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Procurement, Payables and Commercial Card Strategies
Financial Services
Arizona State University Panelist
• Lily Tram• Financial Services – Accounts Payable• Director Financial Services
• Patty Taylor• Procurement• Purchasing Technology Manager
Financial Services/Procurement
ASU{5 campuses
Over 90,000 students enrolled
Graduated over 20,000 students
About 14,000 faculty/staff
Accounts Payable and Purchasing:
Where do they fall under at ASU?
ASU Structure
Financial Services/Procurement
Dr. Morgan Olsen
Executive Vice President, Treasurer and Chief Financial Officer
Joanne Wamsley
Vice President for Finance and Deputy Treasurer
John Riley
Associate Vice President University Business Services
Marilyn Mulhollan
Assistant Vice PresidentFinancial Services
Nichol Luoma
Chief Procurement Officer
Accounts Payable
Procurement
Payments
140,000 AP payments - $604.3M
4,300 wire payments - $506.8M
Over 55,000 AP checks issued
41,000 AP Vendors
FY 2015 Accounts Payable Highlights
AP Card Payment:
Why use the AP Card Payment Process?
AP card payment program can
•Reduce the number of printed AP checks
•Scrub the vendor table
•Vendor receives payment faster
•Financial Incentive
Strategy:
How did we do it?
• JPMC – AP Trac Program
• Upper management support of the program
• Identified vendors to seek program participation
• Created communication letters
• Piloted one vendor
• Full Implementation
After Implementation:
What’s next?
• How can we grow the program?
• RFP for AP Card Payment program
• ACH
• Single Use Card – secure format
• Reduced merchant fee program
Commerce Bank {
Quick implementation
Supplier on-boarding
Single use virtual card
Easy to access
ASU policies incorporated
One Accounts Payable Card Payment Program
ASU moved to one AP Card Payment Program
Commerce Bank
Some Challenges…
•Impact of Vendor merchant fees
•Large dollar payments
•Merchant fees passed to ASU
•Training and turnover of AP staff
Reduced the number of checks issued
Vendors receive payments faster
Program volume of spend increased
Onboarding vendors monthly
Rebate
Efficiencies and Successes
Travel Card Program
US Bank Travel Card Program
•Implementation July 2015
•Company billed company paid card
•1,500 travel card issued
•Over 700 cards used
•Ghost card for airfare
•$2.6M in spend through September 2015
o
Procurement, Payables and Commercial Card Strategies
Procurement
Procurement
Methods {Standard Purchase Orders
eProcurement System
PCard
Limited Value Purchase Order
Request for check or Payment Voucher
Employee Reimbursement
Travel Card
Internal Purchase Orders
Standard Purchase
Orders
27,950 Transactions
$709M Purchase Orders Issued
FY 2015 Standard Purchase Order Highlights
eProcurement System
Less than 5K
Consultants
Technology
FY 2015 Standard Purchase Order Goals
eProcurement System
“SunRISE”
36,606 Transactions
$17.5M Spend
FY 2015 eProcurement Highlights
eProcurement:
Why use the eProcurement System?
eProcurement program can:
•Reduce the number of orders routing to the buyer
•Less time for order distribution to the supplier
•Departments receive their product quicker
•cXML orders are not retyped
•Contract Repository
Strategy:
How did we do it?
SciQuest – eProcurement Program
•Gained support of upper management
•Contracted with the supplier
•Created an Advisory Board
•Started with Scientific community
•Full Implementation
Challenges…
•Identifying Board Members
•PI’s didn’t want to inventory their labs
•Users didn’t want to use the system
TODAY, USERS ARE ASKING TO DO MORE IN THE e-PROCUREMENT SYSTEM!
eProcurement Optimization Project:
What’s next?
How can we optimize the program?
•Non-Catalog Ordering
•Forms
•Buyer routing
•Sourcing
•Contract Routing
ALL PROCUREMENT FUNCTIONALITY WITHIN ONE SYSTEM!
Purchasing Card
(PCard) Program
155,892 PCard Transactions
$67M Spend
FY 2015 PCard Highlights
PCard:
Why PCard?
Procurement Card (PCard) program benefits
•Users can place orders with greater ease
•Reduced Buyer workload
•Grant Account purchases vs other funding
•Rebate
Strategy:
How is the Program Structured?
Purchasing Card (PCard) Program
•Cardholders/PCard Managers/Allocators
•Cardholder limit – 5K
– Exceptions Granted
•Reconciliation Process
•1 PCard per university account
•Reconciliation ManualPCARD LANGUAGE IS WRITTEN INTO ALL CONTRACTS!!!
Partnership
WORKING TOGETHER FOR OVERALL SUCCESS!
43
Procurement , Payables Commercial Card Stratégies at the University of Washington
Aris GempesawManager of Accounts Payable and Card Services
Who is the University of Washington
The UW is a multi-campus university in Seattle, Tacoma and Bothell, as well as a world-class academic medical center
We have 16 colleges and schools and offer 1,800 undergraduate courses each quarter.We confer more than 12,000 bachelor’s, master’s, doctoral and professional degrees annually.Ranks among the top schools in the country in providing U.S. Peace Corps volunteerReceives more federal research funding than any other American public university
Our Organization
UW Bothell:
•4,605 students enrolled
•6 Schools offering more than 35 undergraduate, post-baccalaureate and graduate degrees
UW Tacoma:
•4,501 students enrolled
•6 Undergraduate Programs and 7 graduate programs
•Campus consists of 20 buildings on 46 acres with a total of 557,664 square feet of active campus space
UW Seattle:
•44,786 students enrolled
•11 Schools /Programs
•Offer 180 majors
Our Medical Partnerships
UW Financials- June 30, 2014 -
TOTAL REVENUES Assets $9,898,206Revenues $3,913,971
OPERATING EXPENSES Salaries $ 2,026,646Benefits $ 661,999Goods/Services $ 1,698,731
47
Our Structure: Procurement Services
PROCUREMENT SERVICES GOALS
Our Strategic FrameworkRELEASE POTENTIALQUALITY DELIVERY
COST
TRANSFORM SERVICESAFETY MORALE
Reduce Cost/Increase Revenue
Eliminate Administrative Burden
Enhance Stakeholder Experience
Create Value for Customer
Provide Constancy
of Purpose
Organization & Resources Embrace Innovation
Assure
Quality at the
Source
Respect
Individuals
Lead with Humility
Implement 100% supplier scorecard with strategic contracted suppliers by January 2016
Meet Lean Assessment: Goal 100% by 2015
Migrate all transactions to electronic processes by January 2016 (PAS PO to Ariba)
Reduce cost to campus by 50% my moving PAS transactions into Ariba by Dec 2016
Idea watch: 2 implemented idea per employee per month
SMALL DOLLAR TRANSACTION INITIATIVE
Starting in July 2009, “Small dollar” transactions routed through eProcurement or credit card (ProCurement Card) rather than legacy purchasing and accounting system.
Benefits:
More efficient & better visibility
Estimated Cost savings• $62/legacy system transaction• $20/credit card transaction• $18/eProcurement transaction
BUYER INITIATED PAYMENT PROGRAM (BIP)
PAPER CHECK REDUCTION
PAYMENT TRANSITION
NUMBER OF CHECKS ISSUEDTRANSACTIONS PAID IN A TYPICAL MONTH
0
5
10
15
20
25
30
35
40
45
2009 2014
Thou
sand
s
ACH
ePayables
PCard
Checks
0
20,000
40,000
60,000
80,000
100,000
120,000
2009 2010 2011 2012 2013 2014 2015
# of Checks issued
ProCard Structure• UW’s Card program started in 1999 with JP Morgan Chase as
our card provider
• WIPHE * contract with other WA Universities
• Types of card accounts:• Travel• Procurement Card (ProCard)
• Managed by 2 Full time staff + Administrator
* WASHINGTON INSTITUTIONS OF PUBLIC HIGHER EDUCATION(WIPHE)
PROCARD
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
Jan '12-Dec '12
Jan '13-Dec '13
Jan '14-Dec '14
Jan '15-Dec '15
Annual Spend
Total Procard Accounts: • Individual Cards: 3,431• Ghost Cards : 227
PCARD 2010 2011 2012 2013 2014 YTD 2015
Transactions 265,991 288,294 296,390 298,856 295,627 199,063
Spend Volume $ 83,174,765 $ 106,246,811 $ 125,297,750 $ 128,384,792 $ 129,180,849 $ 84,964,434
Growth 27% 28% 18% 2% 1% ?
Travel Accounts
Total Travel Accounts: 2,810• Individual Cards: 2,299• Department Cards: 511
CTA 2010 2011 2012 2013 2014 2015 Forecast
Transactions 95,497 91,965 94,123 91,022 86,978 87,967
Spend Volume $ 25,560,586 $ 26,100,818 $ 27,054,740 $ 28,306,253 $ 18,213,841 $ 27,358,239
Growth 11% 2% 4% 5% -4% ?
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
Jan '12-Dec '12
Jan '13-Dec '13
Jan '14-Dec '14
Jan '15-Dec '15
Annual Spend
Card spendUW CY2012 CY2013 CY2014 2015 Forecast
Transaction # 390,513 387,868 381,495 386,971Spend Volume 152,352,490$ 156,651,872$ 156,429,804$ 154,979,715$ YOY Growth 15% 3% 0% -1%
Other Card Programs for Special Projects
Procurement, Payables and Commercial Card Strategies
Sandy HicksAssociate Vice President & Chief Procurement Officer
University of Colorado 61,258 students $3.55B budget $1.06B procurement spend $878M research funds 35,000 active Concur users 94,000 expense reports
valued at $105M March 2010 fully implemented Concur Expense May 2011 implemented Concur Travel August 2011 implemented SciQuest P2P
Payables Organization / PSC
Payables staff assignments broken down by alphabet / system responsibility
Process ImprovementInvoice Process < July 2011Receive all paper invoices via US mail and campus mail
o 650/dayo 3250/weeko 169,000/year
Manual handling / sortingA slow and labor-intensive processZero invoices received electronically
Invoice Process > July 2011July 2011 launched [email protected] – dedicated email in box Initial phase – printed, date stamped, sorted, delivered May 2012 began importing invoice images directly into CU MarketplaceInvoice images imported directly into folder of the responsible Payables SpecialistBy 2014, 80% of invoices are received electronically through APInvoice (Avg. 430/day)
Efficiencies GainedProcess improvement benefits the University in multiple ways – Streamlined process increases speed of processing invoicesReduce transit time and risk of lost invoicesReduce postage and envelope costs for suppliersReduce personnel involved in process – one FTE Savings on required supplies – went from $350/month on copy paper to $175/monthReduce paper usage by 5 cases/monthShredding pick-ups reduced to once every two months; an annual savings of approx. $8,000.Departments able to view invoice images in the system
Received CUSP Award
Electronic Invoicing through CU Marketplace
Procurement Card• Visa card issued by US Bank to purchase small dollar items up to
$5000• Training required to obtain card• Procurement Card Handbook• US Bank feeds card transactions into the University’s Expense
System Concur for reconciliation• Cardholder submits a monthly expense report for review/approval• Compliance Specialist reviews procurement card information in
Concur. Targeted review for specific purchases and general department reviews on a rotating schedule
• Violation points assessed for mis-use may result in card suspension
Travel Card• Visa card issued by US Bank to facilitate payment of University
travel-related expenses, including groups and guests• University liability card• Training required to obtain card• Travel Card Handbook• US Bank feeds card transactions into the University’s Expense
System Concur for reconciliation• Cardholder submits one expense report per trip for review/approval• Reports route to Payable Services for final approval. Travel
Coordinator spot checks approved reports for policy mistakes• Automatic approval of Mileage & Parking reports at $500 and less • Ghost card used for airline tickets
Payment Plus• US Bank credit card product used at payment stage of procure-to-
pay process • Cardless e-payments replace paper check processing• Single payment created for all invoices paid in the same day• File feed to US Bank instructs the bank to open credit limit (ghost
card) for the amount of the payment• Email remittance information sent to supplier; includes control # and
breakdown of invoices included - Supplier charges card for payment• CU team dedicated to sign-up suppliers for the program and
coordinate with US Bank• Supplier portal used to identify suppliers interested in the program• Favorable payment terms at N10
Commercial Card Program
Card Program Volume
Commercial Card Revenue
• eProcurement licensing fees• 5 FTE for Procurement Systems • Spend Analytics Tools• Temporary Staffing Needs• Online booking fee for Concur Travel• Campus Events• Procurement Consulting Fees
Questions