1. EasyProcure, The Education Procurement Card
What can this program do for your school?
Sponsored by:
Pennsylvania Association of School Business Officials (PASBO)
Pennsylvania Association of School Administrators (PASA)
Pennsylvania School Boards Association (PSBA)
Pennsylvania School District Liquid Asset Fund (PSDLAF)
March 15, 2007
52nd PASBO Annual Conference and Exhibits

2. EasyProcure: The Education Procurement Card
54 participating school entities; 40 school entities currently using cards; 14 are in the application stages
Participants earned 37.5 basis points on their EasyProcure purchases in first term ending May 31, 2006; Goal for 2007 is 42.5 basis points
Bonus added to regular rebate schedule: participants who reach over $1 million in purchases will receive $1,000 per every $1 million spent with the EasyProcure Card

3. EasyProcure Benefits PNC Bank Visa© purchasing card
Accepted anywhere Visa© commercial cards are accepted
No card fees
Rebates – rate determined by the EasyProcure program’s participants’ aggregate purchase total
Online access to transactions, typically, 48 hours after card usage
Integration of card purchases into your existing accounting system
Sponsored by PASBO, PASA, PSBA and PSDLAF

4. EasyProcure Applicants/Participants
Aliquippa SD
Allegheny IU #3
Baldwin-Whitehall SD
Blast IU #17
Burrell SD
Canon-McMillan SD
Carbondale Area SD
Central Susquehanna IU #16
Chartiers Valley SD
Chichester SD
Clarion County Career Center
Erie County Technical School
Fleetwood Area SD
Freedom Area SD
Garnet Valley SD
Gettysburg Area SD
Governor Mifflin SD
Great Valley SD
Kennett Consolidated SD
Kutztown Area SD
Lackawanna County CTC
Lakeland SD
Leechburg Area SD
Lehigh Career & Tech Institute

5. EasyProcure Applicants/Participants Con’t
Lower Merion SD
Mars Area SD
Methacton SD
Millcreek Twp. SD
Morrisville Borough SD
Muncy SD
Norristown Area SD
North Hill SD
Oxford Area SD
PASBO
Penn Manor SD
Penn-Trafford SD
Pine Grove Area SD
Pittsburgh SD
PSBA
Rose Tree Media SD
Salisbury-Elk Lick SD
Shenango Area SD
South Side Area SD
State College Area SD
Tunkhannock Area SD
Tyrone Area SD
Western Area CTC
Williamsport Area SD

6. EasyProcure Rebate Tiers
Goal for second Term ending May 31, 2007
*Annual Dollar Volume = Combined participants’ 12-month total volume of purchases minus returns minus cash advances. Dollar Volume shall not include (i) any “unauthorized use” as defined in the Commercial Card Agreement with Participants, or (ii) any outstanding balances on cardholder accounts of Participants not paid on or before each payment due date set forth in such Commercial Card Agreements. Terms run June 1 – May 31.
** Rebate Incentives are listed in basis points. One basis point equals

7. Procurement Card Benefits
Extend float through incremental card payment terms
Reduce individual invoice processing
Industry averages between $5 - $10 per invoice
Reduce bank services and check fees
Reduce regular & overnight mail costs associated with check payments
Reduce buying cycle time by allowing the employee to deal directly with the supplier
Obtain vendor discounts for quicker payment
Penetrate higher spending volume for larger bank revenue share

8. Procurement Card Features
Controls allow customized limitations on each card based on the cardholder’s purchasing needs
Provides spending analysis reports grouping charges by industry/vendor based on merchant category codes (MCCs)
Enhanced data provided for ease of reconciliation and allocation of charges
Automated G/L interface available
Web based reporting capability

9. Overview of Program Mechanics
Visa
Develop and support products
Provide brand presence
Provide interchange infrastructure to facilitate authorization, clearing and settlement among all Issuers
Sign/set-up merchants
Pass authorization, financial information and enhanced data between merchant and Visa
Set-up/maintain client contracts
Apply card authorization controls
Provide reporting, billing, payment services for clients
Acquirer/
Processor
Issuer/
Processor
3 Stages
Authorization
Clearing
Settlement
Merchant
Company
Commercial card transactions follow a three stage process:
Authorization—This first stage begins when a Visa commercial card is swiped through a point-of-sale (POS) device. The corporate account is reviewed by checking financial criteria. For example, a check is made to see if the account is in good standing, has available credit, and is in compliance with controls for merchant type, transaction, and billing cycle limits. The pending transaction is then either authorized or declined.
Clearing—Upon successful authorization, the financial transaction (either charge, credit, or cash) is processed or cleared, among all parties.
Settlement—This final stage involves the passing of funds among the financial institutions, who then deposit these funds into merchant accounts for payment of purchases, and post charges to cardholder accounts for later billing.
The commercial card transaction involves five parties: the merchant, the Acquirer, Visa, the Issuer, and the company, also called the commercial card client/cardholder:
The merchant accepts the card from a company’s cardholder and transmits cardholder information, as well as financial and enhanced transaction data, to the Acquirer.
The Acquirer, sometimes referred to as the merchant Acquirer, sets up and maintains merchant accounts and exchanges authorization, and clearing and settlement information between merchants and Visa. In most cases, Acquirers use third party Processors, called Acquirer Processors, to perform this exchange function. Because Acquirer Processors are very efficient at handling card transactions, banks of all sizes can become Acquirers, thus rounding out their merchant banking services without having to invest in highly specialized equipment and staff.
Visa operates the interchange infrastructure that facilitates authorization, clearing, and settlement between both Acquirers and Issuers. Visa is also responsible for developing new products and services as well as promoting the Visa brand.
The Issuer sets up and maintains company cardholder accounts, applies authorization controls, and provides reporting, billing and payment services. Like Acquirers, Issuers generally rely on third parties, for example, Issuer Processors, to perform their processing, reporting, and billing functions. Third party companies frequently perform both Issuer and Acquirer processing.
The company’s cardholders use their commercial cards to transact with merchants for business related purchases. The company may also use data supplied by the Issuer to populate financial systems, and report on spending and usage.
Accept commercial cards
Exchange authorization, financial information and enhanced data with Acquirer/Processor
Use cards for purchases
Enter transactions into financial systems
Utilize reports to review card purchases/negotiate with suppliers
Overview
Commercial Solutions Basics

10. Payment Economics
Material differences in the economics of various payment alternatives create opportunities to pursue an optimum payment mix and a winning proposition !
Customer
Average Cost Per Transaction*
Card
Incremental Revenue Share:
$1.87
(37.5 basis points)
ACH
Incremental Expense: $0.12
Check
Incremental Expense: $0.64
(bank fees and estimated mail remittance fees)
Wire
Incremental Expense: $7.00
* Assumes average transaction size of $500 and based on PNC representative pricing

11. Joining the Program 1 Step One:
One Page application – accessible online or provided by PSDLAF representative
Contact Information section
Entity Information section, most important is
#3 - Monthly credit limit requested for your program - must be provided
#4 - PSDLAF and PNC account information (if applicable at this point)
Three years of audited annual financial reports
Already a PNC procurement card user?
Same one-page application as above
Letter of authorization on school letterhead to transfer; no need for reports

12. Joining the Program 2 & 3 Step Two: Step Three:
After credit limit is approved by PNC, PSDLAF representative will make an appointment with you to complete:
PNC Resolution for Extensions of Credit
PNC Master Resolution and Signature Card for New PNC Account (if applicable)
PSDLAF account documents (if applicable)
Step Three:
Card program setup process - PNC Implementation Team will contact program administrator directly

13. Success Factors Obtain Senior Management Support
Change Management Focus
Establish Realistic and Achievable Goals
Liberal Distribution and Use of Cards
Appropriate Use of Controls
Establish Communication & Training Activities
Utilize Available Technology

14. Typical Procurement and Payment Cycle
Purchase Requisition w/Principals’ approval
Purchase Order
Business Office (Negotiate Price)
Delivery of Merchandise
Shipment of Materials
Supplier
Copy of PO
Copy of Packing Slip
School Receiving
Invoice
Accounts Payable
Check Approval
Post to A/P or G/L
Accounting Department

15. Procurement Card Cycle
Shipment of Materials
Supplier
Statements mailed to cardholder or accessed online for reconciliation
Supplier charges procurement card
PNC Bank
After employee reconciles statement, statement(s) and receipt(s) are forwarded to supervisor(s) for review and approval
Manual OR Automated posting to G/L or A/P
Average Cost for this process is under $15-
A savings of close to 90% per Transaction

16. Policies, Procedures, Guidelines
Tom Delaney
Chuck Linderman
Dolores D’Amore

17. More Benefits/Advantages
Ease of Purchasing
Thorough record keeping
Better Management Controls

18. When to Use It Making small purchases
As replacement for petty cash system
Phone orders (eliminates the need for mailing purchase orders
Mail Orders
On-line orders

19. Policies/Controls Written policies and procedures Merchant controls
Establish credit limits/controls
Reconciliations (monitor account activity)

20. Risky Areas to Monitor Use of cards at unauthorized vendors
Types of purchases (Bid requirements)
Personal use
Exceeding credit limit

21. Set-Up Process Outline your needs Administration of Process/Program
Number of cards
Who gets a card
What can be purchased with the card
Administration of Process/Program
Approving official at building, department level
Staff to perform reconciliations and monitor activity

22. Set-Up Process Continued
Approving Official at District Level
Signs off on statement certifying the legitimacy of the purchases with regard to District policies/controls
Takes appropriate action for violations

23. Cardholder Responsibility
Identify needed purchases
Obtain original receipts showing purchase details
Verify all charges—reconciling receipts to monthly statement
Give statements, receipts to Building Approving Official for review and sign off
Statement and receipts are then forwarded to the District Approving Official.

24. Closing Comments
Identify concerns or risks associated with the District needs
Review account activity ….
(monitor, monitor, monitor)
Develop written policies and procedures

25. EasyProcure Resources
Application – one page
Auditor General Guidance
Review by Counsel
Sample Board Resolution
Merchant Category Code Groups (MCC Groups)
(downloadable documents)
Guidelines, procedures, user agreements, etc.
Frequently Asked Questions
Documents available Upon request
PSBA Board Policy – Procurement Cards
Visa© Purchasing Card Agreement and Resolution of Extension of Credit available upon request