

of Organization

EAP Impact on Cost Savings

The full range of benefits associated with EAP use are still being studied, but certainly

include improved working capital management, potential financial incentives negotiated with

the card issuer, greater vendor discounts, and greater control over spending activities.

Some have contended that payment by EAP account at the end of the traditional

procurement process (with requisition, PO, and invoice) would yield no administrative cost

savings when compared to payment by check. However, analysis of the current response in

Exhibit 23 on the next page indicates that a cost savings of $10 per transaction occurs

when payment for a manually-invoiced transaction is made with EAP (as opposed to check).

Further, a cost savings of $16 per transaction occurs when payment for an electronically-

invoiced transaction is made with EAP (as opposed to check). The cost savings reported

are presumed to be a result of the elimination of activities associated with matching the

invoice with the order, check writing, filing, mailing, and reconciliation.

Fortune 500-Size

Large Market Middle Market Government and Not-for-

Profit

Impact of EAP Spending on Plastic P-Card Spending

Significant reduction 4% 9% 3% 3%

Moderate reduction 8% 7% 13% 3%

Modest reduction 24% 20% 14% 12%

Little or no impact 64% 64% 70% 82%


Exhibit 23

Impact of EAP on Cost of Invoice Receipt, Payment, and Reconciliation

Conclusion

Average monthly EAP account spending is $1,070,751, the average number of EAP

transactions per month is 454, and the average EAP transaction amount is $2,359. About

19% of respondents spend over $1 million per year on EAP accounts and about one-quarter

report an average transaction amount greater than $5,000. Organizations are using EAP to

pay for, on average, 14% of their under $2,500 transactions, 18% of their $2,500 to $10,000

transactions, and 19% of their $10,000 to $100,000 transactions. Average monthly EAP

spending per employee is $136. Annual EAP spending per $1 million of annual sales

revenue (or budget if a Government or Not-for-Profit organization) is $18,892. Thus, an

organization with $1 billion dollars in annual sales revenue would be expected to generate

$18.9 million of EAP spending per year, or $1.6 million per month.

On average, EAP spending accounts for 49% of all purchasing card program spending

(including combined spending on plastic cards, ghost accounts, and EAP) among EAP

users. Middle Market corporations have been able to drive a higher percentage of their total

purchasing card spending to EAP accounts.

Notwithstanding the notable amounts of EAP spending, it is having a relatively small impact

on plastic card spending. Seventy-three percent of respondents indicate that EAP account

spending has had “little or no impact” on plastic purchasing card spending.

Finally, some have contended that payment by EAP account at the end of the traditional

procurement process would yield no administrative cost savings when compared to payment

by check. However, analysis indicates that a cost savings of $10 per transaction occurs

when payment for a manually-invoiced transaction is made with EAP (as opposed to check).

Further, a cost savings of $16 per transaction occurs when payment for an electronically-

invoiced transaction is made with EAP (as opposed to check).

$31.69

$21.69

$15.69

Traditional payment process (with PO, manual invoice, check payment)

EAP-enabled payment process (with PO, manual invoice, EAP payment)

EAP-enabled payment process (with PO, electronic invoice, EAP payment)


Chapter 4

EAP Spending Growth

This Chapter breaks down the past and future EAP spending activity of Corporations and

Government and Not-for-Profit organizations.

Past Growth in EAP Spending

Exhibit 24 on the next page shows how spending on EAP accounts has evolved in the two-

year period from 2009 to 2011. The Exhibit shows that the majority of all EAP-using

respondents report spending growth on EAP (82%), while a smaller percentage report no

change (12%) or a decrease (6%) in the two-year period from 2009 to 2011.7

At a more detailed level, the Exhibit shows that a similar proportion of Corporations (83%)

and Government and Not-for-Profit organizations (85%) report EAP spending growth in the

two-year period between 2009 and 2011. However, when compared to Corporations, a

modestly higher percentage of Government and Not-for-Profit organizations reported a

decline in EAP spending between 2009 and 2011 than Corporations (8% versus 5%,

respectively).

7 Across the total sample, of the 82% we identify as reporting spending growth, 26% are so labeled because they

did not have an EAP program in 2009. Thus, any spending on EAP would represent an increase to these organizations. Across the Corporation sample, of the 83% we identify as spending growth, 23% are so labeled because they did not have an EAP program in 2009. Across the Government and Not-for-Profit sample, of the 85% we identify as spending growth, 33% are so labeled because they did not have an EAP program in 2009.

Highlights

Past growth in EAP spending

Past EAP spending growth rate

Rationale for past EAP spending growth

Future growth of EAP account spending

Reasons for future growth in EAP spending

Conclusion

EAP Spending Growth | 49

Exhibit 24

Type of Change in EAP Account Spending between 2009 and 2011

Past EAP Spending Growth Rate

Exhibit 25 shows that, across all respondents, EAP spending grew, on an average, by 67%

(or about 33% per year) in the two-year period between 2009 and 2011. This change only

reflects the growth in spending of those who used EAP in 2009; if those who began using

EAP in the 2009-2011 time period were included, the average growth in EAP spending

would be 134%. Exhibit 25 also shows that the EAP spending growth rate between 2009

and 2011 has been stronger among Government and Not-for-Profit organizations (74%) than

among Corporations (60%). The higher growth rate among Government and Not-for-Profit

organizations may be explained by the fact that a higher percentage of these organizations

have recently adopted EAP (see Footnote on previous page).

Exhibit 25 Average Growth Rates in EAP Spending by Corporations and Government and

Not-for-Profit Organizations, 2009-2011

* This represents the growth of respondents who were using EAP in 2009. If organizational spending of those who were not, but now are, using EAP is included, the growth in EAP spending across the entire sample would be 134% in the 2009-2011 time frame. Likewise, if Corporate spending of those who were not, but now are, using EAP is included, the growth in EAP spending across the entire Corporation sample would be 124% in the 2009-2011 time frame. Similarly, for Government and Not-for-Profit organizations, if spending of those who were not, but now are, using EAP is included, the growth in EAP spending across all Government and Not-for-Profit organizations in the sample would be 142% in the 2009-2011 time frame.

83%

12%

5%

85%

7% 8%

82%

12%

6%

Increase No change Decrease

Corporations

Government and Not-for-Profit

Total Sample

Corporations Government and Not-for-

Profit

Total Sample

Total spending change over the two years, 2009-2011* 60% 74% 67%


Rationale for Past EAP Spending Growth

Exhibit 26 shows the reasons identified by respondents for past growth in EAP account

spending. The Exhibit indicates increased EAP acceptance is the reason most oft-cited for

past EAP spending growth (59%), followed by an increase in the overall budget for

purchasing (23%), improved enforcement of policy requiring EAP use (19%), and relaxed

restrictions on the types of goods and services that can be paid by EAP (12%).

Exhibit 26 Reasons for Past EAP Account Spending Growth

Future Growth of EAP Account Spending

Going forward, Exhibit 27 on the next page shows that 72% of all EAP-using respondents

expect increases in EAP account spending over the three-year period from 2011 to 2014.

Another 24% of respondents expect no change and only 4% expect a decline in EAP

spending over this period. A higher percentage of Corporations expect EAP spending

growth (76%) than Government and Not-for-Profit organizations (67%). In comparison to

Corporations, a higher proportion of Government and Not-for-Profit organizations expect no

change (28% versus 21%) or a decline (5% versus 3%) in EAP spending over the three-year

period from 2011 to 2014.


Sample Response

Reasons for Increase in EAP Spending since 2009

Increased EAP acceptance by vendors 59%

Increased overall budget for purchasing 23%

Improved enforcement of policy requiring EAP use 19%

Relaxed restrictions on the types of goods and services that can be paid by the EAP 12%

Other 13%


Exhibit 27

Type of Change Expected in EAP Account Spending by 2014, by Corporations and Government and Not-for-Profit Organizations

Exhibit 28 on the next page presents the expected EAP spending growth rates from 2011

through 2016 for Corporations and Government and Not-for-Profit organizations. Overall,

EAP account spending is expected to increase, on average, by 8.0% per year over the next

five years (a 40% increase over five years) across all organizations that use EAP. The

expected average annual growth rate of EAP spending is lower for Government and Not-for-

Profit organizations (at 6.0% per year, or an increase of 30% over the next five years) than

for Corporations (at 9.2% per year, or an increase of 46% over the next five years).

The expected growth rate in EAP spending appears to lag behind growth rates associated

with traditional purchasing card programs. For example, in the 2012 Purchasing Card

Benchmark Survey Report, we report that organizations that use only plastic cards and

ghost accounts or use EAP to a lesser degree (putting less than 50% of their total

purchasing card spending on EAP) expect a 9.6% annual growth rate (48% over the five

year period from 2011 to 2016). There are several possible explanations for the relatively

lower expected growth of EAP spending among EAP-using organizations. First, it may

reflect the nature of the technology itself. In other words, once an organization routs the

majority of its pre-defined PO-based purchases to EAP accounts, the growth rate in the

spending for that type of payment option will default to the growth rate of overall spending by

the organization. Thus, there may not be easily identifiable additional transaction activity

that can be shifted to the EAP platform in the future. Alternatively, an estimation of growth in

spending on a new technology such as EAP may be inherently challenging to the

respondents, resulting in more conservative future spending estimates, especially by those

who spend comparatively more on the EAP platform. Finally, it should be considered that a

lower percentage growth rate on EAP is based on (what is often) a higher dollar amount of

spending (i.e., a lower rate still translates into a high absolute dollar increase).

76%

21%

3%

67%

28%

5%

72%

24%

4%

Increase No change Decrease

Corporations


Total Sample


Exhibit 28 Expected Growth Rates in EAP Account Spending from 2011 to 2016, by

Corporations and Government and Not-for-Profit Organizations

Reasons for Future Growth in EAP Spending

Exhibit 29 indicates that respondents’ most oft-cited reason for future growth (increased

acceptance of EAP by vendors) is the same as the most oft-cited reason for past growth

(see Exhibit 26). However, a higher percentage of respondents identify EAP acceptance as

a reason for expecting future growth (77%) than identified it as an explanation for past

growth (59%). Further, the Exhibit shows that a higher percentage of respondents identify

“improved enforcement of policy requiring EAP use” (31%) as a reason for future growth

than cited this factor as a reason for past growth (19%). Similar to respondent reasons for

past growth, 12% cited “relaxed restrictions on the types of goods and services that can be

paid by EAP” and 23% cited expected increases in their purchasing budget as reasons for

expected future growth in EAP spending.

Exhibit 29 Reasons for Expected EAP Account Spending Growth

Corporations Government and Not-for-

Profit Total Sample

Total spending change expected from 2011-2012 9% 6% 8%




Sample Response

Reasons for Expected Future Increase in EAP Spending

Increased EAP acceptance by vendors 77%

Improved enforcement of policy requiring EAP use 31%

Increase in overall budget for purchasing 23%

Relaxed restrictions on the types of goods and services that can be paid by the EAP 12%

Other 6%


Conclusion

Eighty-two percent of all EAP-using respondents report spending growth on EAP in the two-

year period between 2009 and 2011, while a smaller percentage report no change (12%) or

a decline (6%). Across all respondents, EAP spending grew, on an average, by 67% (or

about 33% per year) in the two-year period between 2009 and 2011. This change only

reflects the growth in spending of those who used EAP in 2009; if those who began using

EAP in the 2009-2011 time period were included, the average growth in EAP spending

would be 134% in the same time frame. The EAP spending growth rate between 2009 and

2011 was stronger among Government and Not-for-Profit organizations (74%) than among

Corporations (60%). The higher growth rate among Government and Not-for-Profit

organizations may be explained by the fact that a higher percentage of these organizations

have recently adopted EAP. Increased vendor acceptance of EAP payment is the reason

most often cited for past EAP spending growth, followed by an increase in the overall budget

for purchasing, improved enforcement of policy requiring EAP use, and relaxed restrictions

on the types of goods and services that can be paid by EAP.

Going forward, about 72% of all EAP-using respondents expect increases in EAP account

spending over the three-year period from 2011 to 2014. Another 24% of respondents expect

no change and only 4% expect a decline in EAP spending over this period. A higher

percentage of Corporations expect growth (76%) than Government and Not-for-Profit

organizations (66%), a likely result of larger economic struggles facing many governmental

entities.

The expected average annual growth rate of EAP spending is higher for Corporations (at

9.2% per year, or an increase of 46% over the next five years) than for Government and Not-

for-Profit organizations (at 6.0% per year, or an increase of 30% over five the next five

years). A higher percentage of respondents identify EAP acceptance by suppliers as a

reason for expecting future growth (77%) than identified it as an explanation for past growth

(59%). Further, a higher percentage of respondents identify “improved enforcement of policy

requiring EAP use” (31%) as a reason for future growth than cited this factor as a reason for

past growth (19%).


Chapter 5

EAP and Suppliers

This Chapter will analyze EAP spending as it relates to an organization’s suppliers. Thus,

we examine the types of purchases made with EAP, the percentage and number of suppliers

paid by EAP, the average monthly dollar amounts and number of transactions paid to

suppliers with EAP, and policies promoted by EAP-using organizations and other factors that

suppliers should consider with respect to EAP acceptance.

Types of Purchases

EAP accounts are primarily used to purchase goods that are not similar to those bought with

plastic purchasing cards. About 65% of EAP-using respondents indicate that EAP

purchases are for “goods and services that are different” from plastic card purchases while

35% report that EAP purchases are for goods and services that are the same as those

purchased with plastic purchasing cards. Exhibit 30 on the next page reports on the types

of differences between plastic and EAP buying behaviors. The most commonly identified

difference between plastic card and EAP purchases is that EAP purchases are for a higher

dollar amount (53%). Many organizations also indicate that EAP purchases are from

vendors with whom the organization conducts a high number of transactions (40%), are for

goods and services which are not allowed to be paid for by plastic purchasing cards (35%),

or are for transactions that require additional approvals/controls prior to payment (31%).

Highlights

Types of purchases

Payment terms with EAP

EAP and supplier acceptance

EAP and business with suppliers

Discounts and integration

EAP and supplier pricing

Conclusion

EAP and Suppliers | 55

Exhibit 30 How EAP Purchases Differ from Plastic Card Purchases

Payment Terms with EAP

Organizations adopt different practices with respect to the timing of EAP payment.

Exhibit 31 reveals that a majority of respondents (55%) have the card number charged at

the due date of the invoice. However, it is not uncommon for organizations to pay at or near

the time the invoice is received.

Exhibit 31 Timing of EAP Payment, 2009 and 2011

53%

40%

35%

31%

7%

For purchases of goods of higher dollar

values

For purchases from vendors with who the organization conducts

a high number of transactions

For goods and services which are not allowed to be paid by plastic p-

cards

For transactions requiring additional approvals/controls prior to payment

Other

Purchases that differ are:

2009 2011

Organizations with EAP – Timing of Payment to Suppliers

Card is charged at the due date specified on the invoice (e.g., invoice terms of “net 30 days” will get paid by EAP 30 days from the date of the order) 56% 55%

Card is charged on or about the date the invoice is received 33% 38%

Other 11% 7%


EAP and Supplier Acceptance

EAP presents a different financial value proposition to suppliers than plastic card acceptance

at the point or time of sale.

With EAP, suppliers are paid after the buyer receives (and approves) the payment of an

invoice. Whether payment is made promptly on receipt of invoice or at a later point is a

choice that must be must be agreed upon by the buying and selling organizations.

Not every supplier is willing to accept payment via EAP. However, Exhibit 32 shows that

the average percent of suppliers paid by EAP has grown from 8% in 2009 to 17% in 2011.

Further, the percentage of suppliers that decline to accept EAP has fallen from 28% in 2009

to 22% in 2011.

Finally, though not shown in the Exhibit, open-ended comments explaining supplier

decisions to decline EAP payment indicated that more than 75% of respondents cited the

cost of acceptance as the supplier’s primary reason for non-participation, with unwillingness

to accept card payment or a strong preference for other payment methods a distant second

(17%). While EAP acceptance has improved since 2009, it is important for organizations to

“on board” their key suppliers to ensure purchasing card program progress. The tear-out at

the end of this Chapter provides representative respondent descriptions of actions taken to

help drive EAP acceptance.

Exhibit 32

EAP Supplier Acceptance Statistics, 2009 and 2011

In the event that a supplier does not accept EAP, most organizations pay the supplier with a

check (71%) or ACH payment (23%). Less frequently, buyers pay the supplier with a plastic

card in the customary manner (5%) or switch to a supplier that accepts EAP payment (1%).

2009 2011

Organizations with EAP

Average percent of suppliers paid by EAP 8% 17%

Average percent of suppliers that have declined to accept EAP payment 28%

22%


EAP and Business with Suppliers

Supplier acceptance of EAP payment is a key ingredient to the success of an EAP initiative.

Exhibit 33 shows that EAP-using organizations pay, on average, about 252 suppliers with

EAP out of an average base of 4,231 suppliers. The average monthly spending per supplier

paid with EAP is $22,546 and the average number of monthly EAP transactions per supplier

is 5.3. Note that the “spending per supplier” figure is calculated using the entire base of

vendors that accept EAP payment. In all likelihood, only a fraction of that base is used in a

given month and it would not be unreasonable to assume that a typical supplier would

receive an EAP payment of 4 to 10 times higher than this average (assuming that 10% to

25% of suppliers are used in a given month).

Exhibit 33

EAP Account Activity with Suppliers

* These figures are derived by dividing average EAP spending and average EAP transactions by the number of suppliers paid with EAP. They are an average of respondent-reported averages, and hence cannot be multiplied to obtain average monthly spending.

Total EAP-Using Sample

Response

EAP and Suppliers

Average number of suppliers (total) 4,231

Average number of suppliers paid with EAP 252

Average monthly EAP spend per supplier* $22,546

Average number of monthly EAP transactions per supplier* 5.3

Little by little, one travels far.

- J.R.R. Tolkien


Breaking Down Supplier Activity

Percent of Suppliers Paid with EAP.

Exhibit 33(a) breaks down the sample

response with respect to the percent of

the supply base paid with EAP. As

shown in the Exhibit, about one-

quarter of respondents pay less than

2% of their supply base with EAP,

13.7% pay 2% to 4.9%, 17.0% pay 5%

to 9.9%, and 43.5% pay more than

10% of their supply base with EAP.

Average Monthly Spending per

Supplier. Exhibit 33(b) breaks down

the sample response with respect to

the average monthly EAP spending

per supplier (calculated by dividing

monthly EAP spending by the total

base of suppliers that are paid with

EAP). As shown in the Exhibit, 29.5%

report average monthly EAP spending

per supplier is less than $1,000, 32.1%

report that average monthly spending

per supplier is between $1,000 and

$4,999, 9.7% report that average

monthly spending per supplier is

between $5,000 and $9,999, and

28.7% report that average monthly

spending per supplier is $10,000 or

more. Again, we note that the

“spending per supplier” figure is

calculated using the entire base of vendors that accept EAP payment. In all likelihood, only

a fraction of that base is used in a given month and it would not be unreasonable to assume

that a typical supplier would receive an EAP payment of 4 to 10 times higher than this

average (assuming that 10% to 25% of suppliers are used in a given month).8

8 To understand why actual EAP spending per supplier may be higher than the figure reported, assume an

organization has September EAP spending $1 million and a EAP supply base of 500, but actually pays only 50 suppliers (10% of supply base) in the month. Average spending per supplier (based on the total supply base) would be $2,000 ($1 million divided by 500 suppliers). However, actual payments per supplier would be $50,000 (the average of $1 million in EAP payment divided by 50 suppliers paid), a 10-fold difference.

Exhibit 33(a) Distribution of the Percent of Supply Base Paid with EAP

5% to 9.9% 17.0%

Less than 2% 25.8%

2% to 4.9% 13.7%

10% or more 43.5%

Exhibit 33(b) Distribution of Average Monthy EAP Spending per Supplier

$5,000 to $9,999 9.7%

Less than $1,000 29.5%

$1,000 to $4,999 32.1%

$10,000 or more 28.7%


Average Monthly Transactions per

Supplier. Exhibit 33(c) breaks

down the sample response with

respect to the average number of

monthly EAP transactions per

supplier (calculated by dividing

monthly EAP transactions by the

total base of suppliers paid with

EAP). As shown in the Exhibit,

48.8% of respondents report less

than one EAP transaction per month

per supplier, 29.1% report between

1 and 4.9 transactions per month per

supplier, 8.7% report between 5 and

9.9 transactions per month per

supplier, and 13.4% report 10 or

more EAP transactions per month per supplier.

Suppliers considering accepting EAP may want to consider the fact that some organizations

have policies that direct certain types of spending to EAP-accepting merchants. Exhibit 34

on the next page shows that 24% of respondents require EAP use for the purchase of

particular types of goods and services and 19% require EAP use for purchases from

preferred vendors.

Follow-up inquiry indicated a very diverse list of goods and services for which EAP payment

is a requirement. For example, some respondents indicated that “high value” purchases

(e.g., above $5,000) or “international purchases” were required for EAP payment, while

others reported “recurring payments” and “e-procurement punch-out” purchases were

required to be paid with EAP.

Similarly, follow-up inquiry indicated that the types of preferred vendors paid with EAP

accounts were diverse in nature, from office supply stores to IT and telecommunications to

raw materials providers. Some indicated that EAP was used for “any vendor that accepted

EAP” or to “vendors listed on an internal website” or with vendors with which the

organization had a contractual (pricing) arrangement.

Exhibit 33(c) Distribution of Average Monthly EAP Transactions per Supplier

5 to 9.9 transactions

8.7%

Less than 1 transaction

48.8%

1 to 4.9 transactions

29.1%

10 or more transactions

13.4%


Exhibit 34

Policies Regarding Types of Transactions that Require EAP Use

Discounts and Integration

EAP can create “win-win” opportunities for buyer and seller. Exhibit 35(a) on the next page

shows that 29% of organizations using EAP to pay for the majority of their purchasing card

program purchases report that suppliers who accept EAP have increased their share of

business with their organization compared to suppliers who do not accept EAP.9 On

average, the Exhibit shows, these merchants increased their share of business with the

EAP-using organization by 17% more than that of suppliers who did not accept EAP.

EAP also delivers information that supports pricing discussion between buyers and sellers.

Exhibit 35(a) reports that 31% of organizations using EAP to pay for the majority of their

purchasing card program purchases use EAP spending data to obtain a discount in the price

paid for goods or services from a vendor. At these organizations the use of EAP data in

discount negotiations results in an improvement in price discounts 73% of the time. Given

the higher levels of spending directed to EAP, it stands to reason that organizations would

want to extract extra value of EAP spending data in discussions with vendors.

Exhibit 35(a) also indicates that the improvement in the price discount attributable to the use

of EAP data is influenced by timing of the payment. Respondents paying suppliers on or

about the date that the invoice is received report an average improvement in the price

discount of 1.7% (thus, a buyer that had been getting a 2% discount on the price paid for

goods now receives a 3.7% discount). By contrast, respondents that process charges at the

due date specified on the invoice report an average improvement in the price discount of

1.1%. This is a factor that should be considered by EAP-using organizations as they

structure and manage their EAP program.

Finally, the Exhibit indicates that 18% of EAP arrangements allow the vendor to “close out” a

transaction in the buyer’s accounting information/ERP system, achieving a higher level of

integration which in turn reduces reconciliation issues.

9 Certain questions about EAP throughout the Survey were only asked of respondents who put the majority of their

purchasing card program spending on EAP. Responses to these types of questions will identify the response as coming from the “percent of organizations that conduct the majority of their purchasing card spending on EAP.”


Conduct the Majority of Their Purchasing Card

Spending on EAP

Percent of organizations that have a policy that requires…

EAP for purchases of particular types of goods/services 24%

EAP for purchases from specific/preferred vendors 19%


Exhibit 35(a) EAP and Spending with and Discounts from Suppliers

EAP and Supplier Pricing

A final supplier-related issue considered in

this chapter is the degree to which buyers

perceive that suppliers are “pushing back”

about EAP acceptance in the form of price

adjustments. Exhibit 35(b) shows that

67.5% of organizations using EAP report that

its use has had no effect on supplier prices

and another 16.2% are unsure if prices have

been affected by EAP payment. Only 15.4%

of respondents indicate that they have

experienced a “minimal” increase in prices to

reflect the supplier’s extended wait time for

payment. Less than 1% of respondents

report that they have experienced a “modest”

increase in prices due to EAP use.

% of EAP-Using Organizations that Conduct

the Majority of Their Purchasing Card

Spending on EAP

Increase in Business for Suppliers

Percent of respondents indicating agreement that, “Over the past two years suppliers who accept EAP increased their share of business with your organization compared to suppliers who do not accept EAP payment” 29%

Average % by which suppliers who accept EAP payment have increased their share of business over suppliers that do not accept EAP payment 17%

Use of EAP Data for Improvement in Discounts

Percent of respondents using EAP spending data to obtain a discount in the price to be paid for goods or services from vendor 31%

[Of organizations using EAP data in price negotiations] Percent of respondents reporting improvement in discount based on EAP data 73%

Average Absolute Improvement in Discount Due to Use of EAP Data

EAP account is charged on or about the date the invoice is received 1.7%

EAP account is charged at the due date specified on the invoice (e.g., invoice terms of “net 30 days” will get paid by EAP 30 days from the date of the order) 1.1%

Integration between Supplier and Buyer Accounting Systems

EAP solution allows suppliers to close out transactions in buyer’s accounting information/ERP system 18%

Exhibit 35(b)Impact of EAP Use on Supplier Pricing

No effect on

prices

67.5%

Unsure if

prices

affected

16.2%

Modest increase in prices to reflect extended supplier wait time

0.9%

Miniminal increase in prices to

reflect extended supplier wait

time

15.4%


Conclusion

Sixty-five percent of organizations indicate that EAP purchases are for goods and services

that are “different” from purchases made on plastic purchasing cards. Among these

organizations, the primary differences are that the purchases are (a) for higher dollar

amounts, (b) from vendors with whom the organization conducts a high number of

transactions, (c) for goods and services which are not allowed to be paid by plastic

purchasing cards, and/or (d) for transactions that require additional approvals/controls prior

to payment.

Organizations that use EAP indicate that, in 2011, 17% of suppliers were paid by EAP,

compared with 8% in 2009. Also, the average percentage of suppliers declining to accept

EAP payment was 22% in 2011, down from 28% in 2009.

EAP-using organizations pay, on average, about 252 suppliers with EAP out of an average

supplier base of 4,231 vendors. Across the sample, about one-quarter of respondents pay

less than 2% of their supply base with EAP, 13.7% pay 2% to 4.9%, 17.0% pay 5% to 9.9%,

and 43.5% pay more than 10% of their supply base with EAP.

The average monthly spending per supplier paid with EAP is $22,546 and the average

number of monthly EAP transactions per supplier is 5.3. The “spending per supplier” figure is

calculated using the entire base of vendors that accept EAP payment. In all likelihood, only

a fraction of that base is used in a given month and it would not be unreasonable to assume

that a typical supplier would receive an EAP payment of 4 to 10 times higher than this

average (assuming that 10% to 25% of suppliers are used in a given month).

About 24% of all EAP-using respondents require EAP use for the purchase of particular

types of goods and services and 19% require EAP use for purchases from specific or

preferred vendors. Respondents identified high value, international, recurring, and “e-

procurement punch-out” purchases as those required to be paid with EAP, among others.

Further, about 29% of organizations using EAP to pay for the majority of their purchasing

card program purchases indicate that suppliers who accept EAP have increased their share

of business with their organization compared to suppliers who did not accept EAP. On

average, these merchants have increased their share of business with the EAP-using

organization by 17% more than suppliers that did not accept EAP.

Finally, 31% of organizations using EAP to pay for 50% or more of their purchasing card

program purchases use EAP spending data to obtain a price discount for goods or services

from a vendor. At these organizations, the use of EAP data results in higher negotiated

discounts 73% of the time.


Respondents paying suppliers on or about the date that the invoice is received report an

average improvement in the price discount of 1.7% (thus, a buyer that had been getting a

2% discount on the price paid for goods now receives a 3.7% discount). By contrast,

respondents that process charges at the due date specified on the invoice report an average

improvement in the price discount of 1.1%. The vast majority of respondents believe that

their use of EAP has had little or no effect on the prices charged by suppliers accepting EAP.

Success is not final, failure is not fatal: it is the courage to continue that

matters.

- Winston Churchill


Actions taken to drive supplier acceptance of EAP

Build it into the supplier contract. Financial Analyst Not-for-Profit organization

Endorsement letter and call to key suppliers. Program Administrator Fortune 500-Size Corporation

Forgo early pay discount in exchange for net terms on credit card. AP Manager Middle Market Corporation

We changed our check payment terms from 30 to 45 days to encourage them to use EAP instead. In RFPs we let them know that, all things being equal, we will go with a supplier who takes EAP over one who does not. We have worked with our bank to help set up a supplier to accept cards if they currently do not. Buyer Fortune 500-Size Corporation

We offer better payment terms for EAP than on ACH or paper checks. Accounting Operations Manager City/County

Integration of card acceptance language in customer service scripts. Vice President Middle Market Corporations

Told them we would move them to 75-day terms if they did not take the card. Accounts Payable Manager Middle Market Corporation

We targeted companies that accepted [cards] first. Easy transition for those vendors. Now we are targeting those who do not. Credit Card Lead

Not-for-Profit Organization

EAP Program Management | 65

Chapter 6

EAP Program Management

This Chapter will analyze EAP program management fundamentals such as training,

controls over spending, and performance measurement. In addition, the Chapter reports

user perspectives on whether or not control objectives with respect to EAP are being met

and reviews the prevailing opinions on the role of plastic cards in an EAP environment.

EAP Training

Proper training is essential to the proper use and organizational acceptance of EAP.

Exhibit 36 on the next page shows that, among respondents using EAP to pay for the

majority of their purchasing card program purchases, 45% provide in-person EAP training,

41% provide a copy of a policies and procedures manual for EAP use, and 46% support

card program administrator attendance at user conferences to identify new ways to use

EAP. Less frequently, organizations track completion of EAP training (22%), have an on-

going method of communicating EAP information to managers (23%), or have a Website that

answers EAP questions (13%).

Highlights

EAP training

Controls over spending

Performance measurement

Control objectives met

Conclusion


Exhibit 36

Types of Activities to Train for and Support EAP

Controls over Spending

Spending Limits

As mentioned in Chapter 5, the majority of respondents use EAP to purchase goods and

services that are of higher dollar value than those bought with plastic purchasing cards.

Exhibit 37 on the next page indicates that EAP per transaction and monthly spending limits

are in fact designed to support higher value transactions. The Exhibit shows that the

majority of respondents have an EAP per transaction limit above $2,500 and that the

average EAP per transaction spending limit is $18,903. The Exhibit also indicates that 49%

have monthly EAP account spending limits in excess of $50,000, with an average EAP

monthly spending limit of $268,343.



Spending on EAP

Training: Percent of organizations that ...

Provide web-based EAP training 18%

Provide in-person EAP training 45%

Provide self-study EAP training materials 31%

Track completion of EAP training and training updates by employees 22%

Communications and support: Percent of organizations that…

Provide a copy of a policies/procedures for EAP use 41%

Support card program administrator attendance at user conferences to identify new ways to use EAP 46%

Have an on-going method of communicating EAP information to managers 23%

Have a Website that answers EAP questions 13%


Exhibit 37 Per Transaction and Monthly EAP Spending Limits

Reconciliation

Exhibit 38 indicates that, among respondents using EAP to pay for the majority of their

purchasing card program purchases, the vast majority report that a complete and timely

reconciliation of employee receipts to EAP spending occurs routinely with little or no

problems.

Exhibit 38 Success with Reconciliation of Documentation with EAP Spending



Spending on EAP

EAP Account Spending Limits per Transaction

% of organizations whose per transaction spending limit is greater than $2,500 58%

Average EAP per transaction spending limit $18,903

EAP Account Monthly Spending Limits

% of organizations whose EAP monthly spending limit is greater than $50,000 49%

Average EAP monthly spending limit $268,343



Spending on EAP

A complete and timely reconciliation of employee receipts to EAP spending _________ at my organization.

Routinely occurs and is no problem 75%

Occurs most of the time and is a minor problem 19%

Occurs some of the time and is a problem 2%

Occurs infrequently and is a major problem 1%

Other 3%


Performance Measurement

Among respondents using EAP to pay for the majority of their purchasing card program

purchases, 45% use one or more performance measure to evaluate EAP performance.

Exhibit 39 shows that the vast majority of respondents evaluate EAP performance by the

dollar amount of EAP purchases (91%), followed by the number of EAP transactions (67%)

and rebates paid by EAP issuers (60%).

Exhibit 39 Performance Measures Used to Evaluate EAP Performance

Control Objectives Met

Notwithstanding the significant EAP spending occurring at many organizations with relatively

higher average transaction amounts or the tendency to purchase goods and services that

require additional approvals, Exhibit 40 on the next page reveals that the most respondents

feel that EAP provides the same (72%) or stronger (22%) evidence than other payment

methods that the organization is meeting its internal control objectives related to purchasing

activity.

2%

27%

31%

35%

38%

60%

67%

91%

Other

Percent of eligible dollar spending or transactions paid by EAP

Number of key vendors accepting EAP payment

Percent of vendors accepting EAP

Number of active EAP accounts

Rebate or other financial incentive paid by the EAP account issuer

Number of transactions on EAP

Dollar amount of EAP purchases


Exhibit 40 EAP Fulfillment of Internal Control Objectives

Conclusion

Proper training is essential to the proper use and organizational acceptance of EAP. Among

respondents using EAP to pay for the majority of their purchasing card program purchases,

45% provide in-person EAP training, 41% provide a copy of a policies and procedures

manual for EAP use, and 46% support card program administrator attendance at user

conferences to identify new ways to use EAP.

EAP per transaction and monthly spending limits appear to be designed to support higher

value transactions. The average EAP per transaction spending limit is $18,903 and the

average EAP monthly spending limit of $268,343. Among respondents using EAP to pay for

the majority of their purchasing card program purchases, 94% report that a complete and

timely reconciliation of employee receipts to EAP spending occurs routinely with little or no

problems. About 45% use one or more performance measure to evaluate EAP

performance. The most commonly used metric to evaluate EAP performance is the dollar

amount of EAP purchases.

Notwithstanding the significant EAP spending occurring at many organizations with relatively

higher average transaction amounts or the tendency to purchase goods and services that

require additional approvals, 94% believe that EAP provides the same or stronger evidence

than other payment methods that the organization is meeting its internal control objectives

related to purchasing activity.



Spending on EAP

In comparison to other payment methods, EAP spending provides _______ evidence that the organization is meeting its internal control objectives related to purchasing activity Moderate

Stronger 22%

The same or similar 72%

Weaker 6%


Habit is the nursery of errors.

Victor Hugo


Best Practice


7 Best Practice: Key Program Performance Measures

8 Best Practice: Control and Integration

9 Best Practice: Allowable Spend Categories and Program Optimization

10 Best Practice: Program and Relationship Management


Section 2


Chapter 7

Best Practice: Key Program Performance Measures

The exact benefits of EAP can differ between organizations. Differences in business and

industry practices, governmental regulations, tax laws, accounting and reporting systems,

human resource practices, organizational cultures, and card program leadership affect the

value delivered by EAP. Moreover, different applications of EAP can open new opportunities

and benefits. The purpose of this and the next three chapters is to understand the defining

program characteristics that are unique to organizations that obtain the most benefit from

EAP.

“Best Practice” Criteria: How We Evaluate and Categorize EAP Performance

To better understand how some organizations drive more spending and/or a larger number

transactions to EAP platforms, we identify and define a “best practice” (hereafter, BP) group

of EAP users by their outstanding performance across four key metrics. Specifically, BP

programs must report at least one measure that is in the top quartile (and none in the bottom

quartile) of the following EAP performance measures:

the percentage of $2,500 to $10,000 transactions paid by EAP,

the percentage of $10,000 to $100,000 transactions paid by EAP,

EAP spending as a percent of annual sales revenue (or budget), and

EAP spending per employee.

Highlights

“Best practice” criteria: How we evaluate and categorize EAP performance

Key performance statistics of BP EAP activity

Purchasing card program context of BP EAP use

BP EAP program goals

Conclusion

Best Practice: Key Program Performance Measures | 73

The activities of this group will define the core of “best practice” among EAP-using

organizations throughout this report.

A second “needs improvement” (hereafter, NI) group is also assembled from respondents.

This group is the reverse image of BP, to wit: EAP-using organizations in which at least one

of the four performance metrics is found to be in the bottom quartile and none in the top

quartile. The activities of this group will be used to define underperforming EAP use

throughout this Report.

In order to control for organization size, the total sample was divided into four groups based

on the number of employees.10 Within each of the four groups, high performing

organizations were identified according to the criteria described above, and then combined

into a single BP group. The NI group was constructed from the same four groups, but using

the reverse criteria of the BP group. This methodology ensured that both the BP and NI

groups include organizations of all types, industries, and sizes.

Collectively, the BP and NI groups account for about 68% of all EAP-using respondent

organizations, with 34% of the entire sample in each group. The next three chapters of this

Report will address program performance and unique characteristics of “best practice” EAP-

using programs.

Key Performance Statistics of BP EAP Activity

Exhibit 41 on the next page reveals that, despite being similar in terms of headcount and

the length of time the organization has used EAP as a payment tool, BP programs report:

nearly 18 times the average monthly EAP spending as the “needs improvement” (NI)

group ($2.02 million versus $113,525),

about 29 times the median amount of monthly EAP spending as the NI group ($666,653

versus $23,006 for NI),

over four times the number of monthly EAP transactions as the NI group (659 versus

145 for NI)

nearly four times the average EAP transaction amount as the NI group ($3,070 versus

$782 for NI)

a significantly higher percentage of transactions paid (i.e., “captured”) by EAP accounts,

including under $2,500 transactions (25% versus 4%), $2,500 to $10,000 transactions

(36% versus 2%), and $10,000 to $100,000 transactions (38% versus 1%),

monthly EAP spending per employee that is more than 18 times the NI group ($389

versus $21 for NI), and

significantly greater annual EAP spending per $1 million of annual sales revenue or

budget ($52,685 versus $1,796).

10 The four groups are as follows: up to 300 employees, 301 to 1,000, 1,001 to 5,000, and 5,001 employees or

above. In addition, once the BP and NI organizations from each group were identified, some outliers based on organization size were removed.


Exhibit 41

EAP Spending Data of EAP Best Practice and Needs Improvement Organizations (all numbers are averages except where indicated otherwise)

Best Practice Needs

Improvement Percent

Difference


Number of employees 5,207 5,313 -2%

Age of EAP program (in years) 3.26 2.54 28%


Average monthly EAP spending $2,024,327 $113,525 1683%

Median monthly EAP spending $666,653 $23,006 2798%

Average monthly EAP transactions 659 145 354%

EAP spending per transaction $3,070 $782 293%


Transactions under $2,500 paid with EAP accounts 25% 4% 525%

Transactions between $2,500 and $10,000 paid with EAP accounts 36% 2% 1700%


Monthly EAP spending per employee $389 $21 1752%

EAP Spending Benchmarks

Annual EAP spending per $1 million of annual sales revenue (or budget if a Government or Not-for-Profit organization) $52,685 $1,796 2833%

The harder I work, the luckier I get.

- Samuel Goldwyn


Purchasing Card Program Context of BP EAP Use

Exhibit 42 on the next page examines the larger context of card-based spending at BP

EAP-using organizations. The Exhibit shows that, despite being similar in terms of size (as

measured by headcount) and length of experience with card technology (both in terms of

their plastic card and EAP accounts), best practice EAP users report:

over 3 times the average monthly total purchasing card spending (across all card

platforms—plastic, ghost, and EAP) as the NI group ($2.8 million versus $887,177),

nearly 5 times the median amount of monthly total purchasing card spending (across all

card platforms) as the NI group ($1,000,000 versus $215,000 for NI),

modestly higher distribution of plastic purchasing cards (528 versus 490 for NI),

a significantly higher capture of transactions on purchasing card technology, including

under $2,500 transactions (58% versus 42%), $2,500 to $10,000 transactions (52%

versus 26%), and $10,000 to $100,000 transactions (42% versus 11%), and

average monthly purchasing card program spending (all cards p-card platforms

combined) per plastic cardholder that is 197% higher than that of the NI group ($5,385

versus $1,812 for NI), driven by a higher average transaction amount ($907 versus

$322) and slightly more active monthly utilization of the purchasing card accounts (5.94

versus 5.63 transactions).

While the criteria for selecting identifying membership in BP and NI groups was based, in

part, on EAP transaction capture and EAP spending per employee, it is interesting that the

two groups are far apart on performance metrics that embrace all purchasing card platforms

(e.g., total purchasing card program spending per employee among BP EAP-using

organizations is $546, while NI is $167). In addition, BP organizations spend 6.0% of their

total revenue (or budget) on purchasing card accounts compared to NI organizations’ 1.4%.

Exhibit 42 shows that BP organizations take full advantage of the available options in the

card-based “tool kit” of purchasing and payment solutions.


Exhibit 42

Total Purchasing Card Program Performance of EAP Best Practice and Needs Improvement Organizations (all numbers are averages except where indicated otherwise)

Best Practice Needs

Improvement Percent

Difference

Company Statistics

Age of purchasing card program 6.80 8.23 -17%

Plastic Card Program Performance Measures

Number of plastic purchasing cards 528 490 8%

Card-to-employee ratio 10.1% 9.2% 10%

Performance Measures (All Card Platforms Combined)

Average monthly p-card spending $2,844,641 $887,177 221%

Median monthly p-card spending $1,000,000 $215,000 365%

Monthly p-card transactions 3,138 2,758 14%

Annual p-card spending as a percentage of annual sales revenue (or budget if a Government or Not-for-Profit organization) 6.0% 1.4% 329%

Monthly p-card spending per employee $546 $167 227%

Capture of Total Spending (All P-Card Platforms Combined)

Transactions under $2,500 paid with plastic, ghost, and EAP p-card accounts 58% 42% 38%

Transactions between $2,500 and $10,000 paid with plastic, ghost, and EAP p-card accounts 52% 26% 100%


Cardholder Activity Measures (All P-Card Platforms Combined)

Monthly transactions (all card platforms) per plastic card 5.94 5.63 6%

Spending per transaction $907 $322 182%

Monthly spending (all card platforms) per plastic card $5,385 $1,812 197%

Active plastic cards in a typical month 86% 81% 6%

Active EAP accounts in a typical month 83% 81% 2%


BP EAP Program Goals

Exhibit 43 presents the differences in primary EAP program goals between EAP-using BP

and NI programs. The Exhibit shows that, in comparison to NI programs, BP programs are

significantly more likely to identify EAP program goals that include:

increasing supplier acceptance of EAP (47% versus 22%),

improving cash flow by extending time to payment (64% versus 48%),

reducing labor and administrative costs associated with procurement and payables

(63% versus 48%),

reducing reliance on checks (66% versus 57%), and

obtaining better data to increase control over spending (44% versus 35%).

The notably higher percentage of respondents in the BP group that identify greater supplier

acceptance as a primary goal indicates that BP programs instinctively understand that

supplier participation is crucial to program success. The higher percentage of respondents

in the BP group that identify the need for better data about card spending (to increase

control) indicates that these organizations have a pressing interest in using card technology

not just to conduct spending--but to manage and understand it.

Exhibit 43 Percent of Respondents Identifying “Primary” EAP Program Goals, by EAP Best

Practice and Needs Improvement Organizations

35%

57%

78%

61%

35%

57%

48%

48%

22%

27%

49%

76%

61%

44%

66%

63%

64%

47%

Obtain better data to enhance leverage with vendors

Increase convenience of purchasing for employees

Obtain rebates and incentives for the organization

Reduce the transaction procession workload for the organization

Obtain better data to increase control over spending

Reduce reliance on checks

Reduce labor and administrative costs associated with procurement and payables

Improve cash flow by extending time to payment

Increase supplier acceptance of purchasing card

Best Practice Group

Needs Improvement Group


Conclusion

Prior to EAP, the underlying differences in purchasing card program performance could be

understood in terms the number of plastic cards distributed throughout the organization, card

transaction activity on those cards, and average transaction amount. With EAP, plastic card

distribution is one of several avenues by which transactions are captured with an electronic

card-based payment tool. Adoption and use of ghost and EAP accounts is increasingly

commonplace (see Chapter 2), and spending on these accounts often comprises a

significant portion of organizational purchasing card program spending.

To better understand the drivers of excellence with EAP, we identify and define a “best

practice” (BP) group of EAP users that have reported at least one top quartile (and no

bottom quartile) metric across four key EAP performance measures, including the

percentage of $2,500 to $10,000 transactions paid by EAP accounts, the percentage of

$10,000 to $100,000 transactions paid by EAP accounts, EAP account spending as a percent

of annual sales revenue (or budget), and EAP account spending per employee. The activities

of this group will define the core of “best practice” among EAP-using organizations

throughout this report.

Overall, BP EAP organizations report nearly 18 times higher monthly EAP spending ($2.02

million versus $113,525) than NI counterparts. BP EAP organizations report nearly four

times the number of monthly EAP transactions (659 versus 145 for NI) and also nearly four

times the average EAP transaction amount ($3,070 versus $782) as the NI group.

Compared to EAP-using NI organizations, BP organizations report a significantly higher

percentage of transactions paid (i.e., “captured”) by EAP accounts, including under $2,500

transactions (25% versus 4%), $2,500 to $10,000 transactions (36% versus 2%), and

$10,000 to $100,000 transactions (38% versus 1%). Also, EAP-using BP organizations

have monthly EAP spending per employee that is more than 18 times the NI group ($389

versus $21 for NI), and almost 30-times higher annual EAP spending per $1 million of

annual sales revenue or budget ($52,685 versus $1,796 for NI).

Further, it is apparent that “best practice” EAP programs are more likely to reside in

organizations with strong overall purchasing card programs, with total purchasing card

spending (on all card platforms combined) nearly three times higher than that of NI

counterparts.

What further differentiates BP EAP organizations is that a higher percentage of them identify

supplier acceptance, improved cash flow, reduced administrative costs, reduced reliance on

checks, and the obtaining of better data to increase control over spending as primary goals

of their EAP program.

Best Practice: Control and Integration | 79

Chapter 8

Best Practice: Control and Integration

This Chapter looks at differences between BP and NI EAP use with respect to the spending

limits that apply to EAP, spending monitoring activities, the degree of EAP integration with

front-end approval and back-end data integration processes, and, in comparison to other

payment methods, the perceived effectiveness of EAP at meeting the control objectives of

the organization.

EAP Spending Limits

The differences between BP and NI EAP use may be explained, in part, by EAP spending

limits. Spending limits naturally limit EAP growth by reducing potential transaction activity

and average ticket amount. Exhibit 44 on the next page shows a significant difference in

EAP per transaction spending limits between BP and NI programs. The average EAP per

transaction spending limit for the BP group is 121% higher than the NI group ($29,597 BP

versus $13,408 NI). Further, average monthly EAP spending limits at BP organizations are

notably higher (56%) than at NI counterparts ($351,935 versus $226,289).

Highlights

EAP spending limits

Spend monitoring activity

Integration of EAP account activity with organizational processes

Control objectives achieved

Conclusion


Exhibit 44 Per Transaction and Monthly EAP Spending Limits, by EAP Best Practice and

Needs Improvement Organizations

Spend Monitoring Activity

Aside from different EAP account spending limits, there are other controls that are more

likely to be found among BP EAP programs. Exhibit 45 shows that BP programs are more

likely to require Accounts Payable to maintain a logbook of EAP account activity (51% BP

versus 45% NI) and track and resolve disputed EAP transactions (85% BP versus 66% NI).

The tracking and resolving of disputes is an activity that can affect a large number of

employees and helps create greater employee confidence in the EAP option. There is no

notable difference in the percentage of BP and NI organizations that conduct data mining of

EAP transactions or that formally audit and review the EAP spending approval process.

Exhibit 45 Activities to Monitor and Control the Purchasing Card Program, by EAP Best


Integration of EAP Account Activity with Organizational Processes

An important aspect of control over card-based spending is the avoidance of manual data

entry processes that can undermine data integrity and introduce the potential for errors in

data. Exhibit 46 on the next page indicates that BP EAP programs are more likely to

harmonize the “back end” of the procurement process by integrating EAP account data into

their accounting information system or ERP system. Hence, the Exhibit shows that the

Best Practice Needs

Improvement Percent

Difference

EAP Spending Limits

Average EAP per transaction spending limit $29,597 $13,408 121%

Average EAP monthly spending limit $351,935 $226,289 56%

% of Best Practice

Organizations that Conduct the Majority of Their Purchasing Card

Spending on EAP

% of Needs Improvement


Spending on EAP

Percent of Organizations that:

Require AP to maintain a logbook of EAP account activity 51% 45%

Track/resolve disputed EAP transactions 85% 66%

Formally audit and review the EAP spending approval process 75% 78%

Conduct data mining of EAP transactions 41% 41%


majority (64%) of BP organizations have significantly or completely integrated EAP data into

their accounting or ERP system while only 40% of NI programs have done the same.

Conversely, 29% of NI, but only 9% of BP, report no integration of EAP data with their

accounting or ERP system.

Exhibit 46

Back-end Integration of EAP Account Spending with Accounting or ERP System, by EAP Best Practice and Needs Improvement Organizations

Exhibit 47 shows a similar pattern of differences between BP and NI EAP programs with

regard to the “front-end” integration of EAP account spending with the organization’s spend

approval processes. Specifically, 78% of BP but only 65% of NI programs have

“moderately,” “significantly,” or “completely” integrated EAP account spending with their

organization’s spending approval process. Among NI programs, 29% report no integration

with the spend approval process compared to only 11% of BP programs.

Exhibit 47 Front-End Integration of EAP with Spend Approval Process, by EAP Best


Best Practice Needs

Improvement

My organization’s EAP account spending is _______ integrated with our accounting information or ERP system

Not at all 9% 29%

Minimally 9% 18%

Moderately 18% 13%

“Significantly” or “Completely” 64% 40%

% of Best Practice

Organizations that Conduct

the Majority of Their

Purchasing Card Spending

on EAP





on EAP

My organization’s EAP account spending is _____ integrated with our spending approval processes.

Not at all 11% 29%

Minimally 11% 6%

Moderately 21% 15%



Control Objectives Achieved

Notwithstanding the higher spending, the higher average transaction amounts, or the

tendency to purchase goods and services that require additional approvals, Exhibit 48

reveals that BP EAP organizations are more likely than NI counterparts (29% versus 10%) to

report that EAP payment provides stronger evidence than other payment methods that the

organization is meeting its internal control objectives related to purchasing activity. Further,

the Exhibit shows that over 90% of both the BP and NI organizations think EAP account

spending provides the same as or stronger evidence than other payment methods that the

organization is meeting its internal control objectives.

Exhibit 48 Perception of EAP Fulfillment of Internal Control Objectives, by EAP Best Practice

and Needs Improvement Organizations

% of Best Practice




on EAP





on EAP

In comparison to other payment methods, EAP spending provides _______ evidence that the organization is meeting its internal control objectives related to purchasing activity Moderate Med

Stronger 29% 10%

The same or similar 67% 84%

Weaker 4% 6%


Conclusion

Analysis of survey responses indicates that higher EAP spending conducted by BP EAP

programs is supported by more aggressive EAP spending limits. Specifically, BP EAP-using

organizations report a 121% higher average EAP per transaction spending limit and a 56%

higher average monthly spending limit than their NI counterparts. BP EAP-using

organizations are also more likely to require Accounts Payable to maintain a logbook of EAP

account activity and track and resolve disputed EAP transactions.

An important aspect of control over card-based spending is the avoidance of manual data

entry processes that can undermine data integrity and introduce the potential for errors in

data. Survey responses reflect that EAP-using BP programs are more likely to harmonize

the “back end” of the procurement process by integrating EAP account data into their

accounting information system or ERP system. A similar pattern of differences exists

between BP and NI programs with regard to the “front-end” integration of EAP account

spending with the organization’s spend approval processes.

Over 90% of both the EAP-using BP and NI organizations believe that EAP account

spending provides the same or stronger evidence as other payment methods that the

organization is meeting its internal control objectives related to purchasing activity.


Chapter 9

Best Practice: Allowable Spend Categories and Program Optimization

The purpose of this chapter is to examine whether BP and NI EAP use is affected by the

“allowable” types of purchases paid with EAP accounts and the program optimization

policies of the organization.

Span of Spend for Goods and Services

Exhibit 49 on the next page shows the percentage of BP and NI organizations that use EAP

to pay for certain types of goods and services. The Exhibit shows that BP organizations are

more likely to use EAP to pay for every category out of a list of twenty different types of

goods and services. In terms of items often thought to represent “high ticket” purchases, the

Exhibit shows BP organizations are significantly more likely than NI organizations to use

EAP to pay for computer hardware, software, and peripherals (79% versus 33%), capital

assets (45% versus 11%), inventory (47% versus 30%), and construction materials (33%

versus 19%). Further, BP organizations are also significantly more likely than NI

counterparts to use EAP when purchasing a wide array of services, including printing and

duplicating (45% versus 11%), professional services (43% versus 15%), temporary help

(28% versus 4%), media and advertising (39% versus 15%), utilities (40% versus 22%),

lease and rental payments (25% versus 11%) mail and delivery (25% versus 11%), catering

(32% versus 19%), and transportation and freight delivery (31% versus 19%).

Highlights

Span of spend for goods and services

Differences in EAP and plastic purchasing card use

Program optimization policies

Conclusion

Best Practice: Allowable Spend Categories and Program Optimization | 85

A higher percentage of BP programs also use EAP to pay for office equipment and supplies

(73% versus 59%) and general maintenance, repair, and operating (MRO) goods (61%

versus 56%).

The differences in the types of goods and services paid with EAP may explain why BP

organizations have a higher average transaction amount than NI counterparts ($3,070 at BP

versus $782 at NI as shown in Exhibit 41). The difference is also supported by higher

average per transaction spending limits ($29,597 at BP versus $13,408 at NI as reported in

Exhibit 44) and higher average monthly EAP spending limits ($351,935 at BP versus

$226,289 at NI as reported in Exhibit 44).

Exhibit 49 Percent of Organizations that Use EAP Accounts to Pay for Types of Goods and

Services, by EAP Best Practice and Needs Improvement Organization

% of Best Practice Organizations

that Conduct the Majority of Their Purchasing Card

Spending on EAP



Spending on EAP

Difference

Percent of Organizations Using EAP Account to Buy Goods/Services

Computer hardware, software, and peripherals 79% 33% 46%

Capital assets 45% 11% 34%

Printing and duplicating services 45% 11% 34%

Professional services 43% 15% 28%

Temporary help services 28% 4% 24%

Clothing/uniforms 39% 15% 24%

Media and advertising services 39% 15% 24%

Utilities 40% 22% 18%

Inventory 47% 30% 17%

Construction materials 33% 19% 14%

Lease and rental payments 25% 11% 14%

Mail and mail delivery services 25% 11% 14%

Office equipment and supplies 73% 59% 14%

Catering 32% 19% 13%

Transportation and freight delivery 31% 19% 12%

Telecommunications service 36% 26% 10%

Fuel 39% 30% 9%

Travel 39% 30% 9%

Government services 19% 11% 8%

General maintenance, repair and operating (MRO) goods 61% 56% 5%


Differences in EAP and Plastic Purchasing Card Use

Exhibit 50 shows that BP organizations are more likely than NI organizations to report that,

in comparison to plastic purchasing card purchases, EAP is used to purchase goods and

services that are different (72% versus 61%) from plastic card purchases. Conversely, NI

organizations are more likely than the BP group to indicate that EAP accounts are used to

purchase goods and services of the same type and dollar amount as purchases made with

plastic cards (39% versus 28%). Of those organizations that use EAP to buy goods and

services that are different than purchases made with plastic purchasing cards, the Exhibit

shows that BP organizations are more likely than their NI counterparts to use EAP for

transactions for goods of higher dollar values (63% versus 43%) and for transactions

requiring additional approvals/controls prior to payment (37% versus 11%). The latter

difference may be connected to Exhibit 47, which showed that BP organizations are more

likely to integrate EAP accounting spending with their spend approval process.

Exhibit 50 Differences between Plastic Purchasing Card and EAP Purchases, by EAP Best


Program Optimization Policies

Exhibit 51 on the next page shows that BP organizations are more likely to implement

certain policies to optimize EAP use and value. In comparison to their EAP-using NI

counterparts, BP organizations are more likely to target specific commodities or services for

EAP payment (39% versus 17%) and specific vendors for EAP payment (72% versus 48%).

Best Practice Needs

Improvement

Compared to Purchases on Plastic P-Cards, EAP Purchases are for:

Goods and services that are of the same type and dollar amount. 28% 39%

Goods and services that are different. 72% 61%

Compared to Purchases on Plastic P-Cards, EAP Account Purchases are:

For transactions for goods of higher dollar values 63% 43%

For purchases from vendors with whom the organization conducts a high number of transactions 41% 36%

For goods and services which are not allowed to be paid by plastic purchase cards 33% 30%

For transactions requiring additional approvals/controls prior to payment 37% 11%

Best Practice: Allowable Spend Categories and Program Optimization | 87

Exhibit 51 Program Optimization Policies, by EAP Best Practice and Needs Improvement

Organizations

Conclusion

“Best practice” organizations use EAP to pay for a wider array of goods (in particular,

computers, capital assets, and inventory) and services (of all types, but in particular for

printing and duplication, professional services, and temporary help) than their NI

counterparts. Differences in the types of goods and services bought with EAP payment may

explain why BP organizations report a higher average transaction amount and have higher

per transaction and monthly EAP spending limits than NI counterparts.

Organizations with BP EAP programs are more likely to implement policies to optimize and

control EAP use and value. Specifically, in comparison to NI counterparts, BP organizations

are more likely to target specific commodities, services, and/or vendors for EAP payment.

BP organizations are more likely than NI organizations to report that, in comparison to plastic

purchasing card purchases, EAP is used to purchase goods and services that are different

from plastic card purchases. For BP organizations, the differences relate primarily to higher

dollar values and additional approvals/controls required prior to payment.

% of Best Practice


Spending on EAP



Spending on EAP

In order to reach EAP spend potential, my organization….:

Targets specific commodities or services for EAP payment 39% 17%

Targets specific vendors for EAP payment. 72% 48%


Chapter 10

Best Practice: Program and Relationship Management

This chapter examines the differences between BP and NI EAP programs with respect to

organizational support and program management fundamentals. We will look at the number

of transactions and the average monthly EAP spending with suppliers by both BP and NI

programs and will examine the relationships between the BP and NI organizations and their

card issuers (as expressed in satisfaction with EAP product, service, and technology). We

conclude with a summary of “best practices” with EAP.

Top Management Support

Top management support is a fundamental principle of change management and it is critical

to organizational adoption and use of new technologies. Exhibit 52 on the next page shows

that BP EAP programs report significantly higher “vocal support” by a top management

sponsor for the use of EAP (4.43 for BP versus 3.00 for NI on a 7 point scale). Further, BP

EAP programs report greater agreement that “a strong business case was made to

employees about the benefits of EAP” (4.00 for BP versus 3.14 for NI on a 7 point scale).

Highlights

Top management support

Performance measurement

EAP training and training methods

Impact on suppliers

Relationship with EAP issuers

Conclusion and summary of “best practices”

The customer perspective: Excerpts of why EAP works

Best Practice: Program and Relationship Management | 89

Exhibit 52 Top Management Support for EAP Program, by EAP Best Practice and

Needs Improvement Organizations (where 1=Do Not Agree and 7=Fully Agree)

Performance Measurement

In keeping with sound management practice, 57% of BP (but only 24% of NI) organizations

use formal measures to evaluate EAP performance. For both groups, the primary measure

of performance is the dollar amount of spending conducted on EAP.

EAP Training and Training Methods

Exhibit 53 on the next page presents training practices of BP and NI organizations related to

EAP. The Exhibit shows that, in comparison to the NI group, BP programs are more likely

to:

provide web-based EAP training (24% versus 4%),

provide in-person EAP training (50% versus 25%),

provide self-study EAP training materials (35% versus 25%),

support program administrator attendance at conferences to identify new ways to use

EAP (49% versus 33%),

track completion of EAP training and training updates by employees (24% versus 17%),

have an on-going method of communicating EAP information to employees and

managers (28% versus 17%), and

have a website that answers EAP questions (17% versus 4%).

3.14

3.00

4.00

4.43

A strong "business case" was made to employees about the benefits of EAP

There is a top management sponsor who gives strong vocal support to the use of EAP

Best Practice Group

Needs Improvement Group


Exhibit 53 Training, Training Methods, and Other EAP Support, by EAP Best Practice and

Needs Improvement Organizations

Impact on Suppliers

Exhibit 54 shows that EAP-using BP organizations pay a higher number (and percentage)

of their suppliers with EAP than their NI counterparts (456 versus 131) and, on average,

direct more dollars to those suppliers through EAP on a monthly basis ($36,068 versus

$6,633).

Exhibit 54 Supplier Statistics, by EAP Best Practice and Needs Improvement Organizations

^ As per respondents, the average percentage of the supplier base that is paid with EAP is 21.1% for the BP group and 6.2% for the NI group. We multiplied that percentage time the respondents supply base to determine the number of suppliers paid with EAP.

* This figure is an average of respondent-reported averages.

% of Best Practice


Spending on EAP


Organizations that Conduct the

Majority of Their Purchasing Card

Spending on EAP

Type of Training. Percent of Organizations that:

Provide web-based EAP training 24% 4%

Provide in-person EAP training 50% 25%

Provide self-study EAP training materials 35% 25%

Support program administrator attendance at user conferences to identify new ways to use EAP 49% 33%

Other Cardholder Support. Percent of Organizations that:

Track completion of EAP training and training updates by employees 24% 17%

Have an on-going method of communicating EAP information to employees and managers 28% 17%

Have a website that answers EAP questions 17% 4%

Best Practice Needs

Improvement

EAP and Suppliers

Average number of suppliers (total) 4,265 3,748

Number of suppliers paid with EAP^ 456 131

Average monthly EAP spend per EAP supplier* $36,068 $6,633


Relationship with EAP Issuers

Exhibit 55 indicates that NI EAP programs are modestly more inclined to be considering

switching EAP issuers.

Exhibit 55

Prospective Switching Consideration, by EAP Best Practice and Needs Improvement Organizations

Exhibit 56 on the next page summarizes the importance of and satisfaction with six overall

measures of card issuer performance related to EAP for BP and NI organizations. First, with

respect to customer measures of “importance”, the Exhibit shows that, except for the issue

of the integration of EAP data into the organizational accounting system, BP organizations

assign greater importance to each listed performance expectation of their EAP issuer than

their NI counterparts. Second, with respect to customer measures of satisfaction, the Exhibit

reveals that, in comparison to BP programs, NI programs are notably less satisfied with the

overall (a) reporting package (4.60 versus 5.31 for BP on a 7-point satisfaction scale), (b)

economic relationship with card issuer in relation to EAP (5.06 versus 5.53) and (c) the

ability of bank technology to support EAP program management (5.00 versus 5.47). More

detail on customer satisfaction issues will be presented in Chapter 14.

% of Best Practice


Spending on EAP



Spending on EAP

Organizations that are…

Currently considering switching EAP issuer 6% 8%


Exhibit 56 Comparison of Customer Importance and Satisfaction Ratings on Economics,

Customer Service, and Technology Factors, by EAP Best Practice and Needs Improvement Organizations

Co

ncl

usi

on

and

Su

mm

ary

of

“Be

st

Pra

ctic

es”

Survey responses indicate that organizations with BP EAP programs have a significantly

higher level of top management support for EAP use and stronger communication to the

employee base about the benefits of EAP payment. Further, in keeping with sound

management practice, a significantly higher percentage of BP organizations use formal

measures to evaluate EAP performance. Finally, BP programs are more likely to maintain a

variety of sound training practices related to EAP.

In terms of supplier involvement in EAP success, survey responses indicate that BP

programs pay a higher number of suppliers with EAP and, on average, engage in a higher

level of spending with those suppliers.

In terms of card issuer involvement in EAP success, survey responses indicate that BP

organizations are notably more satisfied with the economic relationship they have with their

EAP issuer, the bank technology to support EAP program management, and the overall

reporting package than their NI counterparts.

Exhibit 57 on the next page summarizes the items of distinction found in the previous four

chapters related to “best practice” EAP use, broken into key categories that include (1)

leadership and organizational support, (2) goals, (3) program management and control, (4)

program policy, (5) action steps to reach EAP potential, (6) integration of EAP with

procurement processes, (7) use of data, (8) supplier relations, and (9) training and

communications.

Best Practice Needs Improvement

Importance Satisfaction Importance Satisfaction

Card Issuer Performance Item

Overall economic relationship with card issuer in relation to EAP 5.68 5.53 5.15 5.06

Overall customer service and support 6.13 5.46 5.35 5.40

Overall capture of transaction-related information 6.19 5.53 5.90 5.32

Overall integration of EAP data with your organizational information/ERP systems 5.69 5.18 5.78 5.13

Overall ability of bank technology to support EAP program management 5.69 5.47 5.24 5.00

Overall reporting package 5.69 5.31 5.38 4.60


Exhibit 57 Summary of Best Practices EAP Use

Leadership and organizational support

Secure vocal top management support for EAP payment Provide a strong business case for EAP to employees

Goals

Focus on the administrative efficiency of the payment process, supplier acceptance of payment, improvement in cash flow, rebates and incentives, and reduced reliance on checks

Program management and control

Make higher dollar transaction payment by EAP routine Expand the EAP-accepting supply base Log activity and track disputes Measure program performance

Program policy

Implement EAP spend-supportive per transaction and monthly credit limits Support a wide bandwidth of allowable spending categories for EAP, including computers, capital

assets, inventory and a wide range of services

Action steps to reach EAP potential

Take action steps to expand EAP reach, in particular by targeting commodities, services, and vendors for EAP payment

Integration of EAP with procurement processes

Integrate EAP with the spend approval process Integrate EAP data with the “back-end” accounting/ERP system

Use of data

Leverage EAP data in supplier discount negotiations

Supplier relations

Communicate the benefits of being “on board” with EAP acceptance to suppliers.

Training and communications

Establish appropriate training encouraging employees to engage in EAP payments (web-based and self-study modules)

Provide a website for FAQs


THE CUSTOMER PERSPECTIVE: EXCERPTS ON WHY EAP WORKS

System allows us to instantly see that vendors have taken payment…and send secure e-mails which include the card number to vendors who are not able to retain card information. Easy to use program with customizable reports. Senior Business Process Administrator Not-for-Profit organization

Security and convenience.

CFO Large Market corporation

The ability to extend payments.

Controller Middle Market corporation

The provider has helped us increase our merchants who accept e-payables as well as traditional p-cards.

Procurement Officer City/County

Rebates the company receives, cut costs for preparing and mailing paper checks.

Supervisor Not-for-Profit organization

We require vendors that have electronic catalogs in our marketplace to sign up for the EAP program. Assistant Vice President University

Software integration into card program.

Buyer/Program Administrator Large Market corporation


Breadth of acceptance and the ability to meet the vendor’s needs and ours.

Assistant Controller Middle Market corporation

The majority of our production requirements are processed through EAP.

VP Finance Middle Market corporation

Less manual check issuing, signatures, and mailing.

AP Coordinator Middle Market corporation

The bank providing the reporting that shows the merchants who already accept the program is helpful. AP Manager Large Market corporation

Multi-faceted options (i.e. push payments as well as ghost accounts and ACH in one file upload). AP Coordinator Fortune 500-Size Healthcare organization

Electronic reconciliation/approval system. Director of AP Not-for-Profit organization

We have an annual spend analytics exercise that looks at certain characteristics of our supplier spend and suggests the appropriate payment solution (p-card, virtual p-card, etc.).

Senior Financial Analyst Fortune 500-Size Financial Services corporation

Being able to offer different payment solutions for our invoices. We have purchase card, virtual cards and buyer-initiated payment. Senior Financial Analyst Fortune 500-Size Healthcare corporation


The only place success comes before work is in the dictionary.

Vidal Sassoon


EAP by Age of Program and Degree of Use


11 EAP Programs by Age: Maturation and Change

12 Degrees of EAP Use: Moderate, Advanced, and High EAP Organizations

13 Degree of EAP Use and the Interaction with Plastic Card and Ghost Account Spending


Section 3


Chapter 11

EAP Programs by Age: Maturation and Change

As noted in Exhibit 8 of the first chapter, respondents are evenly split between those that

have been using EAP for less than three years and those that have been using EAP for

three or more years. The purpose of this chapter is to examine the program performance

and activities of similar-size organizations that have been using EAP for differing lengths of

time. This chapter compares “Younger” (less than three years old) with “Older” (three years

of age or older) EAP programs. In so doing, we analyze changes in organizational use of

EAP over time.

Key EAP Performance Statistics by the Age of EAP Program

Exhibit 58 on page 100 presents organizational and key performance statistics of similar-

size organizations (all with less than 60,000 employees) that have younger or older EAP

programs.

Age of Program

As noted above, all respondents in the Younger EAP group have been using EAP for less

than three years (an average of 1.1 years). The Older EAP group has been using EAP for,

on average, 4.9 years.

Highlights

Key EAP performance statistics by the age of

EAP program

EAP in context of the total purchasing card

program

Integration in and outside of the

organization

Shifting means and ends

Growth expectations

Capture of transactions across payment

methods

Intent to switch and customer satisfaction

Conclusion

EAP Programs by Age: Maturation and Change | 99

Monthly EAP Spending

Average monthly EAP spending at organizations with Older EAP programs is 151% higher

than with Younger EAP programs ($1.3 million versus $531,872). The higher EAP spending

over the 3.8 year average EAP age differential between the groups (4.9 versus 1.1 years)

translates into an average 40% growth rate per year between years 1 and 5, a figure similar

to that shown in Exhibit 9 where spending in an illustrative “new EAP” program goes from

$900,000 at the end of year 1 to $2.35 million by year five.

Monthly EAP Transaction Activity

Similar to EAP spending figures, the average number of EAP transactions at Older EAP

programs (581) is 134% higher than at Younger EAP programs (248).


The average EAP transaction amount at Older EAP programs ($2,301) is 8% higher than at

Younger EAP programs ($2,140).


Under $2,500 Transactions. Older EAP programs capture a higher percentage of their

under $2,500 transactions on EAP than their Younger EAP counterparts (17% versus 9%).

$2,500 to $10,000 Transactions. Older EAP programs capture a higher percentage of their

$2,500 to $10,000 transactions on EAP than their Younger EAP counterparts (21% versus

14%).

$10,000 to $100,000 Transactions. Older EAP programs capture a higher percentage of

their $10,000 to $100,000 transactions on EAP than their Younger EAP counterparts (22%

versus 16%).

EAP Spending Relationship Benchmark Points

EAP Spending per Employee. Monthly EAP spending per employee at Older EAP programs

($271) is 161% higher than at Younger EAP programs ($104).

EAP Spending per $1 Million in Revenue (or Budget). Monthly EAP spending per $1 million

in sales revenue (or budget if a Government or Not-for-Profit organization) at Older EAP

programs ($25,453) is 31% higher than at Younger EAP programs ($19,386).


Exhibit 58

EAP Performance Data of Older and Younger EAP Programs (with less than 60,000 employees

EAP in Context of the Total Purchasing Card Program

EAP programs typically are situated in a larger organizational initiative that includes paying

for goods with plastic purchasing cards and ghost accounts. Exhibit 59 on page 102

examines Older and Younger EAP programs in the context of total purchasing card program

activity that includes all platforms– plastic purchasing cards, ghost accounts, EAP, and other

purchasing card accounts.

Age of Plastic Card Program

Younger EAP organizations also have younger purchasing card programs (than Older EAP

organizations). Purchasing card programs in the Younger (Older) EAP group are 6.5 (8.7)

years of age.

Card Distribution

The Exhibit shows that the percentage of employees given plastic purchasing cards in the

Younger (Older) EAP group is 8.6% (10.4%), with the Older EAP group having distributed

16% more plastic purchasing cards. Thus, experience with the use of EAP does not appear

to result in a reduction in the number of plastic cards given to employees.

Younger EAP Programs

Older EAP Programs

Percent Difference


Number of employees 5,114 4,937 -3%

Age of EAP program (in years) 1.1 4.9 345%


Average monthly EAP spending $531,872 $1,335,935 151%

Median monthly EAP spending $119,924 $208,730 74%

Average monthly EAP transactions 248 581 134%

EAP spending per transaction $2,140 $2,301 8%





Monthly EAP spending per employee $104 $271 161%


Annual EAP spending per $1 million of annual sales revenue (or budget if a Government or Not-for-Profit organization) $19,386 $25,453 31%


Monthly Purchasing Card Spending

Total average monthly purchasing card program spending (on all card platforms combined)

is 49% higher at Older EAP organizations ($2.04 million versus $1.37 million per month).

Median monthly purchasing card program spending is 55% higher at Older EAP programs.

As shown in Exhibit 58, this difference is essentially attributable to the differences in EAP

spending between Younger and Older EAP programs.


Under $2,500 Transactions. Older EAP programs capture a higher percentage of their

under $2,500 transactions on purchasing card accounts (all card platforms combined) than

their Younger EAP counterparts (55% Older EAP versus 48% Younger EAP).

$2,500 to $10,000 Transactions. Older EAP programs capture a higher percentage of their

$2,500 to $10,000 transactions on purchasing card accounts (all card platforms combined)

than their Younger EAP counterparts (44% Older EAP versus 35% Younger EAP).

$10,000 to $100,000 Transactions. Older EAP programs capture a higher percentage of

their $10,000 to $100,000 transactions on purchasing card accounts (all card platforms

combined) than their Younger EAP counterparts (35% Older EAP versus 26% Younger

EAP).

Spending Relationship Benchmark Points

Annual purchasing card spending (on all card platforms combined) as a percentage of

annual sales revenue (or budget if a Government or Not-for-Profit organization) is 4.2% in

the Older EAP group and 3.7% in the Younger EAP group. Monthly purchasing card

spending per employee in the Older EAP group (on all purchasing card accounts combined)

is 55% higher ($413) than in the Younger EAP group ($267).


The average transaction amount (dividing spending on all card platforms combined by the

number of transactions on all card platforms combined) is $754 in the Older EAP group and

$495 in the Younger EAP group (a 52% difference).

Inactive Cards

The percentage of inactive plastic card accounts is lower among Older EAP programs (16%

for Older and 18% for Younger EAP programs).

The comparative statistics in Exhibit 59 demonstrate that the use of and experience with

EAP complements the purchasing card programs of organizations who seek to enhance

their overall suite of purchasing and payment tools.


Exhibit 59 Total Purchasing Card Program Performance of Older and Younger EAP Groups

(with less than 60,000 employees)

Integration In and Outside of the Organization

Younger and Older EAP programs have other differences that speak to the changes that

occur as a program matures. One key aspect of a developing EAP program appears to be

increased integration of EAP within the organization and across the supply chain.

Exhibit 60 on the next page shows that Older EAP programs have enlisted a higher number

of suppliers (362 versus 178 for Younger programs) and a higher percentage of their supply

base to accept EAP payment than Younger EAP organizations.


Older EAP Programs

Percent Difference


Age of purchasing card program (in years) 6.5 8.7 34%

Plastic Card Distribution Measures



Performance Measures (All Card Platforms Combined)

Average monthly p-card spending $1,366,664 $2,037,063 49%

Median monthly p-card spending $435,000 $673,703 55%

Annual p-card spending as a percentage of annual sales revenue (or budget if a Government or Not-for-Profit organization) 3.7% 4.2% 14%

Monthly spending per employee $267 $413 55%

Capture of Spending (All Card Platforms Combined)




Cardholder Activity Measures (All Card Platforms Combined)

Monthly transactions (all card platforms) per plastic card 6.25 5.29 -15%

Spending per transaction $495 $754 52%

Monthly spending (all card platforms) per plastic card $3,093 $3,985 29%

Inactive plastic cards in a typical month 18% 16% -11%


Exhibit 60 Suppliers Paid with EAP, by Older and Younger EAP Groups (with less than

60,000 employees)

Exhibit 61 shows that Older EAP programs have a higher percentage of respondents that

have significantly or completely integrated their organization’s EAP account spending with

their accounting information or ERP system (53% versus 41%).

Exhibit 61 Back-End Integration of EAP Account Spending with Accounting Information or

ERP System, by Older and Younger EAP Groups (with less than 60,000 employees)

Exhibit 62 on the next page shows that a higher percentage of Older EAP programs report

having significantly or completely integrated their organization’s spend approval process with

their EAP program than their Younger EAP counterparts (63% versus 43%).


Older EAP Programs

Supplier statistics

Number of suppliers in supply base 4,497 4050

Number of suppliers paid with EAP 178 362


Older EAP Programs

My organization’s EAP account spending is _______ integrated with our accounting information or ERP system

Not at all 24% 18%

Minimally 16% 14%

Moderately 19% 15%



Exhibit 62 Front-End Integration of EAP with Spend Approval Process, by Older and

Younger EAP Groups (with less than 60,000 employees)

Overall, Exhibits 60-62 show that the efficiency and effectiveness of EAP programs improves

as organizations have more experience with the use of program.

Shifting Means and Ends

Exhibit 63 on the next page shows the differences between Older and Younger EAP

programs with respect to the percentage that report certain items as “primary” goals for their

EAP program. In comparison to Younger EAP programs, Older EAP programs are more

likely to identify primary EAP goals that include:

obtaining better data to increase control over spending (51% versus 38%) and/or

enhance leverage with vendors (39% versus 34%),

increasing convenience of purchasing for employees (92% versus 83%), and

improving cash flow by extending time to payment (57% versus 51%).

Interestingly, Older EAP programs are less likely than Younger EAP programs to identify

“rebates and incentives” as a primary EAP program goal (80% versus 86%, respectively).


Older EAP Programs

My organization’s EAP account spending is _____ integrated with our spend approval processes.

Not at all 26% 9%

Minimally 10% 7%

Moderately 21% 21%



Exhibit 63

Percent Identifying “Primary” EAP Program Goals, by Older and Younger EAP Groups (with less than 60,000 employees)*

* The survey inquired of EAP goals only of those respondents who put the majority of their purchasing card program spending on EAP. Answers by those respondents are represented in this Exhibit.

Growth Expectations

The significant growth of EAP does not continue unabated. Exhibit 64 shows expected

EAP account spending growth rates from 2012 through 2016. The Exhibit indicates that

Younger EAP account spending is expected to increase, on average, by about 10.8% per

year over the next five years (a 54% increase over five years). By contrast, Older EAP

program account spending is expected to increase, on average, by about 6.6% per year over

the next five years (a 33% increase over five years). As noted earlier in Exhibit 28, overall

EAP account spending is expected to increase, on average, by about 8.0% per year over the

next five years (a 40% increase over five years) across all organizations that use EAP.

Thus, it appears that, after the organization has routed the majority of its selected (low-

hanging) PO-based purchases to EAP spending (as more likely to be the case for Older EAP

programs), the growth rate of EAP payments begins to decline.

Exhibit 64 Expected Growth Rates in EAP Account Spending from 2011 to 2016, by Older

and Younger EAP Groups (with less than 60,000 employees)


Older EAP Programs


Obtain better data to increase control over spending 38% 51%

Increase convenience of purchasing for employees 83% 92%

Improve cash flow by extending time to payment 51% 57%

Obtain better data to enhance leverage with vendors 34% 39%

Reduce reliance on checks 80% 75%

Obtain rebates and incentives for the organization 86% 80%


Older EAP Programs

Total spending change expected from 2011-2012 13% 5%




Capture of Transactions Across Payment Methods

As noted earlier in this Report, the key value of purchasing card technology is the movement

of transactions away from paper-based payment methods to an efficient electronic

alternative. This section looks at the capture of transactions (of differing dollar amounts)

among different payment methods as organizations mature in their use of EAP accounts.

Under $2,500 Transactions. Exhibit 65 shows the percentage of under $2,500 transactions

paid by Younger and Older EAP programs by the type of payment method used. The

percentage of under $2,500 transactions paid by EAP at Younger (Older) EAP organizations

is 9% (17%). The percentage of under $2,500 transactions paid by plastic cards and ghost

accounts is modestly higher at Younger EAP (38%) than at Older EAP programs (36%).

Small changes in plastic card payments after EAP is adopted are not uncommon (and will be

addressed later in a section entitled "Longitudinal Analysis of Respondents Before and After

EAP.” The average percent of under $2,500 transactions paid by paper check drops notably

(from 41% to 32%) as one compares Younger and Older EAP programs. Older EAP

programs also report a higher percentage of transactions paid with ACH than Younger

programs (11% versus 8%, respectively). The higher percentage of ACH payments may be,

in part, attributable to the influence of EAP inasmuch as 23% of respondents indicate that

they pay suppliers with ACH if suppliers do not accept EAP payment.11

Exhibit 65 Capture of Under $2,500 Transactions by Payment Method, by Younger and Older

EAP Programs (with less than 60,000 employees)

11 See discussion in Chapter 5 (“EAP and Supplier Acceptance”)

41%

32%

8%

11%

4%

4%

38%

36%

9%

17%

Young Old

EAP

Plastic and ghost

Other card and non-card accounts

ACH

Paper check


$2,500 to $10,000 Transactions. Exhibit 66 shows the percentage of $2,500 to $10,000

transactions paid by Younger and Older EAP programs by the type of payment method. The

percentage of $2,500 to $10,000 transactions paid by EAP at Younger (Older) EAP

organizations is 14% (21%). The average percentage of $2,500 to $10,000 transactions paid

by plastic purchasing cards and ghost accounts is the same in both groups (21%). The

average percent of $2,500 to $10,000 transactions paid by paper check drops notably (from

51% to 39%) as transactions are shifted to EAP and ACH among the Older EAP

respondents.

Exhibit 66 Capture of $2,500 to $10,000 Transactions by Payment Method, by Younger and

Older EAP Programs (with less than 60,000 employees)

$10,000 to $100,000 Transactions. Exhibit 67 on the next page shows the percentage of

$10,000 to $100,000 transactions paid by Younger and Older EAP programs by types of

payment method used. The percentage of $10,000 to $100,000 transactions paid by EAP at

Younger (Older) EAP organizations is 16% (22%). The average percentage of $10,000 to

$100,000 transactions paid by plastic cards and ghost accounts is similar in the two groups

(9% for Younger and 10% for Older). The average percentage of $10,000 to $100,000

transactions paid by paper check drops notably (from 53% to 42%) as transactions are

shifted to EAP and ACH in the Older EAP group.

51%

39%

9%

14%

5%

5%

21%

21%

14% 21%

Young Old

EAP

Plastic and ghost


ACH

Paper check


Exhibit 67 Capture of $10,000 to $100,000 Transactions by Payment Method, by Younger

and Older EAP Programs (with less than 60,000 employees)

Intent to Switch and Customer Satisfaction

Exhibit 68 on the next page indicates that Older EAP organizations, which average 49%

more monthly purchasing card program spending (see Exhibit 59), are five times more likely

to be considering switching EAP issuers as Younger EAP programs (10% Older versus 2%

Younger). The Exhibit also provides some potential explanations for this difference,

revealing that Younger programs report higher satisfaction than their Older counterparts with

the overall (a) economic relationship their card issuer in relation to EAP, (b) customer

service and support, (c) reporting package, (d) ability of bank technology to support EAP

program management, (e) capture of transaction-related information, and (f) integration of

EAP data into organizational information systems. It may be that the increased experience

and higher spending of Older programs enables them to better identify their requirements of

their card issuer or that new programs are benefitting from later EAP adoption, after most

technical learning curve issues have been resolved.

53%

42%

13%

16%

9%

10%

9%

10%

16% 22%

Young Old

EAP

Plastic and ghost


ACH

Paper check


Exhibit 68 Prospective Switching Consideration, by Older and Younger EAP Groups (with

less than 60,000 employees)*

* The survey inquired about consideration to switch EAP issuers only of those respondents who put the majority of their purchasing card program spending on EAP. Only answers by those respondents are represented in this Exhibit.

Younger EAP Program

Older EAP Program

Consideration of Switching Card Issuers

Percent of organizations considering switching EAP issuers 2% 10%

Overall Satisfaction Measures (where 1=very dissatisfied, 7=very satisfied)

Overall economic relationship with card issuer in relation to EAP 5.56 5.20

Overall customer service and support 5.61 5.25

Overall reporting package 5.38 5.06

Overall ability of bank technology to support EAP program management 5.64 5.10

Overall capture of transaction-related information 5.64 5.34

Overall integration of EAP data with organizational information systems 5.26 5.07

Don’t find fault. Find a remedy.

- Henry Ford


Conclusion

The purpose of this chapter was to examine the performance of EAP (both in isolation and

as a part of a larger purchasing card initiative) among similar-size organizations that have

been using EAP for differing lengths of time. Specifically, the chapter examined “Younger”

(less than three years old) and “Older” (three years of age or older) EAP programs with less

than 60,000 employees. The comparison revealed that Older EAP programs drive 49%

more total purchasing card spending (on all card platforms combined) than their Younger

counterparts ($2.04 million versus $1.37 million). Most impressively, organizations with

Older EAP programs conduct 151% more EAP account spending than organizations with

Younger EAP programs ($1.3 million versus $531,872). Spending on plastic cards appears

to be the same or modestly lower after the adoption of EAP. Plastic card distribution, in

general, is similar across programs of different EAP age. Thus, experience with the use of

EAP does not appear to result in a reduction in the number of plastic cards given to

employees.

Organizations with Older EAP programs report a higher capture of under $2,500

transactions and a significantly higher capture of $2,500 to $10,000 and $10,000 to

$100,000 transactions by EAP payment and by use of all purchasing card platforms

combined.

One key aspect of a developing EAP program appears to be its integration within the

organization and across the supply chain. Older EAP programs have enlisted a higher

number (and percentage) of their supply base to accept EAP payment than the Younger

EAP organizations. Further, Older EAP organizations report a higher incidence of significant

or complete integration of EAP account spending with their accounting information or ERP

system and integration of EAP with their organization’s spending approval process.

Older programs report modestly different goals than newer EAP programs, to wit: Older EAP

programs are more likely to identify primary EAP goals that include obtaining better data to

increase control over spending or enhance leverage with vendors, increasing convenience

for employees, and improving cash flow by extending time to payment. Interestingly, Older

programs are less likely than Younger programs to identify “rebates and incentives” as a

primary EAP program goal.

Degrees of EAP Use: Moderate, Advanced, and High EAP Using Organizations | 111

Chapter 12

Degrees of EAP Use: Moderate, Advanced, and High EAP Organizations

Defining Degrees of EAP Use

Organizations make choices about the purchasing card platform(s) they use and the degree

to which they use them. To understand the effect of these differences in the organizational

use of EAP, this chapter breaks down organizational use of EAP into three main categories:

Moderate EAP – where most of the respondent’s total purchasing card spending is

placed on plastic cards and a low to moderate percentage of spending (between 1% and

49%) is placed on EAP accounts,

Advanced EAP – a significant percentage of the respondent’s total purchasing card

spending is on EAP accounts (between 50 and 74%) and the remainder is placed on

plastic cards,

High EAP – a high percentage of the respondent’s total purchasing card spending is on

EAP accounts (between 75% and 100%) and the remainder (if any) is placed on plastic

cards.

Highlights

Defining degrees of EAP use

Sample response by the degree of EAP use

Key performance statistics by the degree of EAP use

Control over spending

Expected growth in EAP spending

Capture of transactions by payment method

Conclusion


Sample Response by the Degree of EAP Use

As shown earlier in Exhibit 4, about 50% of respondents charge less than 50% of their total

purchasing card spending to EAP accounts, 19% charge between 50% and 74% to EAP

accounts, and about 31% charge 75% to 100% of their total purchasing card spending to

EAP purchasing card accounts. Among the latter group are some organizations that do not

have plastic cards and charge 100% of their spending to EAP accounts. This group

comprises 4.5% of all EAP-using organizations.

Exhibit 69 shows the sample compositions of the Moderate EAP, Advanced EAP, and High

EAP groups. The Exhibit indicates that, of all three groups, the Advanced EAP group has

the greatest percentage of corporations among its respondents (61%). In comparison,

among Moderate (High) EAP respondents corporations make up 51% (59%) of the total

responses. The Exhibit also shows that Universities and Cities and Counties are more likely

to be represented in the Moderate EAP group, while Not-for-Profit organizations (often in the

healthcare field) are more likely to be in the High EAP group.

Exhibit 69 Respondents by Organizational Type, by Moderate, Advanced, and High EAP Use

Groups

Moderate EAP Advanced EAP High EAP

Type of Organization

Public corporation 21% 19% 23%

Privately-owned corporation 30% 42% 36%

University 16% 8% 3%

School district 8% 9% 7%

City/county government 14% 9% 7%

State government 3% 2% 3%

Federal government 0% 2% 2%

Not-for-Profit 8% 9% 19%


Exhibit 70 breaks down the corporate respondents by industry within the Moderate,

Advanced, and High EAP groups. The Exhibit shows that the response pool is well-

distributed across different industries in all three groups. Manufacturing is the largest single

industry segment in all three groups, with 30%, 29%, and 36% of survey participants in

Moderate, Advanced, and High EAP groups, respectively.

Exhibit 70 Type of Corporate Respondents, by Moderate, Advanced, and High EAP Use Groups

Key Performance Statistics by the Degree of EAP Use

Exhibit 71 on page 115 presents organizational and key performance statistics of similar-

size organizations (all with less than 50,000 employees) in the Moderate, Advanced, and

High EAP groups. Below we breakdown the response by the age of the program, monthly

EAP spending, average transaction amount, EAP capture of transactions of differing dollar

values, and size-adjusted EAP spending benchmarks.

Age of EAP Program

The degree of EAP use increases with the average length of time that an organization has

used EAP accounts, with High EAP organizations having used EAP for 3.3 years, while

Advanced and Moderate EAP organizations have used EAP for 2.9 and 2.6 years,

respectively. This pattern is a positive reflection on EAP inasmuch as organizations

increase their use of EAP as they gain experience with its use.


Industry

Professional, scientific, and technical services 10% 17% 14%

Agricultural, mining, and construction 12% 12% 10%

Utilities 3% 6% 1%

Telecommunications, media, and entertainment 9% 5% 4%

Transportation, warehousing, and delivery services 8% 5% 8%

Manufacturing 30% 29% 36%

Software and IT solutions 6% 3% 4%

Wholesale and retail trade 6% 11% 10%

Finance, insurance, banking, and real estate 14% 8% 12%

Other service 2% 4% 1%



Total average monthly EAP spending increases steadily with the degree of EAP use, with

High EAP organizations reporting average EAP spending that is over seven times higher

than the Moderate EAP group ($1.6 million versus $215,980, respectively). Median (or mid-

point) monthly EAP spending peaks in the High EAP group and is nearly ten times higher

than the Moderate group ($450,000 versus $46,530, respectively).


The average EAP transaction amount is lower among Moderate EAP organizations ($1,503)

than at either Advanced ($2,872) or High EAP ($2,388) organizations.

EAP Capture of Transactions

Under $2,500 Transactions. The percentage of under $2,500 transaction paid by EAP

increases with the use of EAP. Thus, Moderate, Advanced, and High EAP organizations

report the capture of 6%, 18%, and 26% of under $2,500 transactions, respectively.

$2,500 to $10,000 Transactions. The percentage of $2,500 to $10,000 transaction paid by

EAP also increases with the use of EAP. Thus, Moderate, Advanced, and High EAP

organizations report the capture of 8%, 25%, and 34% of $2,500 to $10,000 transactions,

respectively.

$10,000 to $100,000 Transactions. Similar to lower value transactions, the percentage of

$10,000 to $100,000 transactions paid by EAP also increases with the use of EAP. Thus,

Moderate, Advanced, and High EAP organizations report the capture of 9%, 20%, and 26%

of $10,000 to $100,000 transactions, respectively.

Size Adjusted EAP Spending Benchmarks

Though we have restricted the Moderate, Advanced, and High EAP respondents to

organizations of similar-size, it is good to compare metrics that are scalable. Two naturally

size-adjusted metrics are monthly EAP spending per employee and annual EAP spending as

a percentage of organizational revenue. We find that both of these metrics increase with the

use of EAP. Thus, Moderate, Advanced, and High EAP organizations report monthly EAP

spending per employee of $47, $216, and $385, respectively. Similarly, annual EAP

spending per $1 million of annual sales revenue (or budget if a Government or Not-for-Profit

organization) rises from $7,049 among Moderate EAP to $29,280 among Advanced EAP to

$42,200 among High EAP organizations.


Exhibit 71

EAP Spending Data of Moderate, Advanced, and High EAP Use Groups (with less than 50,000 employees)

Control over Spending

Spending Limits

Exhibit 72 on the next page reveals that EAP per-transaction spending limits and monthly

spending limits increase steadily to support the increased percentage of spending on EAP

accounts. Thus, Moderate EAP organizations report an average per transaction spending

limit of $15,308 while Advanced ($20,096) and High EAP ($27,493) organizations enforce

higher limits. Similarly, average monthly EAP spending limits rise from $238,579 at Moderate

to $286,406 at Advanced to $349,792 at High EAP use organizations.

One might argue that, with the adoption of EAP, an organization can “tighten up” the credit

lines extended to plastic cardholders (since higher dollar transactions will be routed to EAP).

The Exhibit indicates that EAP-using organizations in general do not take this approach.

Though not shown in the Exhibit, “traditional” card programs (those that only use plastic

cards and ghost accounts) report an average per transaction spending limit on plastic cards

of $2,275 and an average monthly spending limit on plastic cards of $9,238. Exhibit 72

shows that all but the High EAP group have higher average per transaction limits on plastic

cards and all EAP-using groups (Moderate, Advanced, and High) report average monthly



Number of employees 4,597 4,051 4,121

Age of EAP program (in years) 2.6 2.9 3.3


Average monthly EAP spending $215,980 $875,063 $1,587,291

Median monthly EAP spending $46,530 $312,500 $450,000

Average monthly EAP transactions 144 305 665

EAP spending per transaction $1,503 $2,872 $2,388





Monthly EAP spending per employee $47 $216 $385


Annual EAP spending per $1 million of annual sales revenue (or budget if a Government or Not-for-Profit organization) $7,049 $29,280 $42,200


spending limits on plastic cards that are higher than “traditional” card programs. However,

Advanced and High EAP organizations do report a slightly lower average per transaction

spending limit on plastic cards compared to their Moderate EAP counterparts, which may

indicate some level of “tightening” of plastic spending limits as the degree of EAP increases.

It should be noted that the High EAP group includes organizations that have relatively limited

plastic card distribution.

Exhibit 72 Average Monthly and Per Transaction Spending Limits on EAP and Plastic Accounts,

by Moderate, Advanced, and High EAP Use Groups (with less than 50,000 employees)

Types of Purchases

Moderate, Advanced, and High EAP organizations do not always use EAP to buy the same

types of goods and services. Exhibit 73 on the next page shows that the majority of

organizations (in all groups) use EAP to pay for goods and services that are different from

purchases made with plastic purchasing cards. The Exhibit also reveals that, as

organizations pay for a higher percentage of their spending with EAP accounts, they become

less likely to purchase goods and services with EAP that are of the “same type and dollar

amount” as those bought with plastic cards. Thus, 42% of Moderate EAP organizations

report that they use EAP to buy the same types of goods and services as bought on plastic

cards, but only 26% (25%) of Advanced (High) EAP organizations do the same.

Further, the Exhibit shows that the majority of respondents (in all groups) use EAP to

purchase goods and services that are of a higher dollar value than purchases made with

plastic cards (a response corroborated by the average EAP transaction amount in Exhibit

71). The Exhibit also indicates that, the higher the proportion of EAP spending as a percent

of total purchasing card program spending, the more likely it is that the organization is

buying goods and services that require additional approvals or controls prior to payment.

Thus, 44% of High EAP organizations indicate that their EAP purchases are for transactions

that require additional approvals and/or controls prior to payment, a figure that is similar to

Advanced EAP (43%) but much higher than Moderate EAP (11%) organizations. These

findings reflect the desire of many organizations with ERP systems (such as SAP or Oracle)


EAP Spending Limits

Per transaction spending limit $15,308 $20,096 $27,493

Monthly spending limit $238,579 $286,406 $349,792

Plastic Card Spending Limits Counties

Per transaction spending limit $3,122 $2,729 $1,625

Monthly spending limit $14,555 $15,938 $9,333


to make card-based payments compatible with their ERP data requirements and workflow

rules. EAP presents an excellent card option in this circumstance.

Finally, Exhibit 73 shows that the number of suppliers and percentage of invoices paid with

EAP increases as the organization pays for a higher percentage of its card spending with

EAP. Thus, the number of suppliers paid with EAP rise from 162 in the Moderate EAP group

to 214 in the Advanced and 446 in the High EAP group. The percentage of invoices paid

with EAP follows a similar pattern, rising from 11% in the Moderate EAP group to 19% in the

Advanced and 31% in the High EAP group. In addition, organizations with higher use of

EAP are more likely to have a policy requiring EAP payment for purchases from specific

vendors.

Exhibit 73 Differences between Purchasing Activity and Supplier Involvement, by Moderate,

Advanced, and High EAP Use Groups (with less than 50,000 employees)


In comparison to p-card purchases, EAP purchases are for ________.

Counties

Goods and services of the same type and dollar amount 42% 26% 25%

Goods and services that are different 58% 74% 75%

Compared to purchasing on plastic p-cards, EAP account purchases are:

Counties

For transactions for goods of higher dollar values 54% 57% 50%

For purchases from vendors with whom the organization conducts a high number of transactions 39% 43% 39%

For goods and services which are not allowed to be paid by plastic purchase cards 32% 33% 33%

For transactions requiring additional approvals/controls prior to payment 11% 43% 44%

Different in other ways 1% 3% 4%

Suppliers Counties

Number of suppliers paid with EAP 162 214 446

% of respondents with an organizational policy requiring EAP payment for purchases from specific/preferred vendors 17% 21% 33%

Percent of invoices paid with EAP 11% 19% 31%


Integration of EAP with Organizational Systems

Part of control over spending is avoiding manual data entry processes that can undermine

data integrity and introduce the potential for error. Exhibit 74 indicates the differences

between Moderate, Advanced, and High EAP organizations with regard to “back-end”

integration of EAP account spending into their accounting information or Enterprise

Resource Planning (ERP) system. The exhibit shows that, as EAP use increases, the

likelihood that an organization will significantly or completing integrate its EAP spending into

its accounting information or ERP system increases steadily. Hence, 59% of High EAP

organizations, but only 47% (42%) of Advanced (Moderate) EAP organizations report

significant or complete integration of EAP account spending with their accounting or ERP

system. The Exhibit reveals a similar pattern of differences between organizations with

regard to “front-end” integration of EAP account spending into the organization’s spend

approval processes. Specifically, 68% of High EAP organizations, but only 45% of either

Advanced or Moderate EAP organizations, report significant or complete integration of EAP

spending with the organization’s spend approval process.

Exhibit 74 EAP Integration with Accounting Information/ERP System and Spend Approval Process, by Moderate, Advanced, and High EAP Use Groups

Expected Growth in EAP Spending

Exhibit 75 on the next page presents the expected EAP account spending growth rates from

2011 through 2016. The Exhibit shows that the expected growth rate of EAP account

spending is higher for Moderate and Advanced EAP organizations than for High EAP

organizations. EAP account spending is expected to increase, on average, by about 8.4%

per year over the next five years (a 42% increase over five years) in both Moderate and

Advanced EAP organizations, but by about 6.4% per year (a 32% increase over five years)

in High EAP organizations. Though the reasons for the lower expected growth of EAP

spending among High EAP organizations are uncertain, the most plausible explanation is

that members of this group are reaching an EAP spending plateau, having already routed

the majority of their purchasing card spending to the EAP platform.


Integration Counties

% of respondents “significantly” or “completely” integrating EAP account spending with the organization’s accounting information / ERP system 42% 47% 59%

% of respondents “significantly” or “completely” integrating EAP account spending with the organization’s spend approval process 45% 45% 68%


Exhibit 75 Expected Growth Rates in EAP Account Spending from 2011 to 2016, by Moderate,

Advanced, and High EAP Use Groups (with less than 50,000 employees)

Capture of Transactions by Payment Method

The key value of purchasing card technology is the movement of transactions away from

paper-based payment methods to an efficient electronic alternative. This section looks at

the differences in the percentage of transactions paid by different payment methods across

organizations with differing degrees of EAP use.

Under $2,500 Transactions. Exhibit 76 on the next page shows the percentage of under

$2,500 transactions paid by organizations with differing degrees of EAP use by type of

payment method. The percentage of under $2,500 transactions paid by EAP accounts is 6%

at Moderate EAP organizations and 18% (26%) in the Advanced (High) EAP groups. Also

as expected by the intensity of the use of EAP, the percentage of under $2,500 transactions

paid with plastic cards and ghost accounts is at its peak in the Moderate EAP group (47%)

and is lower in the Advanced (35%) and High (23%) EAP groups.






Exhibit 76 Capture of Under $2,500 Transactions by Payment Method, by Moderate,

Advanced, and High EAP Groups (with less than 50,000 employees)*

* Each group includes all respondents with 50,000 or fewer employees,


$2,500 to $10,000 transactions paid by organizations with differing degrees of EAP use by

type of payment method. The Exhibit shows that the percentage of $2,500 to $10,000

transactions paid by EAP accounts is 8% at Moderate EAP organizations and higher among

Advanced (25%) and High (34%) EAP organizations. The percentage of $2,500 to $10,000

transactions paid with plastic cards and ghost accounts is at its peak in the Moderate EAP

group (29%) and lower within the Advanced (18%) and High (8%) EAP groups.

37% 36% 39%

8% 8%

10% 2% 3%

2%

47%

35% 23%

6%

18%

26%


EAP

Plastic and ghost


ACH

Paper check


Exhibit 77 Capture of $2,500 to $10,000 Transactions by Payment Method, by Moderate,

Advanced, and High EAP Groups (with less than 50,000 employees)*



$10,000 to $100,000 transactions paid by organizations with differing degrees of EAP use by

type of payment method. The percentage of $10,000 to $100,000 transactions paid by EAP

accounts is 9% at Moderate EAP organizations, rising to 20% in the Advanced and 26% in

the High EAP group. The percentage of $10,000 to $100,000 transactions paid by plastic

cards and ghost accounts is lower within the High EAP group as compared to the Moderate

and Advanced EAP groups.

49% 44% 42%

11%

8% 12%

3%

5% 4%

29%

18%

8%

8%

25%

34%


EAP

Plastic and ghost


ACH

Paper check


Exhibit 78 Capture of $10,000 to $100,000 Transactions by Payment Method, by Moderate, Advanced, and High EAP Groups (with less than 50,000 employees)*


Conclusion

We label organizations that pay for less than 50% of their total purchasing card spending

with EAP accounts as the “Moderate EAP” group, organizations that pay for 50% to 74% of

their total purchasing spending with EAP as the “Advanced EAP” group, and organizations

that pay for 75% or more of their total purchasing card spending with EAP as the “High EAP”

group.

Total average monthly EAP spending increases steadily as the degree of EAP use

increases, with High EAP organizations reporting average EAP spending that is over seven

times higher than the average reported by the Moderate EAP group ($1.6 million versus

$215,980, respectively). Organizations with a higher proportion of spending on EAP have

used EAP for a longer period of time, implying that organizations increase their EAP

spending as they grow more experienced with its use. The average EAP transaction amount

is lower among Moderate EAP organizations than at either Advanced or High EAP

organizations. The percentage of transactions paid with EAP (whether for under $2,500,

$2,500 to $10,000, or $10,000 to $100,000) rises with increases in the percentage of total

card spending paid with EAP.

Both EAP spending per employee and annual EAP spending as a percentage of

organizational revenue (or budget if a Government or Not-for-Profit organization) rise with

increased use of EAP. Thus, Moderate, Advanced, and High EAP organizations report

56% 52%

44%

15%

12%

16%

8%

7% 9%

12%

9%

5%

9%

20% 26%


EAP

Plastic and ghost


ACH

Paper check


monthly EAP spending per employee of $47, $216, and $385, respectively. Similarly, annual

EAP spending per $1 million in annual sales revenue (or budget) rises from $7,049 among

Moderate to $29,280 among Advanced to $42,200 among High EAP organizations.

Per-transaction and monthly spending limits on EAP spending increase steadily to support

the increased percentage of spending paid with EAP accounts. Thus, Moderate EAP

organizations report average per transaction spending limits of $15,308 while Advanced

($20,096) and High EAP ($27,493) organizations use higher limits. Similarly, average

monthly EAP spending limits rises from $238,579 at Moderate to $286,406 at Advanced and

$349,792 at High EAP organizations.

As organizations pay for a higher percentage of their spending with EAP accounts, they

become less likely to purchase goods and services with EAP that are of the “same type and

dollar amount” as those bought with plastic cards. Thus, 42% of Moderate EAP

organizations report using EAP to buy the same types of goods and services as bought on

plastic cards, but only 26% (25%) of Advanced (High) EAP organizations do the same. In

addition, the higher the proportion of EAP spending as a percent of total purchasing card

spending, the more likely it is that the organization is buying goods and services that require

additional approvals or controls prior to payment. The latter finding reflects the desire of

many organizations with ERP systems (such as SAP or Oracle) to make card-based

payments compatible with their ERP data requirements and workflow rules.

Supplier relationships change with increasing use of EAP. The number of suppliers and

percentage of invoices paid with EAP increases as the organization pays for a higher

percentage of its total card spending with EAP. Whether as an outcome or a cause, we find

that as use of EAP increases, organizations are more likely to have a policy requiring EAP

payment for purchases from specific vendors..

The likelihood of an organization significantly or completing integrating their EAP spending

into their accounting information or ERP system increases with greater organizational

involvement with EAP. Likewise, a higher percentage of organizations with significant

spending on EAP report significant or complete integration of EAP payment with the

organization’s spend approval processes.

The expected growth rate of EAP account spending is higher for Moderate and Advanced

EAP organizations than for High EAP organizations. EAP account spending is expected to

increase, on average, by about 8.4% per year over the next five years in both Moderate and

Advanced EAP organizations, but by about 6.4% per year in High EAP organizations.


Chapter 13

Degree of EAP Use and the Interaction with Plastic Card and Ghost Account Spending

This chapter compares EAP-using programs to “traditional” purchasing card programs. We

define and label “traditional” programs as those in which all spending is conducted with

plastic cards or ghost accounts. Further, this Chapter examines the differences between the

total purchasing card program “context” in which Moderate, Advanced, and High EAP use

organizations function. We define Moderate, Advanced, and High EAP use similar to the

description presented in Chapter 12.

EAP in Context of the Total Purchasing Card Program

Exhibit 79 on page 127 presents key purchasing card program statistics at similar-size

organizations (all with less than 50,000 employees) that are “Traditional” programs or are

members of the Moderate, Advanced, or High EAP groups defined and presented in Chapter

12. We breakdown the response by program age, plastic card distribution, total monthly

purchasing card spending, capture of transactions of different dollar values on card

technology, cardholder activity measures, average transaction amounts, size-adjusted

benchmark data points, and the percentage of inactive plastic cards.

Highlights

EAP in context of the total purchasing card program

A graphic summary of purchasing card program activity

Longitudinal analysis of respondents before and after EAP

Philosophy regarding plastic purchasing cards

Conclusion and summary

Degree of EAP Use and Interaction with Plastic Card and Ghost Account Spending | 125

Age of Purchasing Card Program

Traditional and Moderate EAP organizations report that their purchasing card programs are

8.2 and 8.6 years old, respectively. Purchasing card programs are modestly younger at

Advanced (6.9 years) and High EAP (5.9 years) organizations. To put this in perspective, we

reported the average age of a purchasing card program to be 8.4 years (in the 2012

Purchasing Card Benchmark Survey Results) and the average age of an EAP program to be

2.9 years (see Exhibit 17). Further, we reported the average age of the Moderate,

Advanced, and High EAP program to be 2.6, 2.9, and 3.3 years, respectively (see Exhibit

71). Thus, Moderate EAP organizations have slightly older purchasing card programs but

slightly younger EAP programs. By contrast, Advanced and High EAP organizations have

younger than average purchasing card but older than average EAP programs.

The increasing age of the EAP program across Moderate, Advanced, and High EAP

organizations corresponds with findings in Chapter 11 which reported that Older EAP

programs have higher EAP spending.

Plastic Card Distribution

The Exhibit shows that the percentage of employees given plastic purchasing cards is

highest for the Moderate EAP group at 13.5%, up from 11.8% at Traditional card programs.

In Advanced and High EAP organizations we find a lower percentage of employees are

provided with plastic cards (11.0% and 3.5%, respectively). Based on the fact that Older

EAP programs do not have fewer plastic cards than Younger programs (see Exhibit 59) and

that repeat respondents to the Survey (before and after involvement with EAP) did not

reduce plastic card distribution (see Exhibit 84 later in this Report), it appears that High EAP

organizations in all likelihood had low card distribution prior to their involvement with EAP

and that the adoption of EAP did not drive a decision to reduce plastic card distribution.

Total Monthly Purchasing Card Spending

Total average monthly purchasing card spending (on all purchasing card accounts

combined) is higher in organizations with higher degrees of EAP use. Thus, High EAP

organizations report average spending that is over twice as high as Traditional card

programs ($1.8 million versus $846,442). Average monthly purchasing card spending at

Moderate and Advanced EAP organizations is $1.3 million and $1.5 million, respectively.


Under $2,500 Transactions. Traditional card programs pay for 45% of their under $2,500

transactions with plastic cards and ghost accounts. This figure rises to 53% and 55%

among EAP-using Moderate and Advanced EAP organizations, respectively, and then falls

to 49% in the High EAP group. The decline in under $2,500 capture in the latter group may

have less to do with the organization’s use of EAP as it does with the fact that the High EAP


group has a very low level of card distribution across the employee base. In the 2012

Purchasing Card Benchmark Survey we report that low plastic card distribution is associated

with a lower percentage of under $2,500 transactions paid with purchasing cards.

$2,500 to $10,000 Transactions. Traditional card programs pay for 25% of their $2,500 to

$10,000 transactions on plastic cards and ghost accounts. Capture of $2,500 to $10,000

transactions is higher at Moderate EAP (37%) organizations and tops out in the Advanced

EAP group (43%), thereafter falling to 42% in the High EAP group, probably due to the

limited plastic card distribution at High EAP organizations.

$10,000 to $100,000 Transactions. Traditional card programs pay for 6% of their $10,000 to

$100,000 transactions on plastic cards and ghost accounts. Capture of $10,000 to $100,000

increases with the use of EAP accounts (to 21%, 29%, and 31% at Moderate, Advanced and

High EAP organizations, respectively). The High EAP group, while having lower capture of

low dollar transactions, makes up the difference and then some by capturing a higher

percentage of higher dollar transactions on purchasing card accounts.

Cardholder Activity Measures

Purchasing card spending (on all card platforms combined) per employee is elevated among

organizations with higher use of EAP. Traditional card programs report $207 in monthly

purchasing card spending per employee; that figure rises to $285, $363, and $437 at

Moderate, Advanced, and High EAP organizations, respectively.


The average transaction amount (dividing total spending on all card platforms by the total

number of transactions on all card platforms) is higher among organizations with higher use

of EAP. Traditional card programs report an average transaction amount of $289. This

figure rises to $376 among Moderate EAP to $569 among Advanced EAP to $1,377 among

High EAP use organizations.

Spending Relative to Sales Revenue (or Budget)

Annual purchasing card spending (on all card platforms combined) as a percent of sales

revenue (or budget if a Government or Not-for-Profit organization) is higher among

organizations with higher use of EAP. Traditional card programs report an average

purchasing card spending as a percent of revenue of 2.3%. This figure rises to 3.7% among

Moderate EAP organizations, to 3.8% among Advanced EAP organizations, and to 4.2%

among High EAP organizations.


Inactive Plastic Cards

Traditional card (Moderate EAP) organizations report that, in a typical month, 20% (21%) of

their plastic card accounts are inactive. The percentage of inactive card accounts is notably

lower at Advanced (14%) and High EAP (16%) organizations. The lower level of inactive

plastic cards may reflect the lower levels of card distribution at Advanced and High EAP

organizations.

Exhibit 79 Total Purchasing Card Program Performance of Similar-Size Organizations, by

Traditional Card Program and Moderate, Advanced, and High EAP Groups*

* Each group includes all respondents with 50,000 or fewer employees.

Traditional Card

Program

Moderate EAP

Advanced EAP

High EAP


Number of employees 4,088 4,597 4,051 4,121

Age of purchasing card program (in years) 8.2 8.6 6.9 5.9

Plastic Card Distribution Measures Counties

Number of plastic purchasing cards 481 621 446 145

Card-to-employee ratio 11.8% 13.5% 11.0% 3.5%

P-Card Spending Measures (All Accounts Combined)

Counties

Average total monthly p-card spending $846,442 $1,312,293 $1,471,677 $1,799,863

Annual p-card spending as a percentage of annual sales revenue (or budget if a Government or Not-for-Profit organization) 2.3% 3.7% 3.8% 4.2%

Monthly p-card spending per employee $207 $285 $363 $437

Capture of Spending (All Card Platforms Combined)

Counties

Transactions under $2,500 paid with plastic, ghost, and EAP p-card accounts 45% 53% 55% 49%

Transactions between $2,500 and $10,000 paid with plastic, ghost, and EAP p-card accounts 25% 37% 43% 42%

Transactions between $10,000 and $100,000 paid with plastic, ghost, and EAP p-card accounts 6% 21% 29% 31%

Cardholder Activity Measures (All P-Card Platforms Combined)

Counties

Transactions (all card platforms) per plastic card 6.10 5.61 5.80 9.04

Spending per transaction $289 $376 $569 $1,377

Spending (all card platforms) per plastic card $1,761 $2,109 $3,296 $12,442

Inactive cards in a typical month 20% 21% 14% 16%


A Graphic Summary of Purchasing Card Program Activity

Exhibit 80 and Exhibits 81 and 82 on the next page and Exhibit 83 on page 130 provide a

graphic summary of key total purchasing card program statistics (on all accounts—plastic,

ghost, and EAP) of the respondent groups based on varying degrees of EAP use.

Exhibit 80 provides a graphic summary of total purchasing card spending. Exhibit 81 shows

both the average number of monthly purchasing card transactions and the average

transaction amount (dividing combined purchasing card spending on all platforms by the

number of transactions on all platforms). Exhibit 82 presents the average percent of

transactions (below $2,500, between $2,500 and $10,000, and between $10,000 and

$100,000) paid by purchasing cards (all card platforms combined). Finally, Exhibit 83

summarizes the card distribution patterns of the respondent groups.

Exhibit 80 Average and Median Monthly Purchasing Card Spending (All Accounts Combined)

by Traditional Card Programs and Moderate, Advanced, and High EAP Use Groups

$846,442

$1,312,293

$1,471,677

$1,799,863

$210,000

$450,000

$651,137

$500,000

Traditional Card Program Moderate EAP Advanced EAP High EAP

Average Monthly Spending (All Accounts)

Median Monthly Spending (All Accounts)


Exhibit 81 Average Monthly Purchasing Card Transactions (All Card Platforms Combined)

and Average Transaction Amount (All Card Platforms Combined), by Traditional Card Programs and Moderate, Advanced, and High EAP Use Groups

Exhibit 82 Percent of Transactions (of Differing Dollar Values) Captured on Purchasing Card

Accounts, by Traditional Card Program and Moderate, Advanced, and High EAP Use Groups

2,932

3,487

2,589

1,307

$289

$376

$569

$1,377

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


Ave

rage

Tra

nsa

ctio

n A

mo

un

t

Mo

nth

ly P

urc

has

ing

Car

d T

ran

sact

ion

s (A

ll A

cco

un

ts)

Number of transactions Average transaction amount

45%

53%55%

49%

6%

21%

29%31%

25%

37%

43% 42%

0%

10%

20%

30%

40%

50%

60%

Plastic Only Low EAP Medium EAP High EAP

Ca

ptu

re

of

Tra

nsa

cti

on

s

Less than $2,500

Between $10,000 and $100,000

Between $2,500 and $10,000


Exhibit 83 Card-to-Employee Ratio, by Traditional Card Program and Moderate,

Advanced, and High EAP Groups

Longitudinal Analysis of Respondents Before and After EAP

Given the differences between Moderate, Advanced, and High EAP programs with respect

to plastic card distribution (see Exhibits 79 and 83 above) and the potential impact of EAP on

plastic card spending, we extend our investigation by analyzing EAP-using respondents that

had previously participated in either our 2008 or 2010 Surveys (about 14% of the EAP-using

response). Exhibit 84 on the next page examines the average card distribution and

spending (by type of card platform) both before and after adoption of EAP. The Exhibit

shows that, for these repeat respondents to the survey, plastic card spending and the card-

to-employee ratio remained basically flat after the introduction of EAP. The card distribution

ratio was 14.7% prior to EAP and 15.1% after the adoption of EAP. Average monthly

spending on plastic cards was $1.2 million both before and after adoption of EAP. Average

ghost account spending declined by 42% (from $86,642 prior to EAP adoption to $50,068

after EAP adoption) and, naturally, EAP spending “came on board” at an average monthly

amount of $968,699.

11.8%

13.5%

11.0%

3.5%

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%


Ca

rd-t

o-E

mlo

ye

e R

ati

o


Exhibit 84 Purchasing Card Program Statistics of Repeat Respondents, Before and After

Adoption of EAP

Philosophy Regarding Plastic Purchasing Cards

Exhibit 85 on the next page reveals the philosophies of the organizations that use EAP in

differing degrees with respect to the use and distribution of plastic cards. The most common

philosophy found about plastic cards in all respondent groups (Moderate 55%, Advanced

46%, and High 34%) is that “Plastic cards are an important payment tool to be distributed to

employees who have demonstrated need to purchase goods and services.” A significant

percentage of each group (Moderate 23%, Advanced 17%, High 16%) is even more

aggressive regarding plastic card distribution, indicating that “Plastic cards are an important

payment tool to be distributed widely and used as much as possible.” Thus, it appears that

the majority of EAP-using organizations remain very supportive of the distribution and use of

plastic cards.

There is, however, a sliver of each group that want to limit the distribution of plastic cards to

an “as needed” basis. The size of the sliver grows as organizations report increased

spending on EAP, with 28% of the High EAP group distributing plastic cards on an “as

needed” basis.”

2008/2010 Pre-EAP Repeat Respondent

Average

2012 Post-EAP Repeat

Respondent Average

Percent Difference


Number of employees 5,929 6,475 9%




Total Monthly Spending by Card Type

Average monthly plastic p-card spending $1,202,176 $1,199,059 0%

Average monthly ghost account spending $86,642 $50,068 -42%

Average monthly EAP spending $0 $968,699 N/A

Total $1,288,818 $2,217,826 72%




Spending per employee $217 $343 58%


Exhibit 85 Position on Plastic Cards by EAP-Using Organizations, by Moderate, Advanced,

and High EAP Organizations

Conclusion and Summary

Exhibit 86 on the next page summarizes the key findings of this and the previous chapter

related to varying “degrees” of EAP use. It is interesting to note that, though Advanced and

High EAP organizations have higher purchasing card program spending, several other

factors distinguish these programs from their Traditional and Moderate EAP counterparts.

Those differences extend to:

philosophy about and level of distribution of plastic cards,

the types and dollar value of goods and services purchased with EAP,

the greater need for control—particularly in terms of approval processes—for

purchases,

the greater need for transaction data that is both compliant with organizational

requirements and easily integrated into the organization’s information system,12

a greater focus on improvement in cash flow and card issuer financial incentives,

and

expanded base of relationships with vendors accepting EAP payment.

12 Though we did not ask of Advanced and High EAP organizations, we did find that Moderate EAP organizations

were more likely than Traditional card programs to identify primary purchasing card program goals that included (a) obtaining better data to enhance leverage with vendors (36% versus 21%, respectively), (b) obtaining better data to increase control over spending (43% versus 35%, respectively), (c) improved cash flow by extending time of payment (55% versus 30%, respectively), (d) obtaining rebates and incentives for the organization (84% versus 58%), and (e) increasing supplier acceptance of card payment (50% versus 26%, respectively). Presumably these goals only intensify if an organization increases its percentage of spending on EAP.

Moderate EAP

Advanced EAP

High EAP

Which categorization best characterizes your organization's position about plastic p-cards

Plastic cards are an important payment tool to be distributed as widely and used as much as possible 23% 17% 16%

Plastic cards are an important payment tool to be distributed to employees who have demonstrated the need to purchase goods and services 55% 46% 34%

Plastic cards are a useful payment tool, though its use is neither encouraged or discouraged by the organization 3% 11% 13%

Plastic cards are an acceptable, but not preferred, payment mechanism 11% 11% 9%

Plastic cards are only given out and used on an “as needed” basis 8% 15% 28%


Exhibit 86 Summary of Similarities and Differences between Organizations with Differing

Degrees of EAP Spending

* As reported in the 2012 Purchasing Card Benchmark Survey Results.

Traditional Card Program Moderate to Advanced EAP Advanced to High EAP

Philosophy Plastic card distribution supports program growth.

The EAP account option is an additional option in the card toolkit for specific types of payment applications.

Need for control and approval prior to payment leads organization to favor EAP over other payment methods.

Card distribution Liberal card distribution improves prospects for card program success.

Liberal card distribution improves prospects for card program success.

Plastic cards play limited role in overall purchasing card spending, distribution of plastic limited.

Goods and services bought

Focus on all purchases below a predetermined dollar amount.

Both lower value purchases (on plastic) and selected higher value purchases (on EAP).

EAP payments for purchases for higher value goods and services that require prior approvals or greater control.

Spending by Card Platform

Plastic and ghost cards only.

Primarily on plastic cards, secondarily on EAP.

Primarily on EAP, limited spending on plastic or ghost.

Invoices paid with P-card/EAP

None or few. About 10%. About one-third.

Integration with Information System

Modest integration of spend approval processes and card data into G/L.

Modest integration of spend approval processes and card data into G/L.

High integration of spend approval processes and card data into G/L.

Card inactivity Higher (due to higher number of plastic cards)

Higher (due to higher number of plastic cards)

Lower (due to fewer cards)

Vendor Relationship

Broad supplier base for plastic cards; 27% use card data for discount negotiations and 61% increase the price discount on purchased goods (by, on average, 1.7%).*

Broad supplier base for plastic cards, limited EAP supplier base; 31% use EAP data for discount negotiations and 73% increase the price discount on purchased goods (by, on average, 1.1 % to 1.7% depending on timing of payment).

Broader EAP supplier base; 31% use EAP data for discount negotiations and 73% increase the price discount on purchased goods (by, on average, 1.1 % to 1.7% depending on timing of payment).

Cost Savings/Other Benefits

Primarily driven by administrative cost from reductions in sourcing, purchasing, and payment and reconciliation activities due to driving paper-based transactions to electronic format.

A mix of savings from reductions in sourcing, purchasing, and payment and reconciliation activities, card issuer financial incentives, increased “float” time to supplier payment, greater control over some spending activity.

Primarily driven by administrative cost savings in payment and reconciliation activities, card issuer financial incentives, increased “float” time to supplier payment, and greater control over spending activity.


I think the simple rule of business is, if you do the things that are easiest first, then you can make a lot of progress.

Mark Zuckerburg


Customer Issues


14 Customer Satisfaction with EAP

15 Switching Behavior and Barriers to EAP Growth


Section 4


Chapter 14

Customer Satisfaction with EAP

Six sections in the Survey had questions that consisted of two parts; the first asking

respondents about the importance and the second asking about satisfaction with respect to:

(1) economic elements of EAP use, (2) EAP issuer service and support of the EAP account

product, (3) capture and transfer of EAP transaction data, (4) integration of EAP data with

business information systems, (5) EAP program management technology, and (6) the

capabilities of EAP reporting software. These questions were only asked of organizations

that put the majority of their purchasing card program spending on EAP accounts (i.e., they

were in the Advanced or High EAP use groups). The greatest value of the

importance/satisfaction component of the Survey is that it reveals strengths to build upon

and opportunities to make improvements.

When the level of importance is high and the level of satisfaction is significantly lower, the

resulting “satisfaction dissonance” should be addressed by redeploying resources to raise

the level of user satisfaction. EAP users can benefit from this analysis by recognizing

satisfaction gaps specific to their organization and working with their EAP issuer to address

them. The EAP issuer can benefit by proactively addressing and managing these gaps for

users’ benefit.

Notable positive satisfaction gaps--which this report labels as “customer satisfaction

successes”--are identified as those satisfaction scores that are at least 0.50 points higher

than the sample average importance rating (measured on a seven point scale where 1=very

dissatisfied and 7=very satisfied). Notable negative satisfaction gaps--which this report

labels as “opportunities to increase customer satisfaction”--are identified as those

Highlights

Economics

Service and support

Data transmission

Data integration

Impact of integration on organizational performance

Card program management technology

Reporting technology

Gap summary across all importance-satisfaction categories

Conclusion

Customer Satisfaction with EAP | 137

satisfaction scores that are 0.50 points or more lower than the sample average importance

rating.

Economics

Exhibit 87 shows respondent ratings of the importance of and satisfaction with six economic

factors associated with EAP accounts in ascending order of importance. As shown in the

Exhibit, the importance of five of the six economic factors is greater than customer

satisfaction of these factors. A positive satisfaction gap (where customer satisfaction is

rated higher than importance) exists for foreign exchange fees. Respondents indicate

negative satisfaction gaps (where importance is greater than satisfaction) for bank fees,

liability protection from employee misuse, the overall economic relationship with the issuer in

relation to EAP, large dollar transaction costs, and rebates and incentives tied to EAP

spending.

Exhibit 87 Importance of and Satisfaction with Factors that Influence Electronic Accounts

Payable Economics

(where 1= Not Important or Very Dissatisfied and 7 = Very Important or Very Satisfied)

Service and Support

Exhibit 88 on the next page shows respondent ratings of the importance of and satisfaction

with sixteen aspects of customer service and support in ascending order of importance.

Negative satisfaction gaps exist for all sixteen items of customer service and support. The

largest of these negative satisfaction gaps relate to “assistance in getting suppliers to accept

EAP” (-0.67), “overall customer service and support” (-0.58), “service and support in EAP

program implementation” (-0.52), and “handling of disputed transactions” (-0.50). These

areas represent improvement opportunities for card issuers with the relatively new EAP

technology and process.

Importance Satisfaction Gap

Factor that Influences EAP Economics

Foreign exchange fees 3.83 4.27 0.44

Bank fees for EAP 5.39 5.16 -0.23

Liability protection from employee misuse of EAP 5.41 5.26 -0.15

Overall economic relationship with issuer in relation to EAP 5.56 5.39 -0.17

Large dollar transaction costs 5.59 5.15 -0.44

Rebates/incentives tied to EAP spending 6.00 5.40 -0.60


Exhibit 88 Importance of and Satisfaction with EAP and Service and Support


Data Transmission

Keeping up with the continuously evolving technical aspects of collecting and transmitting

data associated with payments through the card network has been a significant challenge to

card brands and issuers and is an on-going endeavor with different types of solutions

emerging in the marketplace. Exhibit 89 on the next page shows the importance of and

customer satisfaction with the overall capture of transaction-related information. EAP using

customers place relatively high weight (6.08) on this factor. Customer satisfaction with the

overall capture of transaction-related data is 5.49.


Customer Service and Support

Receipt imaging service 4.77 4.53 -0.24

Sponsorship of user conferences or other training programs 5.00 4.96 -0.04

Support in development of EAP spending reports 5.23 5.02 -0.21

Work with suppliers to ensure quality or suitability of data passed through system 5.36 4.99 -0.37

Hours of help desk availability 5.42 5.27 -0.15

Assistance identifying best applications for EAP 5.50 5.19 -0.31

Training materials and support 5.54 5.25 -0.29

Knowledge of your organization's purchasing/payables software and business process 5.61 5.15 -0.46

Assistance in getting suppliers to accept EAP 5.63 4.96 -0.67

Quality of help from help desk 5.67 5.24 -0.43

Average time elapsed for help desk to resolve a problem 5.70 5.44 -0.26

Average time elapsed for help desk to resolve a problem 5.70 5.44 -0.26

Friendliness and respect shown by EAP issuer support personnel 5.72 5.46 -0.26

Service and support in EAP program implementation 5.91 5.39 -0.52

Handling of disputed transactions 5.93 5.43 -0.50

Overall customer service and support 5.99 5.41 -0.58


Exhibit 89 Importance of and Satisfaction with Overall Capture of Transaction-Related

Information


Data Integration

Seamless transfer and integration of data from the EAP issuer and into the user’s

information system increases the value of the EAP product in the market. However, this is a

significant challenge due to the multitude of different software providers, applications, and

technical standards. Exhibit 90 shows respondent satisfaction with four items associated

with data integration in ascending order of importance. There are two items with notable

positive satisfaction gaps: the ability to “consolidate p-card spending from multiple North

American sites into one single report” and the “ability to consolidate EAP spending from

multiple global sites into one report.”

The other two aspects of data integration—the ability to integrate payment data into resource

planning, general ledger, Accounts Payable, or other internal information systems

applications and the overall integration of EAP data with organizational information systems-

-have notable negative satisfaction gaps, representing areas of opportunity and cooperation

between EAP issuers and EAP-using organizations.

Exhibit 90 Importance of and Satisfaction with Aspects of EAP Data Integration



Capture of Transaction Data

Overall capture of transaction-related information 6.08 5.49 -0.59


Data Integration

Ability to consolidate EAP spending from multiple global sites into one report 3.78 4.57 0.79

Ability to consolidate EAP spend from multiple North American sites into one report 4.28 4.79 0.51

Overall integration of EAP data with organizational information systems 5.78 5.16 -0.62

Ability to integrate EAP data into resource planning, general ledger, AP, or other internal information systems applications 5.82 5.13 -0.69


Impact of Integration on Organizational Performance

Exhibit 91 shows the percentage of respondents that report having “significantly” or

“completely” integrated EAP account spending with (a) the organization’s accounting

information/ERP system (48%) and (b) the organization’s spending approval process (55%).

Exhibit 91 EAP Integration with Accounting Information/ERP System and Spending

Approval Process

* The survey inquired of integration with the organization’s spending approval process only of those respondents who put the majority of their purchasing card program spending on EAP.

To determine how the integration of EAP data into the accounting infrastructure affects

program performance, we examined organizations that did and did not “significantly” or

“completely” integrate EAP spending data into their accounting system. Exhibit 92 on the

next page compares key data points of organizations that have complete or significant

integration of EAP data with their accounting system against organizations that have “no”,

“minimal” or “moderate” degrees of integration. To hold constant for organizational size, all

respondents have less than 50,000 employees. The Exhibit indicates that, when compared,

organizations that have complete or significant integration of EAP data into their accounting

or ERP system:

report higher average monthly spending on EAP accounts ($1.2 million versus

$629,023),

report higher monthly EAP spending per employee ($202 versus $152),

report notably higher satisfaction (defined as a 0.50 point difference on a 7-point

satisfaction scale where 1=very dissatisfied and 7=very satisfied) with (a) their ability to

integrate EAP data into resource planning, general ledger, AP, or other internal

information systems applications, (b) [card issuer] service and support in EAP program

implementation, (c) their ability to automate workflow processing for expenditure

approval, (d) [card issuer] work with suppliers to ensure quality or suitability of data

passed through system, and (e) spend analysis,

report significantly greater overall satisfaction with the ability of bank technology to

support EAP program management, and

are modestly less likely to be considering switching EAP issuers (5% versus 7%).

EAP-Using Sample

Integration

% of respondents “significantly” or “completely” integrating EAP account spending with the organization’s accounting information / ERP system 48%

% of respondents “significantly” or “completely” integrating EAP account spending with the organization’s spending approval process* 55%


Exhibit 92

Program Performance of EAP-Using Organizations with/without Significant Integration of EAP Data into the Organizational Information or ERP System

(respondents with less than 50,000 employees) (all numbers are averages except where indicated otherwise)

Exhibit 92 suggests that seamless integration of EAP data into the accounting infrastructure

is an important element of customer satisfaction that may enhance or detract from the

customer’s relationship with their EAP issuer.

Respondents with Significant or

Compete Integration of EAP Data

Respondents without Significant or

Complete Integration of EAP Data

Company Statistics

Number of employees 5,738 4,146

Program Performance Measures

Average monthly EAP spending $1,156,863 $629,023

Monthly EAP spending per employee $202 $152

Significant Difference in Customer Satisfaction on Selected Integration-Related Items

Ability to integrate EAP data into resource planning, general ledger, AP, or other internal information systems applications 5.39 4.64

Service and support in EAP program implementation 5.65 5.00

Ability to automate workflow processing for expenditure approval 5.43 4.80

Work with suppliers to ensure quality or suitability of data passed through system 5.22 4.72

Spend analysis 5.59 4.89

Significant Difference in “Overall” Customer Satisfaction

Overall ability of bank technology to support EAP program management 5.58 5.08

Customer-Issuer Relations

Percent of organizations considering switching EAP issuers 5% 7%


Card Program Management Technology

Exhibit 93 shows respondent ratings of the importance of and satisfaction with seven EAP-

related program management software capabilities in ascending order of importance.

Respondents placed the highest importance on the EAP program administrator’s ability to

(1) obtain real-time access to information on EAP spending approvals/declines, (2) modify

spending limits in real-time, (3) self-manage the EAP program, and (4) the overall ability of

bank technology to support EAP program management.

The most notable negative gaps between the importance of and satisfaction with technology

are associated with (1) the overall ability of the EAP program administrator to obtain real-

time access to information on EAP spending approvals/declines, and (2) the overall ability of

bank technology to support EAP program management.

Exhibit 93

Importance of and Satisfaction with Software Technology Features Related to EAP Program Management



Ability of EAP Program Administrator to:

Allocate EAP payments to separate accounts on an ad hoc basis 5.31 5.23 -0.08

Validate account codes 5.33 5.24 -0.09

Automate workflow processing for expenditure approval 5.42 5.17 -0.25

Overall ability of bank technology to support EAP program management 5.73 5.38 -0.35

Self-manage the EAP program 5.77 5.49 -0.28

Modify spending limits in real-time 5.90 5.60 -0.30

Obtain real-time access to information on EAP spending approvals/declines 5.96 5.59 -0.37


Reporting Technology

Reporting on EAP activity is a basic tool that enables program administrators to better

manage and evaluate the success of their EAP programs. Exhibit 94 displays respondent

ratings of the importance of and satisfaction with nine different aspects of EAP spend

reporting in ascending order of importance. The Exhibit shows that the most important

aspect of EAP reports is simple readability. After this, respondents place greater importance

on (a) overall reporting package, (b) spend analysis, (c) the length of transaction history, (d)

access to past and current EAP statements, and (e) access to EAP account statements by

e-mail or from Internet/Intranet. The next tier of importance for reporting technology items

includes the ability to customize reports, disputed transaction tracking, and the ability to

generate EAP program performance metrics. There are notable negative gaps between

respondent’s rating of the importance of and their satisfaction regarding the “readability of

reports,” the “overall reporting package,” and the “ability to customize reports to needs of the

business.”

Exhibit 94

Importance of and Satisfaction with Elements of Electronic Accounts Payable Reporting


Gap Summary across All Importance-Satisfaction Categories

Exhibit 95 on the next page summarizes scores related to the importance of and satisfaction

with various elements of EAP programs by presenting the six “catch-all” questions about

service and technology asked in each area; to wit: EAP account (1) economics, (2) customer

service and support, (3) data capture, (4) data integration, (5) program management

technology, and (6) reporting technology, in descending order of importance.


EAP – Reporting

Ability to generate EAP program performance metrics 5.38 4.98 -0.40

Disputed transaction tracking 5.50 5.08 -0.42

Ability to customize reports to needs of business 5.59 4.99 -0.60

Ability of access EAP account statements by e-mail or from Internet/Intranet 5.62 5.34 -0.28

Access to past/current EAP statements 5.71 5.43 -0.28

Length of transaction history 5.72 5.44 -0.28

Spend analysis 5.74 5.27 -0.47

Overall reporting package 5.74 5.23 -0.51

Readability of reports 5.85 5.34 -0.51


Exhibit 95 discloses that the most important overall endeavor of EAP issuers is the capture

of transaction-related information. This point is of interest inasmuch as Traditional card

programs identify “customer service and support” as the most important aspect associated

with “plastic card” programs.13 Thus, it appears that EAP-using organizations place

relatively greater emphasis on the capture of transactional data than their Traditional

purchasing card program counterparts. The Exhibit also shows that the largest gap between

importance and satisfaction is associated with the “overall integration of EAP data with

organizational information systems,” the implications of which are addressed in Exhibit 92.

Significant gaps also exist in the “overall customer service and support” and “overall

reporting package” areas.

Exhibit 95

Summary of the Importance of and Satisfaction with Economics, Customer Service, and Technology Factors


Conclusion

Use of EAP is relatively new and it is no surprise that there continues to be opportunities for

improvement in technology and service. The largest gaps between the average importance

of a certain factor and the satisfaction with that factor exist within the “overall integration of

EAP data with organizational information systems,” “overall capture of transaction-related

information,” and “overall customer service and support” areas. We have also found that

organizations that fully integrate their EAP data with their accounting system are likely to be

more satisfied with several factors regarding their EAP program.

13 In the 2012 Purchasing Card Benchmark Survey, respondents identified “Overall customer service and Support”

as the most important of the six overall items (with a score of 6.33), followed by “Overall capture of transaction-related information” (6.25) and the “Overall ability of bank technology to support EAP program management” (6.23).


Card Issuer Performance Item






Overall economic relationship with card issuer in relation to EAP 5.56 5.39 -0.17

Switching Behavior and Barriers to EAP Growth | 145

Chapter 15

Switching Behavior and Barriers to EAP Growth

Switching EAP account issuers is a business decision that can be expensive for both the

customer and the financial institution. The purpose of this Chapter is to understand the

extent to which customers are considering switching EAP issuers and the rationale behind

those intentions.

Intent to Switch EAP Provider

Across the sample of EAP-using respondents only 6% report that they are currently

considering switching their EAP issuer. By contrast, 12% of “traditional” purchasing card

programs that only use plastic and ghost accounts report that they are considering switching

their card issuer.

Rationale for Switching

Exhibit 96 on the next page shows the relative importance of the reasons for switching EAP

issuers given by respondents that are currently considering switching card issuers. Across

all respondents, the most prominent reason for switching is the need for “greater revenue

sharing in rebates” (6.38). Other important reasons for considering switching card issuers

include the desire for “lower fees or service charges” (5.75) and “better card spend reporting

capabilities” (5.00).

Highlights

Intent to switch EAP provider

Rationale for switching

Specific items for improvement

Barriers to EAP use

Conclusion


Exhibit 96

Importance of Reasons for Considering Switching EAP Issuers (where 1=Not Important and 7=Very Important)

Exhibit 97 on the next page compares the customer satisfaction scores (on the six “overall”

performance criteria) of organizations that are currently considering or not considering

switching card issuers. Organizations considering switching are significantly less satisfied

with every “overall” aspect of card issuer activity. The greatest differences in customer

satisfaction between organizations considering and not considering switching relate to the

overall reporting package (4.33 versus 5.26), the overall ability of bank technology to support

EAP program management (4.67 versus 5.39) and overall customer service and support

(4.83 versus 5.45).

Total Sample

Desire for greater revenue sharing in rebates 6.38

Desire for lower fees or service charges 5.75

Drawing near end of current contract with our issuer 5.57

Desire for better EAP spend reporting capabilities 5.00

Desire to obtain an up-front financial incentive provided by another issuer 4.86

Desire to obtain benefits from consolidating business with one financial institution 4.75

Desire to improve the integration of EAP data into organizational information systems or expense automation software 4.71

Desire to improve the integration of EAP payment with spending approval process 4.57

Desire for better service and support 4.50

Desire for better acceptance by North American vendors 4.38

Desire for better global acceptance 4.00

Other 4.00


Exhibit 97

Customer Satisfaction with Overall Aspects of EAP Issuer Performance by Organizations Currently Considering and Not Considering Switching EAP Issuers

(where 1=Very Dissatisfied and 7=Very Satisfied)

Specific Items for Improvement

As noted above, survey respondents were asked forty-three survey questions about the

importance of and their satisfaction with various elements of their EAP program. Across all

forty-three questions, respondents that were considering switching EAP issuers reported

satisfaction scores below that of their counterparts that were not considering switching.

Exhibit 98 on the next page shows the twelve items with the largest difference in satisfaction

between EAP-using respondents that are currently considering and those that are not

currently considering switching EAP providers. The largest difference in satisfaction

between those considering and those not considering switching is with respect to the overall

reporting package. However, thematically, the largest differences revolve around elements

of:

technological capability, such as ability to access EAP account statements by e-mail or

from Internet/Intranet, access to past/current EAP statements, the length of transaction

history, ability to obtain real-time access to information on EAP spending

approvals/declines, the ability to modify spending limits in real-time, and the overall

ability of bank technology to support EAP program management, and

customer service, including assistance identifying best applications for EAP, service and

support in EAP program implementation, and overall customer service and support, and

the economic relationship with the EAP issuer (in relation to EAP) and the ability to

integrate EAP data into resource planning, general ledger, AP, or other internal

information systems applications.

Currently Considering

Switching EAP Issuers

Not Considering


Difference

Customer Satisfaction Measure

Overall economic relationship with EAP issuer in relation to EAP 4.83 5.41 -0.58







Exhibit 98

Twelve Largest Differences in Satisfaction between Respondents Considering and Not Considering Switching EAP Issuers

(where 1=Very Dissatisfied and 7=Very Satisfied)

Barriers to EAP Use

Exhibit 99 on the next page shows the respondents’ level of managerial concern over

various barriers to EAP use. These concerns give clues about the issues that are of

importance to EAP-users today and may continue to be in future. The highest rated concern

(on a 7 point scale where 1 is low and 7 a high concern) relates to the possibility that

“suppliers will decline [the] EAP account as a method of payment” (with a score of 3.88).

Other barriers, including those relating to regulatory compliance, accounting, and security,

rated of significantly less concern to respondents.

Currently Considering


Not Considering


Difference

Customer Satisfaction Measure


Ability of access EAP account statements by e-mail or from Internet/Intranet 4.50 5.39 -0.89

Access to past/current EAP statements 4.67 5.48 -0.81


Assistance identifying best applications for EAP 4.50 5.21 -0.71

Length of transaction history 4.83 5.48 -0.65


Obtain real-time access to information on EAP spending approvals/declines 5.00 5.61 -0.61

Modify spending limits in real-time 5.00 5.61 -0.61

Service and support in EAP program implementation 4.83 5.40 -0.57

Overall economic relationship with issuer in relation to EAP 4.83 5.39 -0.56

Ability to integrate EAP data into resource planning, general ledger, AP, or other internal information systems applications 4.57 5.13 -0.56


Exhibit 99 Managerial Concern about Barriers to EAP Use

(where 1=Low Concern and 7=High Concern)

Conclusion

The purpose of this section was to determine what impact, if any, customer satisfaction has

on the customer’s intent to switch or maintain relationships with EAP issuers. We found that

high customer satisfaction is associated with customer decisions to maintain their

relationship with their EAP issuer.

Overall, the survey results indicate that 6% of respondents are currently considering

switching their EAP issuers. Among those respondents, the most prominent reason for

considering switching card issuers is the desire for greater revenue sharing in rebates.

The greatest barrier to EAP use is not regulatory compliance, accounting, or even security-

related issues—rather it is the concern that suppliers will not accept EAP as a method of

payment.

2.46

2.69

2.76

2.79

2.80

2.87

2.88

3.88

EAP spend will not be in compliance with Sarbanes-Oxley requirements

EAP spending will not be in compliance with internal audit requirements

IRS Form 1099 will not be sent to appropriate vendors

Reconciliation of EAP spending to internal accounting info about spending will not be complete or timely

Third parties will obtain EAP account information to make unlawful purchases

Sales and use tax obligations will not be met

EAP spend will not be tracked/correctly allocated to appropriate general ledger accounts

Suppliers will decline our EAP account as a method of payment


A culture of discipline is not a principle of business, it is a principle of greatness.

Jim Collins


Program Norms by Market Segment


16 Card Program Performance of Fortune 500-Size Corporations

17 Card Program Performance of Large Market Corporations

18 Card Program Performance of Middle Market Corporations

19 Card Program Performance of Government and Not-for-Profit Organizations


Section 5


Chapter 16

Card Program Performance of Fortune 500-Size Corporations

The purpose of this and the next three chapters is to present EAP spending patterns and

the impact they have on Government and Not-for-Profit organizations and Corporations

of different sizes, including “Fortune 500-Size” (annual sales revenue greater than or

equal to $2 billion), “Large Market” (annual sales revenue greater than or equal to $500

million but less than $2 billion), and “Middle Market” (annual sales revenue greater than

or equal to $25 million but less than $500 million).

The focus in this chapter is on the EAP spending of Fortune 500-Size corporations as

categorized into the following two groups:

Moderate EAP– respondents with less than 50% of their total purchasing card

spending paid with EAP accounts and the remainder on plastic cards and ghost

accounts.

Advanced-to-High EAP – respondents with 50% or more of their total purchasing

card spending paid with EAP accounts and the remainder (if any) on plastic cards

and ghost accounts.

Highlights

Fortune 500-Size EAP program performance statistics

Fortune 500-Size EAP spending in the context of the total purchasing card program

Fortune 100-Size EAP program performance statistics

Fortune 100-Size EAP spending in the context of the total purchasing card program

Conclusion

Card Program Performance of Fortune 500-Size Corporations | 153

We combine these two groups in a “Total” column as well. Key EAP spending

performance metrics and the overall purchasing card program context across the two

categories are shown on the following pages.

Fortune 500-Size EAP Program Performance Statistics

Exhibit 100 on the next page presents key EAP spending statistics at Fortune 500-Size

corporations in the Moderate and Advanced-to-High EAP groups and in both groups

combined (in the rightmost column). We breakdown the responses by the age of the

EAP program, monthly EAP spending, average EAP transaction amount, capture of

transactions of differing dollar values with EAP payment, and EAP benchmark data

points.

Program Age

The average length of time that a Fortune 500-Size corporation has used EAP is 3.1

years. EAP has been used for a longer period of time in the Advanced-to-High EAP

group (3.7 years) than in the Moderate EAP group (2.4 years).


Total average monthly EAP spending is about $4 million at Fortune 500-Size companies.

Respondents in the Advanced-to-High EAP group report average monthly EAP spending

of $6.1 million while those in the Moderate EAP group report $1.7 million. Median

monthly EAP spending peaks in the Advanced-to-High EAP group ($2.0 million), over

three times higher than in the Moderate EAP group ($554,753).

The average monthly number of EAP transactions at Fortune 500-Size corporations is

1,592. Advanced-to-High corporations conduct, on average, 2,142 EAP transactions per

month, compared to 958 at Moderate EAP organizations.


The average EAP transaction amount among Fortune 500-Size corporations is $2,541.

The average EAP transaction amount is higher in the Advanced-to-High EAP group

($2,862) than in the Moderate EAP ($1,746) group.


Under $2,500 Transactions. Moderate EAP and Advanced-to-High EAP Fortune 500-

Size corporations use EAP to pay for 6% and 19% of their under $2,500 transactions,

respectively.

$2,500 to $10,000 Transactions. Moderate EAP and Advanced-to-High EAP Fortune

500-Size corporations use EAP to pay for 11% and 22% of their $2,500 to $10,000

transactions, respectively.


$10,000 to $100,000 Transactions. Moderate EAP and Advanced-to-High EAP Fortune

500-Size corporations use EAP to pay for 20% and 25% of their $10,000 to $100,000



Annual EAP spending per $1 million of sales revenue at Fortune 500-Size corporations is

$5,388. This figure is higher in the Advanced-to-High EAP group ($7,348) and lower in

the Moderate EAP group ($3,041).

EAP monthly average spending per employee at Fortune 500-Size corporations is $118.

This figure is higher in the Advanced-to-High EAP group ($164) and lower in the

Moderate EAP group ($55).

Exhibit 100

EAP Spending Data of Fortune 500-Size Corporations and within Moderate and Advanced-to-High EAP Groups

Fortune

500-Size Moderate

EAP Users

Fortune

500-Size Advanced-to-

High EAP Users

Total Fortune 500-Size

EAP Users





Average monthly EAP spending $1,671,892 $6,129,868 $4,043,584

Median monthly EAP spending $554,753 $1,961,087 $1,167,000

Average monthly EAP transactions 958 2,142 1,592








Annual EAP spending per $1 million of annual sales revenue $3,041 $7,348 $5,388


Fortune 500-Size EAP Spending in the Context of the Total

Purchasing Card Program

Exhibit 101 on the next page presents key purchasing card program statistics for

“Traditional” Fortune 500-Size programs (which only use plastic cards and ghost

accounts) and compares them to their EAP-using counterparts. We breakdown the

responses by the age of the program, plastic card distribution, total monthly purchasing

card spending, capture of transactions of differing dollar values on card technology,

cardholder activity, average transaction amounts, benchmark data points, and the

percentage of inactive plastic cards.

Program Age

Fortune 500-Size corporations with Traditional purchasing card programs have been in

place, on average, 10.8 years. The average length of time that an EAP-using Fortune

500-Size company has had a purchasing card program is 10.3 years.

Card Distribution

Fortune 500-Size corporations with Traditional purchasing card programs distribute, on

average, 2,143 plastic purchasing cards to 8.2% of their employee base. In comparison,

EAP-using Fortune 500-Size corporations distribute, on average, 2,396 plastic

purchasing cards to 7.0% of their employee base.


For Fortune 500-Size corporations, average monthly purchasing card spending (on all

card platforms combined) is $5.4 million among Traditional card programs and $7.6

million at EAP-using programs.


Under $2,500 Transactions. Fortune 500-Size corporations with Traditional card

programs pay for 51% of their under $2,500 transactions with plastic cards and ghost

accounts. Almost similarly, EAP-using Fortune 500-Size corporations pay for 50% of

their under $2,500 transactions with purchasing card accounts (plastic, ghost, and EAP).

$2,500 to $10,000 Transactions. Fortune 500-Size corporations with Traditional card

programs pay for 29% of their $2,500 to $10,000 transactions with plastic cards and

ghost accounts. By contrast, EAP-using Fortune 500-Size corporations use plastic,

ghost, and EAP accounts to pay for 40% of their $2,500 to $10,000 transactions.






Total Spending Relationship Benchmarks

Total purchasing card program spending (on all card platforms combined) as a

percentage of revenue is higher among Fortune 500-Size corporations that utilize EAP

(1.27%) than at Traditional program counterparts (0.84%). Likewise, total monthly card

program spending per employee is higher among Fortune 500-Size corporations that

utilize EAP ($222) that at Traditional program counterparts ($207).


Average spending per transaction (on all card platforms combined) is higher among

Fortune 500-Size EAP-using organizations ($628) than at their Traditional card program

counterparts ($329). The percentage of inactive plastic cards is higher at Traditional card

programs (where a higher percentage of employees are provided with plastic cards) than

among EAP-using corporations (18% versus 14%, respectively).

Exhibit 101 Total Purchasing Card Program Performance of Fortune 500-Size Corporations

with Traditional Card Programs or EAP-Using Card Programs

Fortune 500-Size Traditional Card

Programs

Fortune 500-Size EAP-Using Programs

Company Statistics

Age of purchasing card program (in years) 10.8 10.3


Number of plastic purchasing cards 2,143 2,396

Card-to-employee ratio 8.2% 7.0%

Purchasing Card (Plastic, Ghost, EAP) Spending Measures

Average total monthly spending $5,424,183 $7,640,864

Median total monthly spending $2,828,671 $3,800,000

Annual spending as a percentage of annual sales revenue 0.84% 1.27%

Monthly spending per employee $207 $222

Capture of Spending

Transactions under $2,500 paid with plastic, ghost, and EAP p-card accounts 51% 50%

Transactions between $2,500 and $10,000 paid with plastic, ghost, and EAP p-card accounts 29% 40%



Spending per transaction $329 $628

Inactive plastic cards in a typical month 18% 14%


Fortune 100-Size EAP Program Performance Statistics

The Fortune 500-Size category is “open-ended,” with no upper limit on the size of the

respondents in the group. Exhibit 102 breaks out the EAP performance statistics of the

“largest of the large” respondents that reside within the Fortune 500-Size category--

hereafter called “Fortune 100-Size” corporations, which includes all companies with

annual sales revenue exceeding $20 billion.

The Exhibit shows that Fortune 100-Size corporations average $8.7 million per month in

spending on EAP accounts (over twice that of the “Fortune 500-Size” corporation

average) on 3,380 EAP transactions. In comparison to the Fortune 500 EAP-using

norms (Exhibit 100), this level of activity also results in higher capture of under $2,500

transactions (17% versus 13%), between $2,500 to $10,000 transactions (20% versus

17%), and between $10,000 to $100,000 transactions (25% versus 23%). However,

because of the larger organizational size, benchmark figures such as spending per

employee ($95 versus $118) and annual EAP spending per $1 million in revenue ($4,978

versus $5,388) track lower than that of the Fortune 500-Size group as a whole.

Exhibit 102

EAP Spending Data of Fortune 100-Size Corporations

Fortune

100-Size

EAP Users

Company Statistics

Number of employees 91,576

Age of EAP program (in years) 2.9


Average monthly EAP spending $8,712,829

Median monthly EAP spending $3,000,000

Average monthly EAP transactions 3,380

EAP spending per transaction $2,578


Transactions under $2,500 paid with EAP accounts 17%



Monthly EAP spending per employee $95


Annual EAP spending per $1 million of annual sales revenue $4,978


Fortune 100-Size EAP Spending in the Context of the Total

Purchasing Card Program


“Traditional” Fortune 100-Size programs (which only use plastic cards and ghost

accounts) and compares them to their EAP-using counterparts.

Program Age

Traditional (EAP-Using) Fortune 100-Size corporation purchasing card programs have

been in place, on average, 14.0 (11.6) years.

Card Distribution

Fortune 100-Size corporations with Traditional purchasing card programs distribute, on

average, 3,125 plastic purchasing cards to 4.2% of their employee base. In comparison,

EAP-using Fortune 100-Size corporations distribute, on average, 3,423 plastic

purchasing cards to 3.7% of their employee base.


For Fortune 100-Size corporations, average monthly purchasing card spending (on all

card platforms combined) is $10.3 million in Traditional card programs and $14.9 million

at EAP-using programs.


Under $2,500 Transactions. Fortune 100-Size corporations with Traditional card

programs pay for 48% of their under $2,500 transactions with plastic cards and ghost

accounts. EAP-using Fortune 100-Size corporations pay for 58% of their under $2,500

transactions with plastic, ghost, and EAP accounts.







ghost accounts. In contrast, EAP-using Fortune 100-Size corporations use plastic, ghost,

and EAP accounts to pay for 40% of their $10,000 to $100,000 transactions.




percentage of revenue is higher among Fortune 100-Size corporations that utilize EAP


program spending per employee is higher among Fortune 100-Size corporations that

utilize EAP ($163) that at Traditional program counterparts ($140).

Transaction Activity Measures

Average spending per transaction (all card platforms combined) is significantly higher

among Fortune 100-Size EAP-using organizations ($654) than at Traditional card

program counterparts ($338). The percentage of inactive plastic cards is identical

between Traditional and EAP-using card programs (17%).

Exhibit 103 Total Purchasing Card Program Performance of Fortune 100-Size Corporations


Fortune 100-Size Traditional Card

Programs

Fortune 100-Size EAP-Using Programs

Company Statistics



Number of plastic purchasing cards 3,125 3,423




Median total monthly spending $7,000,000 $12,965,766



Capture of Spending






Inactive plastic cards in a typical month 17% 17%


Conclusion

Fortune 500-Size corporations (with annual revenue of $2 billion or more) that use EAP

report average monthly EAP spending of $4.0 million and total purchasing card program

spending (on all platforms combined) of $7.6 million. By contrast, Traditional card

programs (using only plastic cards and ghost accounts) in the Fortune 500-Size segment

report average monthly purchasing card spending of $5.4 million. The percentage of

under $2,500 transactions paid with card technology is almost the same for Traditional

card and EAP-using programs. The difference lies in “higher value” transactions, where

EAP-using organizations pay for a significantly higher percentage of $2,500 to $10,000

and $10,000 to $100,000 transactions with card technology than Traditional programs.

Consequently, the EAP-using Fortune 500-Size corporations report higher purchasing

card spending (on all accounts combined) per employee and as a percentage of sales

revenue than their Traditional card program counterparts.

Fortune 100-Size corporations (with annual revenue of $20 billion or more) that use EAP

report average monthly EAP spending of $8.7 million and total purchasing card program

spending (on all platforms combined) of $14.9 million. By contrast, Traditional card

programs (using only plastic cards and ghost accounts) in the Fortune 100-Size segment

average monthly purchasing card spending of $10.3 million. The percentage of

transactions paid with cards is significantly higher among EAP-using corporations for

transactions of under $2,500, between $2,500 and $10,000, and between $10,000 and

$100,000. Further, EAP-using Fortune 100-Size corporations report higher purchasing

card spending (on all accounts combined) per employee and as a percentage of sales

revenue than their Traditional card program counterparts.

Card Program Performance of Large Market Corporations | 161

Chapter 17

Card Program Performance of Large Market Corporations

The focus in this chapter is on EAP spending and its relation to overall purchasing card

program performance of Large Market corporations as categorized into the following two

groups:



accounts.



and ghost accounts.



categories are shown on the next few pages.

Highlights

Large Market EAP program performance statistics

Large Market EAP spending in the context of the total purchasing card program

Conclusion


Large Market EAP Program Performance Statistics

Exhibit 104 on the next page presents key EAP spending statistics at Large Market


combined (in the rightmost column). We breakdown the responses by the age of the

EAP program, monthly EAP spending, average EAP transaction amount, capture of

transactions of differing dollar value with EAP payment, and EAP benchmark data points.

Program Age

The average length of time that a Large Market corporation has used EAP accounts is

2.8 years. On average, EAP has been used for a longer period of time in the Advanced-

to-High EAP group (3.0 years) and a slightly shorter period of time in the Moderate EAP

group (2.6 years).


The Large Market group reports average monthly EAP spending of $825,952. The Large

Market Advanced-to-High EAP group reports average monthly EAP spending of $1.2

million while the Moderate EAP group reports $455,004. Median monthly EAP spending

peaks in the Advanced-to-High EAP group ($875,285), over three times higher than at

Moderate EAP organizations ($260,000).

A similar pattern exists with respect to the average number of EAP transactions per

month. The Large Market EAP-using group reports 280 average monthly EAP

transactions. The Advanced-to-High EAP group conducts, on average, 339 monthly EAP

transactions while the Moderate EAP group conducts 225.


The average EAP transaction amount among Large Market corporations is $2,945; this

figure is higher in the Advanced-to-High EAP group ($3,595) and lower in the Moderate

EAP group ($2,021).


Under $2,500 Transactions. Moderate EAP and Advanced-to-High EAP Large Market

corporations use EAP to pay for 8% and 14% of their under $2,500 transactions,

respectively.

$2,500 to $10,000 Transactions. Moderate EAP and Advanced-to-High EAP Large

Market corporations use EAP to pay for 13% and 18% of their $2,500 to $10,000


$10,000 to $100,000 Transactions. Moderate EAP and Advanced-to-High EAP Large





Annual EAP spending per $1 million in sales revenue at Large Market corporations is

$10,652. The figure is higher in the Advanced-to-High EAP group ($16,045) and lower in

the Moderate EAP group ($5,417).

Monthly average EAP spending per employee at Large Market corporations is $186.

This figure is higher in the Advanced-to-High EAP group ($288) and lower in the

Moderate EAP group ($98).

Exhibit 104

EAP Spending Data of Large Market Corporations and within Moderate and

Advanced-to-High EAP Groups

Large Market Moderate EAP

Users

Large Market Advanced-to-

High EAP Users

Total Large Market EAP

Users





Average monthly EAP spending $455,004 $1,219,382 $825,952












Large Market EAP Spending in the Context of the Total Purchasing

Card Program


“Traditional” Large Market programs (which only use plastic cards and ghost accounts)

and compares them to their EAP-using counterparts

Program Age

Traditional Large Market corporation purchasing card programs have been in place, on

average, 7.4 years. The average length of time that an EAP-using Large Market

company has had a purchasing card program is 6.8 years.

Card Distribution

Large Market corporations with Traditional purchasing card programs distribute, on

average, 421 plastic purchasing cards to 11.2% of their employee base. By comparison,

EAP-using Large Market corporations distribute, on average, 352 plastic purchasing

cards to 8.0% of their employee base.


For Large Market corporations, average monthly purchasing card spending (on all card

platforms combined) is $1.1 million at Traditional card programs and $1.6 million at EAP-

using programs.


Under $2,500 Transactions. Large Market corporations with Traditional card programs

pay for 44% of their under $2,500 transactions with plastic cards and ghost accounts.

Almost similarly, EAP-using Large Market corporations pay for 42% of their under $2,500


$2,500 to $10,000 Transactions. Large Market corporations with Traditional card


ghost accounts. In contrast, EAP-using Large Market corporations use plastic, ghost,


$10,000 to $100,000 Transactions. Large Market corporations with Traditional card


ghost accounts. In bold contrast, EAP-using Large Market corporations use plastic,





percentage of revenue is higher among Large Market corporations that utilize EAP


program spending per employee is higher among Large Market corporations that utilize

EAP ($368) that at Traditional program counterparts ($282).



Large Market EAP-using companies ($553) than at Traditional card programs ($236).

The percentage of inactive plastic cards is higher among Large Market Traditional card



Exhibit 105 Total Purchasing Card Program Performance of Large Market Corporations

Organizations with Traditional Card Programs or EAP-Using Card Programs

Large Market Traditional Card

Programs

Large Market EAP-Using Programs

Company Statistics



Number of plastic purchasing cards 421 352




Median total monthly spending $600,000 $1,303,198



Capture of Spending






Inactive cards in a typical month 18% 12%


Conclusion

Large Market corporations that use EAP report average monthly EAP spending of

$825,952 and total purchasing card program spending (on all platforms combined) of

$1.6 million. By contrast, Traditional card programs (using only plastic cards and ghost

accounts) in the Large Market segment report average monthly purchasing card

spending of $1.1 million. The percentage of under $2,500 transactions paid with card

technology is almost the same for Traditional card and EAP-using Large Market

programs. The difference lies in “higher value” transactions, where EAP-using

organizations pay for a significantly higher percentage of $2,500 to $10,000 and $10,000

to $100,000 transactions with card technology. Consequently, the EAP-using Large

Market corporations report higher card spending (on all accounts combined) per

employee and as a percentage of sales revenue than Traditional card program

counterparts.

Card Program Performance of Middle Market Corporations | 167

Chapter 18

Card Program Performance of Middle Market Corporations

The focus in this chapter is on EAP spending and its relation to the overall purchasing

card program performance of Middle Market corporations as categorized into the

following two groups:



accounts.



and ghost accounts.




Highlights

Middle Market EAP program performance statistics

Middle Market EAP spending in the context of the total purchasing card program

Conclusion


Middle Market EAP Program Performance Statistics

Exhibit 106 on the next page presents key EAP spending statistics at Middle Market


combined. We breakdown the responses by the age of the EAP program, monthly EAP

spending, average EAP transaction amount, capture of transactions of differing dollar

value with EAP payment, and EAP benchmark data points.

Program Age

The average length of time that a Middle Market corporation has used EAP is 3.0 years.

On average, EAP has been used for a slightly longer period of time in the Moderate EAP

group (3.2 years) than in the Advanced-to-High EAP group (2.9 years).


Middle Market EAP-using corporations report average monthly EAP spending of

$339,618. The Middle Market Advanced-to-High EAP group reports average monthly

EAP spending of $508,871 while the Moderate EAP group reports average monthly

spending of $103,450.

A similar pattern exists with respect to the average number of transactions per month,

with Advanced-to-High corporations conducting, on average, 200 EAP transactions, while

Moderate EAP organizations report 62.


The average EAP transaction amount among Middle Market corporations is $2,389. The

average EAP transaction amount is higher in the Advanced-to-High EAP group ($2,550)

and lower in the Moderate EAP group ($1,667).


Under $2,500 Transactions. Moderate EAP and Advanced-to-High EAP Middle Market

corporations use EAP to pay for 7% and 21% of their under $2,500 transactions,

respectively.

$2,500 to $10,000 Transactions. Moderate EAP and Advanced-to-High EAP Middle



$10,000 to $100,000 Transactions. Moderate EAP and Advanced-to-High EAP Middle





Annual EAP spending per $1 million in sales revenue at Middle Market corporations is

$25,520. The figure is higher in the Advanced-to-High EAP group ($35,714) than in the

Moderate EAP group ($11,533).

Monthly average EAP spending per employee at Middle Market corporations is $472.

This figure is higher in the Advanced-to-High EAP group ($590) than in the Moderate

EAP group ($199).

Exhibit 106

EAP Spending Data of Middle Market Corporations and within Moderate and

Advanced-to-High EAP Groups

Middle Market Moderate

EAP Users

Middle Market Advanced-to-

High EAP Users

Total Middle Market

EAP Users


Number of employees 521 863 658



Average monthly EAP spending $103,450 $508,871 $339,618












Middle Market EAP Spending in the Context of the Total Purchasing

Card Program


“Traditional” Middle Market programs (which only use plastic cards and ghost accounts)

and compares them to their EAP-using counterparts

Program Age

Traditional Middle Market corporation purchasing card programs have been in place, on

average, 6.6 years. The average length of time that an EAP-using Middle Market

company has had a purchasing card program is 4.8 years.

.Card Distribution

A Traditional Middle Market purchasing card program distributes, on average, 149 plastic

purchasing cards to 16.9% of the employee base. By comparison, EAP-using Middle

Market corporations distribute, on average, 59 plastic purchasing cards to 8.3% of the

employee base.


For Middle Market corporations, average monthly purchasing card spending (on all card

platforms combined) is $471,799 at Traditional card programs and $541,442 at EAP-

using programs.


Under $2,500 Transactions. Middle Market corporations with Traditional card programs

pay for 44% of their under $2,500 transactions with plastic cards and ghost accounts. In

contrast, EAP-using Middle Market corporations pay for 51% of their under $2,500


$2,500 to $10,000 Transactions. Middle Market corporations with Traditional card


ghost accounts. In contrast, EAP-using Middle Market corporations use plastic, ghost,


$10,000 to $100,000 Transactions. Middle Market corporations with Traditional card


ghost accounts. In contrast, EAP-using Middle Market corporations use plastic, ghost,





percentage of revenue is higher among Middle Market corporations that utilize EAP


program spending per employee is higher among Middle Market corporations that utilize

EAP ($752) that at Traditional program counterparts ($537).



Middle Market EAP-using companies ($895) than at their Traditional card program

counterparts ($293). The percentage of inactive plastic cards is similar between the two

groups (13% for Traditional and 14% for EAP-using programs).

Exhibit 107 Total Purchasing Card Program Performance of Middle Market Corporations


Middle Market Traditional Card

Programs

Middle Market EAP-Using Programs

Company Statistics






Average total monthly spending $471,799 $541,442

Median total monthly spending $212,831 $250,000



Capture of Spending








Additional Information on the Corporate Segment

The Appendix at the end of this document provides additional benchmark details of key

EAP program performance measures for the three Corporate segments presented in this

and the previous two chapters (Fortune 500-Size, Large Market, and Middle Market).

Conclusion

Middle Market corporations that use EAP report average monthly EAP spending of

$339,618 and total purchasing card program spending (on all platforms combined) of

$541,442. By contrast, Traditional card programs (using only plastic cards and ghost

accounts) in the Middle Market segment report average monthly purchasing card

spending of $471,799. As with the other corporate segments, plastic card distribution is

higher in Traditional card programs. But, unlike Fortune 500-Size and Large Market

corporations, Middle Market EAP-using companies capture a significantly higher

percentage of under $2,500 transactions on card payment. In addition, like other

corporate segments, EAP-using Middle Market companies report a significant difference

in the percentage of “higher value” transactions ($2,500 to $10,000 and $10,000 to

$100,000) paid with card technology. Consequently, the EAP-using Middle Market

corporations report higher purchasing card spending (on all accounts combined) per

employee and as a percentage of sales revenue than their Traditional card program

counterparts.

Imagination is more important than knowledge.

- Albert Einstein

Card Program Performance of Government and Not-for-Profit Organizations | 173

Chapter 19

Card Program Performance of Government and Not-for-Profit Organizations

The focus in this chapter is on EAP spending and its relation to the overall purchasing

card program performance of Government and Not-for-Profit organizations as

categorized into the following two groups:



accounts.



and ghost accounts.




Highlights

Government and Not-for-Profit EAP program performance statistics

Government and Not-for-Profit EAP spending in the context of the total

purchasing card program

Conclusion


Government and Not-for-Profit EAP Program Performance Statistics

Exhibit 108 on the next page below presents key EAP spending statistics at Government

and Not-for-Profit organizations in the Moderate and Advanced-to-High EAP groups and

in both groups combined (in the rightmost column). We breakdown the responses by the

age of the EAP program, monthly EAP spending, average EAP transaction amount,

capture of transactions of differing dollar value with EAP payment, and EAP benchmark

data points.

Program Age

The average length of time that a Government and Not-for-Profit organization has used

EAP accounts is 2.8 years. On average, EAP has been used for a longer period of time

in the Advanced-to-High EAP group (3.2 years) and a shorter period of time in the

Moderate EAP group (2.5 years).


Government and Not-for-Profit organizations group report average monthly EAP

spending of $642,374. The Advanced-to-High EAP group reports average monthly EAP

spending of $1.1 million while the Moderate EAP group reports $208,394.

A similar pattern exists with respect to the average number of transactions per month,

with respondents in the Advanced-to-High group conducting, on average, 685 EAP

transactions as compared to 181 in the Moderate EAP group.


The average EAP transaction amount among Government and Not-for-Profit

organizations is $1,516. The average EAP transaction amount is higher among those in

the Advanced-to-High EAP group ($1,621) and lower in the Moderate EAP group

($1,150).


Under $2,500 Transactions. Moderate EAP and Advanced-to-High EAP Government

and Not-for-Profit organizations use EAP to pay for 6% and 19% of their under $2,500


$2,500 to $10,000 Transactions. Moderate EAP and Advanced-to-High EAP

Government and Not-for-Profit organizations use EAP to pay for 8% and 30% of their

$2,500 to $10,000 transactions, respectively.

$10,000 to $100,000 Transactions. Moderate EAP and Advanced-to-High EAP

Government and Not-for-Profit organizations use EAP to pay for 8% and 27% of their

$10,000 to $100,000 transactions, respectively.



Annual EAP spending per $1 million of organizational budget at Government and Not-for-

Profit organizations is $21,218. This figure is higher in the Advanced-to-High EAP group

($40,816) and lower in the Moderate EAP group ($10,904).

Monthly average EAP spending per employee at Government and Not-for-Profit

organizations is $145. This figure is higher in the Advanced-to-High EAP group ($253)

than in the Moderate EAP group ($47).

Exhibit 108

EAP Spending Data of Government and Not-for-Profit Organizations and

within Moderate and Advanced-to-High EAP Groups


Moderate

EAP Users

Government and Not-for-Profit Advanced-to-

High EAP Users

Total Government and

Not-for-Profit EAP Users

Organizational Statistics Counties




Average monthly EAP spending $208,394 $1,109,737 $642,374










Annual EAP spending per $1 million of annual budget $10,904 $40,816 $21,218


Government and Not-for-Profit EAP Spending in the Context of the

Total Purchasing Card Program


“Traditional” Government and Not-for-Profit programs (which only use plastic cards and

ghost accounts) and compares them to their EAP-using counterparts

Program Age

Traditional Government and Not-for-Profit purchasing card programs have been in place,

on average, 9.0 years. The average length of time that an EAP-using Government and

Not-for-Profit organization has had a purchasing card program is 8.6 years.

Card Distribution

A Traditional Government and Not-for-Profit purchasing card program distributes, on

average, 660 plastic purchasing cards to 15.8% of their employee base. By comparison,

EAP-using Government and Not-for-Profit organizations distribute, on average, 464

plastic purchasing cards to 10.5% of their employee base.


At Government and Not-for-Profit organizations, average monthly purchasing card

spending (on all card platforms combined) is $899,017 at Traditional card programs and

$1.3 million at EAP-using programs.


Under $2,500 Transactions. Government and Not-for-Profit organizations with Traditional

card programs pay for 49% of their under $2,500 transactions with plastic cards and

ghost accounts. In contrast, EAP-using Government and Not-for-Profit organizations pay

for 54% of their under $2,500 transactions with plastic, ghost, and EAP accounts.

$2,500 to $10,000 Transactions Government and Not-for-Profit organizations with

Traditional card programs pay for 26% of their $2,500 to $10,000 transactions with plastic

cards and ghost accounts. In contrast, EAP-using Government and Not-for-Profit

organizations use plastic, ghost, and EAP accounts to pay for 39% of their $2,500 to

$10,000 transactions.

$10,000 to $100,000 Transactions. Government and Not-for-Profit organizations with

Traditional card programs pay for 6% of their $10,000 to $100,000 transactions with

plastic cards and ghost accounts. In contrast, EAP-using Government and Not-for-Profit

organizations use plastic, ghost, and EAP accounts to pay for 27% of their $10,000 to

$100,000 transactions.




percentage of organizational budget is higher among Government and Not-for-Profit

organizations that utilize EAP (4.9%) than at Traditional program counterparts (0.97%).

Unlike all of the Corporate segments, total monthly card program spending per employee

is similar between Government and Not-for-Profit organizations that use EAP ($289) and

Traditional card program counterparts ($301).


The average amount of spending per transaction (on all card platforms combined) is

higher at Government and Not-for-Profit organizations using EAP ($474) than at their

Traditional card program counterparts ($305). The percentage of inactive plastic cards is

slightly higher among Government and Not-for-Profit organizations with Traditional card



Exhibit 109 Total Purchasing Card Program Performance of Government and Not-for-

Profit Organizations with Traditional Card Programs or EAP-Using Card Programs


Traditional Card Programs


EAP-Using Programs

Organizational Statistics






Average total monthly spending $899.017 $1,276,692

Median total monthly spending $200,000 $500,000

Annual spending as a percentage of annual budget 3.3% 4.9%


Capture of Spending








Additional Information on the Government and Not-for-Profit

Segment

The Appendix at the end of this document provides additional benchmark details of key

EAP program performance measures for the four Not-for Profit organization categories:

State and Federal government, City and County government, Universities, and School

Districts.

Conclusion

Government and Not-for-Profit organizations that use EAP report average monthly EAP

spending of $642,374 and total purchasing card program spending (on all platforms

combined) of $1.3 million. By contrast, Traditional card programs (using only plastic

cards and ghost accounts) in the Government and Not-for-Profit segment report average

monthly purchasing card spending of $899,017. As with the all of the Corporate

segments, plastic card distribution is higher in Traditional card programs than in EAP-

using Government and Not-for-Profit programs. Government and Not-for-Profit

organizations that use EAP report a higher capture of transactions (under $2,500,

between $2,500 and $10,000, and between $10,000 and $100,000) than organization

with Traditional card programs. Consequently, EAP-using Government and Not-for-Profit

organizations report higher purchasing card spending as a percent of the annual budget

than their Traditional card program counterparts.


Conclusion, Acknowledgements, and Appendix


Section 6

In this section

• Conclusion

• Acknowledgements

• Appendix


Conclusion

The 2012 Electronic Accounts Payable (EAP) Benchmark Survey Results provide the first

comprehensive independent examination of the organizational use of EAP accounts to

date. This Report presents data and insights into the emerging landscape of

dynamically-adjustable cardless accounts. Further, this Report delves into the

phenomenon of “best practice” EAP use and the drivers that promote high performance

at EAP-using purchasing card programs. As in our other Benchmark Survey projects, we

track and present information on customer goals for EAP use, trends in EAP utilization,

reports of the benefits being derived from EAP use, program management activities and

priorities, and information regarding relationship issues between vendors, buyers, and

card issuers in regard to EAP utilization. Further, this edition--like its companion reports--

focuses on enabling organizations to better assess their EAP account performance by

comparison with similar organizations and to identify specific ways it can be improved.

For Users

We hope the data and analyses presented in this Report will enable users to focus their

efforts to improve EAP performance and sustain controlled growth of EAP account

spending. We urge organizations to consider the various activities associated with “best

practice” and increasing degrees of EAP usage summarized in Exhibits 57 and 86 of this

Report.

For Issuers

The marketplace is moving quickly to derive value from the payment for goods and

services by way of EAP. Much has been accomplished over the past five years, and the

market continues to look to EAP issuers to expand the purchasing card concept through

on-going technological innovations. With the advancements, we encourage issuers to

continue to focus on the “fundamentals” of customer service.

Going forward, we see new landscapes of growth and opportunity and excitement for

EAP technology. We look forward to examining future successes and challenges that lie

ahead.

Richard J. Palmer

Southeast Missouri State University

Mahendra Gupta

Washington University in St. Louis

Acknowledgements | 181

Acknowledgements

The authors would like to express their sincere appreciation to Visa, MasterCard, and

their card issuers (Bank of America, Bank of the West, BB&T, BMO/Harris Bank,

Commerce Bank, JP Morgan Bank, Comerica, Fifth Third Bank, FNBO, HSBC, M&T

Bank, PNC Bank, Regions Bank, Scotiabank, SunTrust, UMB, U.S. Bank, U.S. Bank

Canada, Wells Fargo, and Wright Express) for their support and participation in the

survey. In addition, we thank the members of The National Association of Purchasing

Card Professionals, the National Institute of Government Purchasing, and the Accounts

Payable Network for inviting their members to participate in the survey. Finally, we

heartily thank the survey respondents who took valuable time out of their schedule to

make this project a reality.

On our side of the fence, we want to particularly acknowledge the support and insight of

Miljan Markus, whose tireless assistance was critical to the success of this project. In

addition, we want to express our special thanks to James Brandt, David Rhoads, Shaukat

Sheikh, and Natalie Reinhart for their contribution to analysis and representation of

information for both users and issuers. We also want to thank Tina Raynes of

Washington University in St. Louis, and Sandeep Aggarwal and Amit Khetan of Digital

Route LLC for their terrific assistance in the administration of the project. Last, but not

least, we thank our family members for enduring the many long hours needed to bring

these results to the marketplace in a timely manner


Appendix

Survey participants identified themselves as being in one of the following categories:

public corporations, private corporations, Federal government agencies, State or State

government agencies, City or County or associated agencies, public or private

Universities, Not-for-Profit entities, and other. For purposes of analysis, the following

categories were grouped together in this Appendix:

(1) Public and private corporations;

(2) State and Federal Government;

(3) City and County Government;

(4) Universities;

(5) School Districts; and

(6) Not-for-Profit organizations.

The corporate category was further subdivided into three groups based on sales revenue.

The Fortune 500 Size corporation group includes companies that report annual sales

equal or above $2 billion. The Large Market corporate group consists of companies that

report annual sales equal or above $500 million, but below $2 billion. The Middle Market

corporate group includes companies that report sales equal to or greater than $25 million,

but less than $500 million.

APPENDIX

BENCHMARK STATISTICS BY ORGANIZATION SIZE AND TYPE CATEGORIES

DISCUSSION OF CATEGORIES

Survey participants identified themselves as being in one of the following categories: public corporations, private corporations, State agencies, Federal agencies,

Cities or Counties, Universities, School Districts, and Not-for-Profit organizations. For purposes of analysis, we grouped State and Federal governments together.

The corporate categories were grouped together and then subdivided into three groups by size. The Fortune 500 size corporations group includes companies

that have reported sales equal to or greater than $2 billion. The Large Market corporate group consists of companies with reported sales equal to or greater than

$500 million, but below $2 billion. The Middle Market corporate group includes companies that reported sales equal to or greater than $25 million, but less than $500 million.

1. BASIC EAP PROGRAM DATA BY CATEGORY OF RESPONDENT

Table 1. Number of employees: mean and quartile data by group.

Fortune 500 Large Market Middle Market

State and Federal

Government

City and County

Government Universities School Districts

Not-for-Profit

Organizations

Mean 34,343 4,430 658 13,831 1,305 7,051 3,440 5,729

75th Percentile 30,000 6,125 700 15,000 1,912 10,500 5,000 5,000

Median 12,000 3,000 350 1,000 650 4,000 1,734 2,000

25th Percentile 7,300 1,500 200 300 303 1,000 408 600

Table 2. Age of EAP program; percent of programs that are:


State and Federal

Government

City and County


Not-for-Profit

Organizations

Less than 1 year 27% 21% 23% 5% 20% 41% 32% 13%

1-2 years 19% 31% 26% 38% 30% 28% 29% 33%

3-4 years 24% 26% 24% 10% 26% 16% 24% 23%

Five or more years 30% 22% 27% 47% 24% 15% 15% 31%

2012 Electronic Accounts Payable Benchmark Survey Results 183

2. EAP PROGRAM PERFORMANCE STATISTICS

Table 3. Total monthly EAP spending: mean and quartile data by group.


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean $4,043,584 $825,952 $339,618 $3,778,349 $161,031 $536,887 $179,164 $1,497,004

75th Percentile $2,825,000 $1,150,000 $414,268 $1,969,216 $197,147 $420,000 $213,018 $1,300,000

Median $1,167,000 $480,000 $95,000 $400,000 $35,850 $180,000 $39,932 $453,000

25th Percentile $330,000 $110,000 $30,000 $89,610 $12,625 $64,823 $8,400 $60,000

Table 4. EAP spending per month per employee: mean and quartile data by group. *


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean $359 $552 $975 $877 $287 $202 $74 $971

75th Percentile $237 $238 $813 $780 $179 $136 $105 $500

Median $64 $132 $274 $154 $84 $83 $50 $201

25th Percentile $25 $56 $66 $27 $22 $17 $13 $53

* These figures represent an "average of organizational averages." This figure may not agree with the measure computed when all observations in a category are summed to create one group statistic.

Table 5. Average EAP transaction amount: mean and quartile data by group.*


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean $9,151 $7,361 $6,526 $2,846 $3,118 $1,729 $3,077 $3,879

75th Percentile $12,141 $5,792 $7,672 $2,984 $2,800 $2,322 $3,602 $5,331

Median $2,844 $3,144 $2,337 $1,333 $1,125 $1,003 $2,137 $1,800

25th Percentile $1,304 $1,383 $800 $703 $523 $679 $683 $917

* These figures represent an "average of organizational averages." This figure may not agree with the measure computed when all observations in a category are summed to create one group statistic.


2. EAP PROGRAM PERFORMANCE STATISTICS (continued)

Table 6. Number of EAP transactions per month: mean and quartile data by group.


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean 1,592 280 142 1,790 70 448 89 731

75th Percentile 1,000 415 119 755 100 550 106 550

Median 409 133 52 95 35 195 39 193

25th Percentile 76 37 11 44 13 39 12 31

Table 7. Percent of transactions under $2,500 paid by EAP accounts: mean and quartile data by group.


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean 13% 11% 14% 17% 8% 5% 18% 14%

75th Percentile 24% 15% 25% 21% 10% 10% 25% 20%

Median 8% 10% 10% 8% 5% 5% 10% 8%

25th Percentile 1% 2% 2% 1% 1% 1% 3% 5%

Table 8. Percent of transactions between $2,500 and $10,000 paid by EAP accounts: mean and quartile data by group.


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean 17% 15% 17% 33% 15% 9% 20% 21%

75th Percentile 30% 20% 25% 45% 20% 10% 26% 34%

Median 10% 10% 10% 20% 8% 5% 10% 12%

25th Percentile 2% 5% 2% 2% 2% 1% 3% 5%


2. EAP PROGRAM PERFORMANCE STATISTICS (continued)

Table 9. Percent of transactions between $10,000 and $100,000 paid by EAP accounts: mean and quartile data by group.


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean 23% 19% 17% 33% 13% 7% 20% 20%

75th Percentile 50% 20% 25% 44% 15% 10% 20% 20%

Median 5% 10% 8% 13% 5% 5% 7% 10%

25th Percentile 2% 2% 1% 3% 0% 0% 1% 5%

Table 10. Total EAP spending as a percentage of revenue: mean and quartile data by group


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean 0.64% 1.05% 2.74% 1.23% 2.15% 1.43% 1.61% 2.56%

75th Percentile 0.77% 1.20% 3.61% 1.49% 1.63% 1.27% 2.17% 3.36%

Median 0.25% 0.57% 1.25% 0.46% 0.83% 0.43% 0.38% 0.76%

25th Percentile 0.07% 0.15% 0.21% 0.08% 0.24% 0.09% 0.17% 0.21%


3. EAP PROGRAM FUNDAMENTALS

Table 11. Current goals of the EAP Program*


State and Federal

Government

City and County


Not-for-Profit

Organizations

Reduce labor and administrative costs associated

with procurement and payables 54% 67% 58% 50% 56% 60% 50% 61%

Increase convenience of purchasing for employees 46% 80% 48% 53% 56% 94% 38% 39%

Reduce the transaction procession workload for

the organization 69% 53% 48% 74% 67% 82% 50% 83%

Obtain better data to increase control over

spending 69% 40% 35% 75% 33% 39% 48% 39%

Obtain better data to enhance leverage with

vendors 31% 40% 16% 51% 33% 58% 13% 33%

Improve cash flow by extending time to payment 77% 60% 74% 50% 44% 40% 51% 44%

Obtain rebates and incentives for the organization 69% 87% 77% 49% 67% 80% 75% 89%

Reduce reliance on checks 92% 40% 58% 52% 56% 78% 88% 67%

Increase supplier acceptance of EAP 85% 47% 29% 27% 44% 59% 50% 44%

* These figures represent only organizations who place most or all of their purchasing card spending on EAP accounts

Table 12. Types of EAP accounts utilized by different organizations*


State and Federal

Government

City and County


Not-for-Profit

Organizations

Virtual or dynamic ghost account maintained by

supplier 55% 50% 28% 44% 48% 36% 43% 37%

Virtual or dynamic ghost account maintained by

buyer 34% 46% 41% 50% 24% 36% 50% 37%

Single use or rotating pool of accounts 39% 40% 31% 31% 17% 32% 29% 14%

Straight-through processing, Push-payments, or

Buyer-initiated transactions 36% 37% 53% 38% 28% 50% 43% 46%

Other 5% 13% 6% 13% 17% 4% 11% 14%

* Respondents could identify more than one EAP option,thus the percentages do not add to 100%


3. EAP PROGRAM FUNDAMENTALS (continued)

Table 13. Timing of EAP payment


State and Federal

Government

City and County


Not-for-Profit

Organizations

EAP account is charged on or about the date the

invoice is received 23% 30% 26% 46% 55% 26% 57% 32%

EAP account is charged at the due date specified

on the invoice (e.g., invoice terms of “net 30 days”

will get paid by EAP 30 days from the date of the

order) 67% 64% 66% 47% 35% 67% 26% 56%

Other 10% 6% 8% 7% 10% 7% 17% 12%

Table 14. Difference between EAP and plastic card purchases: Compared to purchasing on plastic p-cards, EAP account purchases are...*


State and Federal

Government

City and County


Not-for-Profit

Organizations

For transactions for goods of higher dollar values 54% 52% 48% 64% 68% 72% 31% 55%

For purchases from vendors with whom the

organization conducts a high number of

transactions 46% 57% 36% 9% 32% 72% 50% 55%

For goods and services which are not allowed to

be paid by plastic purchase cards 65% 52% 20% 18% 58% 50% 31% 25%

For transactions requiring additional

approvals/controls prior to payment 50% 53% 23% 22% 17% 20% 17% 35%

Different in other ways 15% 4% 6% 0% 0% 6% 7% 5%

* Respondents could identify more than one difference, thus the percentages do not add to 100%


4. EAP AND SUPPLIERS

Table 15. Percent of suppliers paid by EAP accounts: mean and quartile data by group


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean 14% 12% 18% 19% 19% 8% 9% 19%

75th Percentile 10% 20% 20% 32% 20% 5% 11% 25%

Median 5% 4% 10% 2% 5% 1% 5% 10%

25th Percentile 1% 2% 4% 1% 3% 1% 1% 4%

Table 16. Number of invoices processed by Accounts Payable per month.


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean 29,790 9,432 2,145 21,836 1,905 5,753 3,210 7,380

75th Percentile 32,150 12,250 2,700 26,750 2,625 10,000 2,000 7,500

Median 10,000 6,100 1,000 2,000 1,000 3,200 450 3,000

25th Percentile 2,750 2,850 600 325 500 1,125 200 700

Table 17. Percent of invoices paid by EAP accounts: mean and quartile data by group*.


State and Federal

Government

City and County


Not-for-Profit

Organizations

Mean 25% 17% 23% 13% 7% 11% 22% 18%

75th Percentile 35% 20% 30% 20% 8% 10% 25% 21%

Median 15% 10% 15% 8% 5% 6% 20% 14%

25th Percentile 2% 5% 5% 1% 3% 4% 3% 10%



4. EAP AND SUPPLIERS (continued)

Table 18. Percent of organizations that..*


State and Federal

Government

City and County


Not-for-Profit

Organizations

Use EAP spending data to obtain a price discount

for goods or services from any vendor 49% 46% 15% 55% 26% 40% 36% 28%


5. SPENDING LIMITS

Table 19. Spending limits per transaction on EAP accounts.


State and Federal

Government

City and County


Not-for-Profit

Organizations

Under $2,500 38% 45% 39% 44% 58% 32% 53% 17%

$2,501-$5,000 18% 22% 24% 31% 8% 36% 32% 28%

$5,001-$10,000 12% 8% 12% 6% 15% 18% 10% 14%

$10,000 to $100,000 17% 22% 18% 13% 15% 9% 5% 17%

Greater than $100,000 15% 3% 7% 6% 4% 5% 0% 24%

Table 20. Spending limits per month on EAP accounts.


State and Federal

Government

City and County


Not-for-Profit

Organizations

Under $50,000 44% 54% 48% 75% 59% 56% 55% 29%

$50,001 to $100,000 15% 13% 20% 13% 11% 16% 5% 16%

$100,01 to $1,000,000 8% 25% 26% 6% 15% 20% 35% 26%

Greater than $1,000,000 33% 8% 6% 6% 15% 8% 5% 29%


6. COMPLIANCE AND DATA MINING

Table 21. Percent of organizations that:*


State and Federal

Government

City and County


Not-for-Profit

Organizations

Provide a copy of the policies and procedures

manual for EAP use 47% 50% 17% 60% 43% 57% 50% 59%

Require AP to maintain a logbook of EAP activity 56% 44% 49% 56% 44% 43% 36% 41%

Track and resolve disputed EAP transactions 83% 78% 79% 60% 75% 57% 67% 77%

Formally audit and review the EAP spending

approval process 72% 83% 62% 63% 75% 63% 83% 78%

Conduct data mining of EAP transactions to

identify potential policy violations or EAP misuse 71% 61% 29% 67% 29% 57% 27% 30%


7. EAP TRAINING

Table 22. Percent of companies that*:


State and Federal

Government

City and County


Not-for-Profit

Organizations

Provide web-based EAP training materials 37% 43% 17% 40% 0% 29% 0% 13%

Provide in-person EAP training 47% 57% 13% 58% 30% 57% 50% 50%

Provide self-study EAP training materials 42% 50% 37% 52% 29% 55% 15% 19%

Track completion of EAP training and training

updates by employees 21% 36% 23% 40% 45% 50% 13% 25%

Support program administrator attendance at user

conferences to identify new ways to use EAP 84% 71% 11% 81% 43% 86% 67% 38%

Have an ongoing method of communicating EAP

information 47% 54% 24% 40% 28% 58% 13% 13%

Have a Web site that answers EAP questions 32% 21% 5% 36% 14% 13% 14% 6%



8. ACTIVITIES AND POLICIES TO EXPAND EAP ACCOUNT USE

Table 23. Actions taken to reach EAP spending potential. Percent of organizations that*:


State and Federal

Government

City and County


Not-for-Profit

Organizations

Target specific commodities or services for EAP

payment 60% 44% 26% 75% 25% 43% 22% 40%

Target specific vendors for EAP payment 75% 61% 64% 53% 63% 57% 32% 60%

Target types of purchases to be paid with EAP

accounts 55% 56% 33% 50% 50% 29% 45% 35%

Use banks list of card-accepting merchants to

identify vendors that can be paid with EAP 55% 50% 49% 11% 15% 29% 44% 45%

Make benchmark comparisons against published

figures 25% 33% 21% 8% 13% 14% 5% 19%

Make benchmark comparisons to that of similar

organizations 40% 28% 23% 25% 38% 71% 43% 50%

Provide financial incentives for business units to

increase EAP spending 25% 17% 18% 24% 25% 13% 0% 14%

Provide non-financial incentives to business units

to increase EAP spending 20% 44% 36% 0% 12% 55% 44% 24%


9. OTHER DETAILS PERTAINING TO EAP ACCOUNT ACTIVITY

Table 24. Percent of companies*:


State and Federal

Government

City and County


Not-for-Profit

Organizations

That are considering switching EAP issuers 17% 7% 5% 15% 14% 0% 11% 5%


Table 25. Percent of organizations with the same EAP issuer as plastic card issuer


State and Federal

Government

City and County


Not-for-Profit

Organizations

Percent of organizations with the same EAP issuer

as plastic card issuer 91% 83% 89% 81% 81% 89% 73% 79%


Documents

2012 Electronic Accounts Payable Benchmark Survey Results · 73% of programs were two years old or less. Based on respondent experience, ... In comparison to the types of goods and