CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 0 Purchasing Card Best Practices : Reduce Costs and Generate Income.

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 0 Purchasing Card Best Practices : Reduce Costs and Generate Income

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 1 Agenda  9:00 a.m. Welcome and Introductions  Charlie Pride and John Rogers  9:15 a.m. Purchasing Card Best Practices  Presentation – Brian Rodgers  9:35 a.m. City of Westfield - Efficiencies & Benefits Recognized through a Card Program  Presentation – John Rogers  9:55 a.m. Q & A  Charlie Pride, John Rogers and Brian Rodgers  10:15 a.m. Adjournment 1

www.westfield.in.gov  J.P. Morgan Chase ◦ Brian Rodgers, Commercial Card Solutions Manager  State Board of Accounts ◦ Charlie Pride, Cities, Towns and Libraries Office Supervisor  City of Westfield, Enterprise Division ◦ John Rogers, Director of Enterprise ◦ Tammy Havard, Financial Strategist ◦ Teresa Evans, Project Manager  City of Westfield, Clerk Treasurers Office ◦ Cindy Gossard, Clerk Treasurer ◦ Kerri Gagnon, Deputy Clerk Treasurer ◦ Micha Farrar, Deputy Clerk Treasurer 2

www.westfield.in.gov  We evaluated everyday tasks and activities: ◦ Are they value-add? ◦ Is this the best way to get this task done? ◦ Are there best practices? ◦ Is Apple going to announce an iClerk to do this for us? 3

www.westfield.in.gov  How many invoices were we processing last year? ◦ How many are we averaging this year?  How much did it cost us to invoice? 4

www.westfield.in.gov  When does authorization for spending occur? ◦ When the budget is approved by the common council? ◦ When the claims docket is approved? ◦ When Charlie says so….  A: When the budget is approved by the common council. 5

www.westfield.in.gov  What do the State auditors require as proof for all expenses? ◦ Paper receipts and signed approval vouchers ◦ Images of receipts and electronic approvals ◦ Let’s ask CHARLIE……  A: Charlie has the answer! 6

www.westfield.in.gov 7

Agenda Purchasing Card Best Practices : Reduce Costs and Generate Income Presented by: Brian Rodgers, Commercial Card Solutions Manager 8

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 9 This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client or potential client to whom it is directly delivered and/or addressed (including subsidiaries and affiliates, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible transaction or transactions or other business relationship and does not carry any right of publication or disclosure, in whole or in part, to any other party. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. Neither this presentation nor any of its contents may be disclosed or used for any other purpose without the prior written consent of J.P. Morgan. To the extent that the information in this presentation is based upon any management forecasts or other information supplied to us by or on behalf of the Company, it reflects such information as well as prevailing conditions and our views as of this date, all of which are accordingly subject to change. J.P. Morgan’s opinions and estimates constitute J.P. Morgan’s judgment and should be regarded as indicative, preliminary and for illustrative purposes only. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us. J.P. Morgan makes no representations as to the actual value which may be received in connection with a transaction nor the legal, tax or accounting effects of consummating a transaction. Unless expressly contemplated hereby, the information in this presentation does not take into account the effects of a possible transaction or transactions involving an actual or potential change of control, which may have significant valuation and other effects. Notwithstanding anything herein to the contrary, the Company and each of its employees, representatives or other agents may disclose to any and all persons, without limitation of any kind, the U.S. federal and state income tax treatment and the U.S. federal and state income tax structure (if applicable) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Company insofar as such treatment and/or structure relates to a U.S. federal or state income tax strategy provided to the Company by J.P. Morgan. J.P. Morgan's policies on data privacy can be found at http://www.jpmorgan.com/pages/privacy.http://www.jpmorgan.com/pages/privacy IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters included herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone not affiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties. Chase, JPMorgan and JPMorgan Chase are marketing names for certain businesses of JPMorgan Chase & Co. and its subsidiaries worldwide (collectively, “JPMC”) and if and as used herein may include as applicable employees or officers of any or all of such entities irrespective of the marketing name used. Products and services may be provided by commercial bank affiliates, securities affiliates or other JPMC affiliates or entities. In particular, securities brokerage services other than those which can be provided by commercial bank affiliates under applicable law will be provided by registered broker/dealer affiliates such as J.P. Morgan Securities LLC, J.P. Morgan Institutional Investments Inc. or Chase Investment Services Corporation or by such other affiliates as may be appropriate to provide such services under applicable law. Such securities are not deposits or other obligations of any such commercial bank, are not guaranteed by any such commercial bank and are not insured by the Federal Deposit Insurance Corporation. This presentation does not constitute a commitment by any JPMC entity to extend or arrange credit or to provide any other services. 9

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 10 Agenda  What is a Purchasing Card  What Can a Purchasing Card Do For You?  Generate Income  Prevent Fraud and Misuse  Reporting  Implementation and Support 10

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 12 What is a Purchasing Card? Commercial cards are charge cards with special controls and value-added functionality Different from a small business or private label card Spend and merchant controls Credit based upon organization, not principal officer Statement balance due in-full Sophisticated analytical tools available Terminology Purchasing card (P-Card) Commercial Card Corporate card (T&E) OneCard (combination of these) Optional hot-stamp logo Two lines of embossing 12

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 14 With a card program you can… Gain efficiencies Reduce costs Optimize cash flow Earn financial incentives Improve vendor relations Empower employees If 90% of your invoices make up 10% of your dollars ~ does that mean that accounts payable is spending 90% of their time on 10% of your dollars? 14

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 15 Efficiency drives cost savings The traditional cost of the purchase order and payment process ranges from $50-$250 The average cost of a traditional PO process is $93* The average cost of a P-card transaction is $22* The average cost savings across all industry types is $71* The average procurement cycle time savings is 10 days* Need to buy Receive goods EmployeeReceivingEmployee Generate PO or requisition Approve purchase Purchase goods Receive invoice Match per purchase Pay per purchase EmployeeManagerPurchasingEmployee Accounts Payable PO or requisition information Shipping notice * 2010 RPMG Purchasing Card Benchmark Survey Generate PO or requisition Approve purchase Purchase goods Receive invoice Match per purchase Pay per purchase PO or requisition information By moving just 100 invoices per month to a card your organization can save over $85,000 annually 15

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 16 The expense category may determine the payment method ACH/EDI/Wires ACH/EDI for your top tier suppliers Wires transfers for immediate needs AP Cards Use commercial cards in AP to reduce check volume Checks continue to decline Commercial Cards and Direct Deposit Commercial Cards for low dollar procurement and travel Direct Deposit and Payroll Cards for payroll 16

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 17 Card payments can add an average of 40 days of float 30-day billing cycle with a 25-day grace period is standard Day 1 of billing cycle Billing cycle begins Pay vendor with purchasing card throughout cycle Vendor processes payment for settlement 30-day billing cycle25-day grace period Day 30 Billing cycle closes Statement is presented Payment not due for another 25 Days Day 55 Payment due in full AVERAGE PAYMENT FLOAT = 40 DAYS 17

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 18 Empower your employees with controlled purchasing ability Accounts payable Central purchasing Administrative assistants Maintenance (facilities/transportation) IT staff members Office and department managers Parks and recreation Fire and police Courts Conference and meeting planners Principals and teachers Athletics and theater Travelers Commercial cards benefit anyone in your organization that needs to make purchases as a regular part of their daily job routine. 18

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 19 Typical card use for best practice organizations Aberdeen Research Office Equipment and Supplies Computer hardware, software and peripherals Catering Food/Groceries Fuel Media Print and Duplicating Services Maintenance, Repair & Operating (MRO) Goods Clothing/Uniforms Professional Services Inventory Telecommunications Mail Delivery Transport/Delivery Construction Materials 91% 81% 78% 77% 71% 66% 60% 59% 56% 53% 52% 49% 39% 36% 69% Note: * RPMG 2010Purchasing Card Benchmark Survey Report Rental Payments 32% Percentage of Best Practice Organization card uses: 19

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 20 Increased Supplier Leverage Using the purchasing card spend data to drive supplier negotiations can yield powerful benefits ■ 60% of organizations that use spend data to support supplier negotiations report receiving higher discounts ■ 53% of organizations report that they receive 1.1% to 3% absolute improvement in discounts ■ 22% say they generate more than 3% absolute improvement in supplier deals Leveraging purchasing power has become more lucrative as suppliers offer substantial incentives to use the card. Supplier Benefits  Status as a preferred vendor  Faster payment (within a few days)  Automated processing  Potential of increased sales © 2010 Purchasing Card Benchmarking Survey Results, RPMG Research Corporation. 20

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 22 Rebates have become commonplace for qualified programs Factors that affect rebate earning potential Annual volume Billing cycle length Speed of pay Program dynamics While cost/incentive is a large factor, other factors should weigh in:* Technology Experience and expertise Customer and cardholder services * Source: Best Practices Task Force Report: Optimizing Revenue Sharing, NAPCP, November 2006 22

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 24 Best Practices for program control Establish policies and procedures with “teeth” – Highlight consequences of misuse. Cardholder agreement Senior management support and visibility Mandate program Training and communication Cards can be completely customized for the user Spend Limits Single purchase limit Monthly spending limit Authorizations per day Transactions per cycle Merchant Category Code restrictions Cash access Allow, block, or block organization-wide Daily access to data via MasterCard smartdata.gen2 TM (“smartdata”) Monthly reconciliation Cardholder and manager review transactions Audit “spot check” Exception reports to monitor “high risk” MCC’s or high dollar transactions. THE RESULT: A successful and secure program PROGRAM COMPLIANCE 1 POINT-OF-SALE CONTROLS 2 TRACKING & MONITORING 3 MasterCard smartdata.gen2 is a registered trademark of MasterCard International Incorporated. The smartdata tool is a MasterCard International Incorporated solution. 24

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 25 Additional cardholder security and protection Insurance benefits Travel accident insurance ($400,000) Lost luggage ($1,250 supplemental coverage) Primary vehicle collision/loss damage waiver Emergency medical coverage ($2,500 secondary coverage) MasterCard Travel Assistance Services Available toll-free 24/7 Medical referrals/prescription filling Trip information and planning Legal/embassy referral Roadside assistance VAT reclaim service MasterCoverage Liability Insurance Liability Insurance* – Insures against employee misuse * Up to a maximum limit of USD 25,000 per cardholder for companies that have two to four cards, or up to a maximum limit of USD 100,000 per cardholder for companies that have five or more cards provided that all program conditions are met. 25

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 27 Web-based reporting for your program management and reporting tool Multiple user types to provide appropriate access to data Program level administrator Manager/supervisor Cardholder Create and maintain a reporting hierarchy to mirror your organizational structure Able to run reports at hierarchy levels Allow manager access based on hierarchy level Email messages to managers and/or cardholders One-off or scheduled messaging Filter messages by reviewed status Card maintenance Request new cards Real-time access for limit changes 27

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 28 Robust accounting allocation options make transaction review painless Define default accounting information Cost center information can be defaulted based on the cardholder Expense code can be populated based on MCC or card account Additional information can be added to the transaction (job or project code) Default information can be reallocated Split transactions into multiple codes for accurate accounting Standard Reports Supplier, Transaction, Cardholder including Exception Reporting Custom Exports for specific reporting needs Variety of file formats General Ledger Upload 28

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 30 Keys to a successful implementation 30 Clearly define program goals Allows you to benchmark and quantify successes Do a Vendor Match to help estimate the size of your program and rebate potential Garner senior management and oversight body support and approval Program champion Involve key areas during the planning process Oversight Body, Accounts Payable, Purchasing and Auditing Establish and enforce policies and procedures Be sure your policies are ‘enforceable’ Determine program administrator Decision-making abilities and authority Comprehensive training Cardholders Management

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 31 Provide us with your vendor information Quick and cost free service. We’ll help you identify which vendors already accept MasterCard and what level of data they provide. Essential to determine program spend potential Confirm Merchant Category Codes for easier program set-up Providing annual spend and number of invoices will allow for a thorough analysis 31

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 32 Implementation and Support Dedicated specialists guide and support your program before, during and after implementation Understand Requirements Implement and Train Service & Support  Identify project resources  Review technical and reporting requirements  Develop policies  Determine readiness  Identify project resources  Review technical and reporting requirements  Develop policies  Determine readiness  Attend Program Administrator Training  Launch solution within clients needs and parameters  Train Users to provide faster ramp-up  Attend Program Administrator Training  Launch solution within clients needs and parameters  Train Users to provide faster ramp-up  Program Coordinator Team Day-to-day servicing and maintenance Program Administrator’s main point of contact  Technical Support Team  Cardholder Support Team  Program Coordinator Team Day-to-day servicing and maintenance Program Administrator’s main point of contact  Technical Support Team  Cardholder Support Team 32

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 33 Training Successful implementation continues with effective training Dedicated trainers are responsible for product training and consulting Program Administrator training Online through our Learning Website Telephone consultations Train-the-trainer sessions SmartData ® “how-to” guide Quick reference cards On-demand Webcasts 33

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 34 Purchasing Card Best Practices : Reduce Costs, Generate Income and Prevent Fraud Questions 34

www.westfield.in.gov  Ask Why ◦ Why does the procure-to- pay process take so long? ◦ Why are we paying two different prices for a similar product or service? ◦ Why are we cutting checks to the bank in lieu of ACH payments? ◦ Why are there interstate highways in Hawaii? http://www.aaroads.com/shields/show.php?image=HI19790012t100010.jpg&view=1 35

www.westfield.in.gov  A pCard program reduces the steps of the procure-to-pay process by: ◦ Moving some aspects of the back office support closer to the transaction ◦ Settlement of the transactions (less invoices) ◦ Account reconciliation ◦ Reporting 36

www.westfield.in.gov  The pCard can provide more efficient control of purchasing activity ◦ Clerk’s office can adjust or limit spend by sector, day and time (much more effective than open PO’s at local suppliers ◦ Limit maverick spend by placing tight controls on the pCard 37

www.westfield.in.gov  Additionally, the pCard data organizes our vendor and spend information for analysis ◦ Facilitating a review of purchase activity/inconsistencies enterprise-wide through a single database ◦ Allowing for vendor and spend management  A vehicle for increasing revenue ◦ The annual rebate currently competes with the interest received on short-term investment notes 38

www.westfield.in.gov 39

www.westfield.in.gov  Because everything we do affects the quality of life of our citizens. 40

CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 0 Purchasing Card Best Practices : Reduce Costs and Generate Income.

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CONFIDENCE, SAVINGS AND CONTROL FROM THE #1 ISSUER 0 Purchasing Card Best Practices : Reduce Costs and Generate Income.

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