Best Practices

Strictly Private and Confidential

October 2011

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Best Practices

Define Best Practices

Understand the Value of Best Practices

Policies and Procedures vs. Best Practices

How to implement and Standardize Best Practices

Improved Program Management and Performance

Agenda

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Federal Agencies

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Best Practices Defined

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Federal Agencies

Wikipedia says:

Best practices are generally accepted, informally standardized techniques, methods or processes that have proven themselves over time to accomplish given tasks

Often based upon common sense, these practices are commonly used where no specific formal methodology is in place or the existing methodology does not sufficiently address the issue. The idea is that with proper processes, checks and testing, a desired outcome can be delivered more effectively with fewer problems and unforeseen complications

In addition, a “best” practice can evolve to become better as improvements are discovered

Best practice is considered by some as a business buzzword, used to describe the process of developing and following a standard way of doing things that multiple organizations can use

Best Practices

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Understanding the Value of Best Practices

Understand the Value of Best Practices

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Federal Agencies

Goals and Best Practices

Efficiency in program and process management– The best way to make payments

– Cost and time savings

Operate within compliance requirements– Government mandated

– Agency policy

Ease of program administration– Impacts you and your field program administrators

Simplify payment process and requirements for cardholders

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Balancing Risk and Efficiency

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Federal Agencies

Managing Risk

Maintain internal controls to meet objectives– Effectiveness and efficiency of operations

– Reliable financial reporting

– Compliance with applicable laws and regulations

Minimize waste, fraud and misuse

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Federal Agencies

Control Environment– Organizational structure and culture

Risk Assessment– Identify internal and external risk jeopardizing objectives

Control Activities– Policies, procedures and mechanisms to achieve objectives

Information and Communications– Information shared vertically and horizontally

Monitoring– Continuous and periodic reviews of data and performance

Five Standards for Internal Control Objectives

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Federal Agencies

Lay groundwork for sound program structure

Develop reporting for minimum standards for program effectiveness

Established policies and procedures can drive how you transact and interact with vendors

Remain open to alternate processes

Understand the organization culture

Senior management role and impact on overall administration

Best Practices apply to internal and external processes

Best Practices

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Policies and Procedures

Policies and Procedures vs. Best Practices

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Federal Agencies

Clearly Identify Organization Goals and Objectives

Goals will drive practices to create efficiency and can include:– Increased card usage

– Static or decreased AP head count

– Vendor discounts

– Centralized payables reporting

– Shift focus to larger dollar transactions

– Improve cash flow

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Policies and Procedures vs. Best Practices

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Federal Agencies

Different meanings for different organizations

Card use controls can impact results– Categories of spend

– Transaction limits

– Number of cardholders

– High-value purchases

– Alternative payments mechanisms to capture spend

– Analyze current check payments – AP file match – Optimization

– Span of control – Approvers

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Federal Agencies

Card Controls are still a major factor:

Deactivate when not traveling

Split disbursements

Delinquency management

Consistent administrative/disciplinary actions

Authority to take action

Individual Bill Travel Best Practices

Best Practices

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Central Bill Travel Best Practices

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Federal Agencies

Centralize travel management and reconciliation are challenging:

Policy for use

Tracking expense reporting

Travel Management Company (TMC) participation and enhanced data

Speed of pay

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There are common practices that apply to both payment and travel

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Balance of internal controls

Internal communication – Training

Detection tools for misuse and abuse– Split transactions

– Restaurants in home city

– Weekends or Holidays

Audits and data mining

PA time constraints

Primary metric – spend or transaction volume

Senior management support

Periodic review of internal controls

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Implementing and Reviewing Best Practices

How to Implement and Standardize Best Practices

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Federal Agencies

Create a Vision for the Program Model

Ingredients for Implementation:

Entity Mission and Policy & Procedures

Derived from agency parameters– Includes external requirements

Internal controls and documentation– Requirements to manage risk

– Establish practices for compliance

– Narrative for plan

Understanding credit card processing– Full comprehension of transaction processing

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How to Implement and Standardize Best Practices

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Federal Agencies

Create a Vision for the Program Model (cont.)

More Ingredients for Implementation:

Cardholder management– Card profiles

– Cardholder training

– Administrative/disciplinary actions

Non-Cardholder roles and responsibilities– Span of control

– Cardholder processing

Risk management– Delinquency, misuse, abuse

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How to Implement and Standardize Best Practices

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Federal Agencies

Vision for Program Model

Final Ingredients for Implementation:

Reporting requirements – Operational Tracking

– Management reporting

Review and adjust– Periodic updates

– Evolving program

– Legislative environment

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Do’s and Don’ts for Best Practice Implementation

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Federal Agencies

Consider the need for change to policies and procedures

Track your program performance using the reporting tools available

Review program processes with field PA

Solicit cardholder feedback

Understand your organizational culture and how to operate within

Gather senior management feedback and support

Network at this conference and any other conferences

Don’t operate in a vacuum

Don’t assume the current way is the best

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Improved Program Performance

Recommendations for Program Growth

To increase program growth, it is important to continuously monitor program

performance and explore new opportunities for card use.

Convert paper check payments to P-card payments – optimization analysis

Establish appropriate policies

Overcome resistance to change – switching behavior

Target spend categories

Establish meaningful goals

Travel Advance cards

Eliminate Petty Cash

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Best Practices

Best Practices

Increase awareness and education of the program through webinars and marketing initiatives

Use Citi training tools for continuing system training for all program administrators

Make P-Card easy decision to use for employees - dollar threshold for micro purchases – many states use $5,000, but depends on entity policies

Supplier enablement – work with Citi to assist vendors in meeting your purchasing needs

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Key Action Steps

Best-in-class Purchase Card Programs Include

Strong executive endorsement

Cross-functional collaboration (Acquisition, Finance, Logistics, Internal Controls, etc.)

Correct distribution of cards

Correct utilization of cards (payment and purchase)

Connection to comprehensive cost management agenda (strategic sourcing)

Mandated card use

The establishment of appropriate policies

Enforcement of established policies

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Best Practices

Purchasing Card Benchmark Statistics

Average administrative cost savings using Purchase Card is $70

– Paper process averages $90

– Purchase card process averages $20

Purchase cards reduce procurement cycle time by approximately 12 days

– Reduce the number of suppliers managed in Accounts Payable (AP) databases by an average of 16

– Result in a reduction or redeployment of staff in AP and Procurement functions

– Twenty-six percent of all organizations report the use of purchasing card data to obtain a higher discount for goods or services

Ghost Accounts have increased usage for procurement

Increased spending limits and categories promote higher program spend to include larger average transaction amounts

* Statistics provided by the 2010 Purchasing Card Benchmark Survey Results by Richard Palmer and Mahendra Gupta, RPMG Research Corporation

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Best Practices

Travel Card Benchmark Information

Mandating the use of the Travel card results in positive outcomes for the organization

− Higher capture of travel spend on card

− Spend capture enabled discount negotiations

− Received senior management program support

− Drove technology development for expense management systems

Trend to provide a single type card with similar spend features

Goals include process efficiency and cost reduction and data integration into financial systems

Broader card distribution resulted in higher penetration of travel budget payments with the card

* Information provided by the 2009 Corporate Travel Card Benchmark Survey Results by Richard Palmer and Mahendra Gupta, RPMG Research Corporation

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Best Practices

Next Steps with Citibank

Discuss your goals with your Account Manager

Review current processes and policies

Work with Account Manager to establish a plan

Consider check payment vendor match-Optimization

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Best Practices

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Federal Agencies

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