Going for the Gold with a
Commercial Card Program
Robert "Bob" Breard
Eckhart & Associates Inc.
Lisa Huff, VP
1
Agenda
¾
LaSalle Bank/ABN-AMRO – Who Are We?
¾
Commercial Cards Definition
¾
Cards as a Payables Solution
¾
Pilot Challenges and Implementing Changes
¾
High Performing Programs and Solutions for Growth
¾
Case Study
¾
The Eckhart Rewards Solution
LaSalle Bank/ABN AMRO – Who We Are…
¾
Card Experience > 11 years
¾
Sustained Growth: Min 25% Growth Over Last Three
Years Respectively
¾
Global/Multiple Currency Program: Canadian, Euro,
Pound Sterling
¾
Cards Solutions include Commercial Card
(Multi-Card) and Stored Value Suite of Products (i.e., Budget,
Project, and Payroll Cards)
3
Cards - What’s The Difference?
Purchasing, Travel & Entertainment, and Fleet Cards
Travel & Entertainment Card – a card offering that streamlines and facilitates
procurement of travel and entertainment expenses.
- Cash Advances - Travel Card
Travel & Entertainment Card – a card offering that streamlines and facilitates
procurement of travel and entertainment expenses.
- Cash Advances - Travel Card
Purchasing Card – a card offering/payables tool that streamlines and
facilitates procurement of goods and services.
- Card Controls - Enhanced Data - Reinvent PO Process
Purchasing Card – a card offering/payables tool that streamlines and
facilitates procurement of goods and services.
- Card Controls - Enhanced Data - Reinvent PO Process
Fleet Card – an integrated card offering for both fuel and maintenance on
one card.
- Driver or Vehicle Assigned - Odometer Reading
- Fuel Grade Capture
Fleet Card – an integrated card offering for both fuel and maintenance on
one card.
- Driver or Vehicle Assigned - Odometer Reading
“Three in One” – The Commercial Card
Common Uses for Commercial Cards:
¾Paper & Office Supplies
¾Cell Phone
¾Subscriptions
¾Small Dollar purchases (i.e., <$2,500)
¾MRO transactions
¾Recurring Payments
¾Fleet
A multi-function expense management and payables solution for travel & entertainment (T&E), purchasing, and fleet.
A multi-function expense management and payables solution for travel & entertainment (T&E), purchasing, and fleet.
5
Why Use Cards as a Payables Solution?
¾ Electronic Payments Migration
• 2004 Federal Reserve Payments study confirmed a 4.3% annual decline in the number of checks
• Check Cost Reduction – Average cost to issue a paper check (inc. systems, check, and labor cost is $4.33 - $12.54)*
• Card Spend is expected to double within the next five years**
¾ Reduce A/P Costs
¾ Improve Administrative Efficiencies
• Elimination of paperwork associated with requisitions, PO’s, and invoices
• 68% reduction in procurement cycle time***
¾ Manage Payables in less time – fewer payments to make
• Better data, card management, fleet purchases, real-time tools
*IAPP 2004 Benchmark Survey Results (0 – 8,000 employees)
**Packaged Facts “The US Market for Corporate Credit Cards and Purchasing Cards”, January 2005 ***RPMG Research Corporation – 2005 Purchasing Card Benchmark Survey Results
7
Why Use Cards as a Payables Solution?
¾ Float Management
• Revenue Sharing or Rewarding
¾ Control Spending
¾ Vendor Management
¾ Data Integration
¾ Sarbanes-Oxley (SOX)
Post Pilot Challenges
¾Were goals and objectives met?
¾Were cards given to the correct people?
• Is the program micromanaged?
¾Is technology being used to drive efficiencies
¾Did you understand program successes and failures
• Was an analysis of the program completed?
¾How involved is your card provider?
¾Resources: Were the correct type and amount of resources
properly allocated?
9
Implementing Changes
¾Consider changing approach to “how to use”, instead of “how
NOT to use”
• Research shows that there is no loss of control with good blocking features in place
¾Loosen controls – simple is better
• Reduce MCC profiles • Transaction Limits
¾Improve accountability
¾Recognize fear, but address it
¾Review vendor analysis
• Review A/P File
• Contact strategic suppliers for acceptance
• Enhanced data
¾Reinforce company policies
• Communicating updates
• Changes in card policy information
11
Organizations with high capture of travel spending on
travel cards focus on program goals relating to what the
card can do for them. Organizations with low capture of
travel spending on travel cards focus on controlling
inappropriate card use.
- 2004 Corporate Travel Card Benchmark Survey Results
Characteristics of High Performing Card Programs
¾Top Management Support & Support for the Program
Administrator
¾Strategic supplier relationship
¾Mandate Usage of Cards
• Integrated cards with preferred vendor initiatives
¾Broad dissemination of cards
• Direct link between number of cards and size of company programs
• Beyond those who are in purchasing
• Include other departments such as manufacturing
¾Use of Technology
¾Refuse requisitions where cards could have been used
• Send memos (or “sticky notes”) back to employees
13
Card Penetration by Spend Category
*14.3% 18.7% 12.0% 8.5% 2.9% 1.5% 1.6% 2.7% 2.0% 1.2% 5.8% 34.8% 24.4% 19.0% 12.0% 9.4% 7.3% 3.9% 3.9% 3.0% 1.0% 24.5% Genera l MR O goo ds Offi ce produ cts Trav el and ent erta inment ex pens es Compute r an d per iphe rals Dire ct mate rials ( inven tory) Cont ract or pr ofes siona l se rvic es Capi tal purc has es Frei ght and s hipp ing Leas e and ren tal pay men ts Utili ties Othe r 2001 2003
Simple Solutions for Growth
- Where Else Can The Card Be Used?
¾
Ghost Cards
¾
Department Cards
¾
Inventory Cards
¾
Recurring Payments
¾
Capital Purchases
¾
Lease/Rental Purchases
15
Case Study: The Global Response
Multi-National provider of advisory/consulting services
with locations across North America, United Kingdom
and Czech Republic.
Problem:
Decentralized domestic petty cash; lack of petty cash controls Significant small dollar transactions
Offices consistently requested checks from A/P Tedious reimbursement process
17
Case Study: The Global Response
Solution: Sell Management on Merits of Card Program
Cards initially assigned to office managers
Additional issuance of Department Cards to Tax, Telecommunications, Recruiting, Corporate Communications
Efficiencies Gained
Elimination of invoices for small dollar purchases No approval form for every purchase
CONTROL for petty cash purchases SAVINGS on overnight packages/mail Ledger allocation coding for purchases
Spending increased from $10,000/mo to $80,000/mo
Next Steps: Implementation of a Global Travel Program & Global Purchasing Program
Growth to global operations
Multi-currency travel and purchasing program Utilize online tools globally
19
IS IT RIGHT FOR ME?
¾
Purchase Volume
¾
Supplier Acceptance
ADVANTAGES
¾Reward Points
¾Short term Line of Credit ¾Float Benefit (Interest Free)
¾Credit limit can grow with program ¾Cardholder account access on line
¾Card usage easily monitored by Manager
¾Points earned by each cardholder can be bundled into one total
21
COSTS
¾
Annual Fee per card
¾
Points Redemption Fee
IMPLEMENTING THE PROGRAM
¾Request LaSalle to provide a list of vendors that accept payment by credit card
¾Verify supplier participation
¾Establish a list of company cardholders and set a credit limit per card
¾Have managers and purchasing personnel listen to LaSalle’s
30 minute training session for on-line use of Rewards Program ¾Set up accounting software to recognize those suppliers that can
23
REWARDS POINTS
¾
1 point earned for every dollar spent
¾
“Householding”
REDEEMING POINTS
¾Redeem points on-line or by 800 number 7 days a week
¾View merchandise on-line or in color brochure
25
