1. Best Practices to Deepen Your Purchasing Card Program Value

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3. Discussion Agenda Review purchasing expense management process
Discuss best practices for each step of the process
Identify opportunities for new or established programs

4. Purchasing Card Best Practices

5. Purchasing Management Process
Purchasing Process
Source
Policy
Payment
Reconcile
Report
Program Drivers
Multiple Stakeholders & Processes – Purchasing, AP, Finance, HR, IT
Organization Culture – targeted/generic, controlled or flexible
Organizational Complexity – industry, organizational footprint

6. Source
Policy
Payment
Reconcile
Report

7. Poll
When did you last conduct an accounts payables analysis to evaluate current purchasing card coverage of your organizations spend?
Within the last year
Within the last two years
Within the last three years
We have never done an accounts payable analysis
Do not know

8. Sourcing
Conduct an annual accounts payable analysis to identify the potential purchasing card (P-Card) Vendors
Understand current P-Card penetration of Vendor base
Understand Vendor payment terms for prospective P-Card Vendors
Review Vendor payment strategy to validate alignment with organizational goals and controls
Update specific categories of spend for purchasing card payment
Ensure alignment with financial policies and procurement procedures
Develop Vendor contract language that requires card payment for future negotiations
Clarify or revalidate Vendor value for accepting P-Card
Leverage purchasing card spend reporting for Vendor consolidation opportunities

9. Source
Policy
Payment
Reconcile
Report

10. Poll
How often do you review and update your procurement policy to align to your purchasing card program?
As needed
Every year
Every two years
We have never updated our purchasing card policy
Current policy does not include purchasing card

11. Policy Review current policies and procedures for purchasing card use
Specify Vendors or categories of spend where card can be used
Ensure appropriate level of controls for card types that enable use
Communicate and ensure the policy is accessible
Develop creative ways to raise awareness of the policy
Post policy on company intranet site and incorporate into training for targeted users
Drive continuous improvement in your policy
Conduct formal policy review every one or two years
Ensure the ability to incorporate “just in time” changes to policy as needs evolve

12. Source
Policy
Payment
Reconcile
Report

13. Poll How are your purchasing cards most often used?
Issued to an individual employee
Issued to a department for shared use
Issued for targeted Vendors
Issued within accounts payable for invoice processing and payment
Embedded within e-procurement or e-commerce tools

14. Payment Review and update purchasing card user profiles
Monitor card usage and distribution to ensure use for individual and department spend
Review AP use cases for general invoice payments or targeted Vendors
Set appropriate spend limits and controls per user profile
Ensure limits and controls align with scope of authority
Review and adjust limits on a regular basis
Establish processes with Vendors to capture appropriate level of data
Determine where enhanced level of detail is required
Ensure enhanced detail is being captured

15. Source
Policy
Payment
Reconcile
Report

16. Poll
What percentage of your transactions are reconciled by your cardholders and program administrators prior to cycle close and payment to J.P. Morgan?
20% or less
20% - 50%
50% - 80%
80% - 99%
100%
Note for John: Ensure that “reconciliation” is placed in context. For our purposes, we are talking about end users going into PaymentNet to review and approve transactions and the PA validation of transactions.

17. Reconciling Ensure that all transactions are reconciled
Utilize tools to assign accounting codes to transactions
Develop a disciplined process to ensure review and approval of transactions prior to payment
Determine and review ongoing audit strategy
Review and modify risk tolerance based on organizational policy.
Review and modify audit process that ensures accountability without loss of efficiency
Integrate purchasing card data into your accounting system
Review integration process for potential improvements or efficiencies
Review and update processes to manage data integration

18. Source
Policy
Payment
Reconcile
Report

19. Poll
How often do you conduct a review of your program and review the results with key stakeholders?
Every month
Every quarter
Every year
Review program but do not communicate with stakeholders
Do not review program

20. Reporting
Review key performance indicators to track program performance
Measure program performance against established success metrics
Review reporting usage to assess value and impact
Establish an annual process to review performance and update goals
Modify controls or payment strategy based on performance
Update program controls and categories of spend based on identified opportunity
Review current reporting strategy and key stakeholders
Understand opportunities to leverage PCard program data within the organization - Sourcing, Finance, HR
Provide quarterly or monthly data and conduct review

21. Higher Ed Benchmarking Analysis

22. Higher Education Commercial Card Overview
Commercial Card MCC Spending1
Commercial Card Metrics
Metric
Higher Ed
All Industries
% Transactions Under $2,500 on a Purchasing Card2
Large Institutions: 55%
Small: 47%
44%
% Transactions $2,500 – $10,000 on a Purchasing Card2
Large Institutions: 31% Small: 20%
28%
Average Purchasing Card Transaction Amount2
$267
$348
Average Corporate Card Transaction Amount3
$298
$227
Travel Spending by Payment Mechanism3
68%
85% Corporate Card
Global Commercial Card Best Practices Opportunities & Benefits
Best Practice
Benefits
Achieve Active Senior Management Support of Card Program
Align with corporate goals, demonstrate value
Increase visibility of program across the company
Integrate Commercial Card with e-Procurement Technology
Increase liquidity, reduce use of cash reserves
Streamline and automate the procurement process from purchase order to payment
Integrate Commercial Card Program into the Green Initiative
Reduce paper and fuel usage
Highlight commitment to customers
Develop Comprehensive Commercial Card Training Program
Communicate updates, reduce misperceptions
Enhance program visibility
Increase spending compliance
Investigate Expansion of Commercial Card into New Spend Categories
Increase spending under management in non- traditional spend categories
Enhance automation with elimination of POs
Optimize Use of Ghost Cards or Virtual Accounts for Procurement Spend
Streamline ordering process, increase efficiency
Allow staff to focus on value-added activities
Increase spending under management
Visa PerformSource Source:
Commercial Card Spending MCC metrics for this report were derived from aggregated Visa commercial card spend from a subset of Visa purchasing card transactions by US organizations between January 1, 2010 and December 31, 2010 and represent the top 10 MCCs by spend and the % of spend out of the total aggregated spend within the top 10 MCCs.
RPMG Research 2010 Purchasing Card Benchmarking Survey; (2) RPMG Research 2011 Corporate Card Benchmark Survey.

23. Higher Education Procure-to-Pay Overview
Establish an End to End Automation Strategy
Procure-to-Pay Maturity Model
Optimize Program
Performance
Procurement Tools within Higher Education1
Consolidate Spend Data, Conduct Spend Analysis
Institute a Supplier Management Program
Benchmark Procure-to-Pay Process
Foundational
Advanced
Establish Supplier KPIs
Global Higher Education Sector
Global Procure-to-Pay Best Practices Opportunities & Benefits
Best Practice
Benefits
Develop a Procure-to-Pay End-to-End Automation Strategy
Improve working capital management
Reduce time and expense
Free staff time for more strategic activities
Automate Order Placement with an e-Procurement Solution
Increase spending under management
Reduce time, expense and errors
Decrease redundant spending
Evaluate Accounts Payable Automation Solutions
Reduce paper in the payment cycle
Implement a solution appropriate to specific company needs
Institute a Supplier Management Program
Align suppliers with procurement strategy and policies
Establish preferred supplier relationships and improve pricing negotiations
Consolidate Spend Data and Conduct Spend Analysis
Gain visibility into indirect spending
Eliminate redundant spending
Track and prevent non-compliant spending
Automate the Payment Approval Process
Ensure supplier compliance with negotiated contract terms
Allow staff to focus on value-added activities
Visa PerformSource Source:
Public College & University Procurement,” American Association of State Colleges and Universities (AASCU) National Association of Education Procurement (NAEP) 2010.

24. Chip and Pin

25. J.P. Morgan Chip Strategy
Chip and Pin
JPM is actively developing a U.S. chip card solution
JPM’s chip solution will fully integrate into our existing U.S. programs without compromise.
Environment Today
J.P. Morgan Chip Strategy
back
front
Magnetic stripe cards continue to be the primary card-type accepted within the U.S.; however, chip card acceptance is rapidly growing internationally.
While magnetic stripe cards still work at a majority of international merchants, chip-only acceptance is growing at:
Unmanned ticket kiosks
Gas stations
As a result, U.S. Cardholders, traveling internationally may need to:
Be persistent in asking a merchant to swipe their card
Plan ahead to purchase train tickets
Use cash for select transactions
U.S. banks and card issuers remain in the early stages of introducing chip cards for their customers.
Project is in active status and moving forward as planned.
J.P. Morgan is working to provide U.S. Clients with access to chip based commercial cards.
The comprehensive approach includes:
Ability to issue chip cards into an existing or new program.
Efficiently integrates into existing program structure.
Commercial cards that will include both a chip and a magnetic stripe.
Enabling existing cards to be converted to chip cards and retain existing account numbers
Availability on both MasterCard and/or Visa.
Cardholders will be able to efficiently set / re-set their 4-digit PIN within our Customer Service automated line.
At this time we are in Pilot and expect to roll out chip cards to select clients in late 2014 and early 2015.

26. Questions for Panelists or JPM?