CFC U.S. Bank One Card
Tuesday, July 12, 2011
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Background
•
Original card programs began in 2001
•
Consolidated products into One Card program
in August 2006
•
Program currently has 168 participants and
generated $19.5 million in aggregated
spending last year
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U.S. Bank – A Strategic Resource
•
$311 billion in assets
•
5th-largest commercial bank in the United States
•
Unparalleled industry experience
•
Solutions for the entire payment continuum
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Program design/implementation expertise
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Unsurpassed resource commitments
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World-class, U.S.-based customer service
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U.S. Bank Strategic Benefits
•
A strong commitment to the payments business
•
Ubiquitous merchant acceptance
•
Competitive commercial card advantages for
CFC members
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Long-term relationship with a strong and stable
commercial bank
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Does My Co-op Need
a Commercial Card?
Purchasing Landscape
•
Annual purchasing card spending in
North America grew from $161 billion in 2009
to $176 billion in 2010
•
Purchasing card spending in North America is
expected to increase to $213 billion by 2012
and $255 billion by 2014
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Purchasing Landscape
Purchasing Card Spend in North America
Source: 2010 Purchasing Card Benchmark Survey, RPMG Palmer & Gupta
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Cards Are Expanding Into Larger, Core Purchases
Cap Ex
CARDS
COGS
CHECKS
CARDS
Ad Hoc
MRO
Common Uses
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T&E
Office Supplies/MRO
POS ad hoc purchases
Petty cash alternative
Increasingly used for larger purchases
including COGS
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•
Rebate potential
•
Extended DPO via credit
function
•
Control in the form of
restricting spend categories
and amounts
•
Ability to automate G/L
interface
•
Pre-purchase process
efficiencies
•
Detailed transaction data
•
No cost to buying
organization
B2B Payment Matrix
(% of total number of transactions)
81%
58%
Checks
ACH
25%
13%
10%
7%
2%
4%
Source: AFP Electronic Payments Survey Data for 2004 - 2010
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Wire
Cards
Bottom-Line Results
•
Average net savings of $69+ per transaction
•
Average procurement cycle time reduction
of 6.3 days
•
Average reduction in supplier base of 31%
•
38% increase in ability to negotiate preferred
pricing
•
Happier and more productive employees
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Real-World Successes*
Procure-to-pay and commercial card programs
build the bottom line.
– One electric utility expanded its card program from
emergency purchases only to all its routine purchasing,
reducing manual AP check payments by more than 65%.
– A leading provider of technology and business solutions
plans to move more than $8 million of company spend
from paper checks to its commercial card program.
– A construction company saved more than $100,000 and
grew its commercial card program from $1 million to
$6 million by eliminating local “house” charge accounts.
*2008 Visa Global Procure-to-Pay and Commercial Best Practices Study,
Deloitte Consulting
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The Program
What Is the CFC One Card?
Meets the needs of every co-op’s spending
activity—combining the benefits of corporate
and purchasing cards in a single card program.
Corporate Travel
Card
Designed to pay for travel and
entertainment (T&E) expenses
Airfare
Hotel
Car rental
Meals
Entertainment
Meeting and event planning
Employee relocation
One Card
Purchasing Card
Designed to manage both T&E
and procurement expenses
Designed to pay for small dollar,
frequently purchased items
+
Office equipment and supplies
Maintenance, repair and
operations
Budgetary spend
Computer hardware, software
and peripherals
Printing and duplicating services
Professional, temporary and
janitorial services
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=
Office equipment and supplies
T&E
Maintenance, repair and
operations
Budgetary spend
Meeting and event planning
Miscellaneous services
Employee relocation
Program Benefits
•
No annual fees or interest
•
No credit check on cardholders
•
No individual liability
•
Flexible online reporting and administration
capabilities
•
Exciting rebate opportunity
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Program Benefits
•
Simplify and streamline operations
•
Save time, money and resources
•
Stay in control and in compliance
•
Tailor the card program to your specific needs
•
Provide a convenient payment tool to
employees
•
Make better-informed business decisions
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Types of One Card Accounts
•
Individual Cardholder Accounts
– A card assigned to an individual employee that
has the employee’s name on the card
•
Department Cardholder Accounts
– A card that is commonly used by a department
or for a specific type of purchase
•
Ghost Accounts
– A virtual, card-free purchasing account tied to a
single department, supplier or spend category
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One Card for Purchasing
•
Reduces volume of purchase orders, invoices
and check payments
•
Improves purchasing management and provides
reporting for IRS and state regulators
•
Enables monitoring of corporate policy
compliance
•
Improves employee spending controls
•
Facilitates vendor negotiations
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One Card for T&E
•
Customized authorization controls
•
Online account access
•
Cash advance option
•
Ability to interface with your accounting
software
•
Comprehensive travel benefits
– Worldwide automatic travel accident insurance:
$250,000
– Excess lost/damaged luggage coverage: $1,250
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Typical Co-op Cardholders
•
Human resources
•
Plant and maintenance employees
•
Technical and office staff
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General administration
•
Purchasing department
•
Advertising/marketing staff
•
Sales force
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Typical Co-op Expenditures
•
Oil and fuel
•
Computer and software purchases
•
Utilities payments
•
Office supplies
•
Continuing education expenses
•
Online purchases
•
Airfare and hotel expenses
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Volume
Wholesale Trade
Hotels
One Card
Top Co-op
Spend
Categories
Business Expense
Vehicle Expense
Other
Eating/Drinking
Office Services
Airline
Office Supplies
MRO Supplies
Mail/Telphone
Auto/RV Dealers
Annual Volume
$5,043,787.93
$3,610,702.51
$2,578,426.81
$2,418,725.45
$1,763,016.10
$1,734,222.01
$1,466,929.51
$1,302,718.90
$972,141.91
$499,338.89
$435,439.17
$225,941.45
Type of Spend
WHOLESALE TRADE
HOTELS
BUSINESS EXPENSE
VEHICLE EXPENSE
OTHER
EATING/DRINKING
OFFICE SERVICES
AIRLINE
OFFICE SUPPLIES
MRO SUPPLIES
MAIL/TELEPHONE
AUTO/RV DEALERS
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ATS
# of Transactions
$164.23
30,712
$295.52
12,218
$393.11
6,559
$59.73
40,495
$198.47
8,883
$50.48
34,354
$364.36
4,026
$227.87
5,717
$166.86
5,826
$365.28
1,367
$312.59
1,393
$273.21
827
One Card Rebate Opportunity
Rebate Overview
•
Participating cooperatives have the
opportunity to qualify for an annual
cash rebate
•
The rebate period runs annually from
September through August
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How the Rebate Works
•
Participating cooperatives must collectively
generate at least $5 million in annual charge
volume and have an average transaction size
of at least $120.
•
The higher the collective charge volume, the
higher the percentage of rebate.
•
Once the collective program rebate is attained,
cooperatives can earn a portion of that rebate
if they meet the individual eligibility
requirement.
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Individual Rebate Eligibility
•
The cooperative’s annual spend must be at
least $175,000.
•
If the cooperative has an average transaction
size of least $120, the rebate is even higher.
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Effective September 1, 2011
Two separate ways of earning a cash rebate
through the One Card program:
– A portion of the collective rebate will be paid to
each cooperative that spends a minimum
amount of $5,000 in one rebate year.
– A separate rebate will be paid to each
cooperative that averages at least $120 per
transaction during the rebate year.
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Rebate Success
•
2008–2009 Rebate Year
– Total spend: $15.9 million
– Average transaction size: $125
– Performance Rebate: $67,687
– Individual co-op payouts ranged from $780 to $11,800
•
2009–2010 Rebate Year
– Total spend: $19.5 million
– Average transaction size: $144
– Performance Rebate: $71,963
– Individual co-op payouts ranged from $640 to $8,170
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Making One Card
Work for You
Access Online
Free Web-based access tool provides:
– Convenient, secure online access to data—
anytime, anywhere
– Account setup and maintenance
– Ability to adjust cardholder spending limits
– Access to view cardholder statements online
– Reports to better understand spending patterns,
vendor usage and policy compliance
– Automated posting capabilities to integrate card
data with accounting and general ledger entries
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AutoPay
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Amount due is automatically drawn from
specified account
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Cycling date is the 16th of every month unless
on a weekend or holiday
•
Cooperative chooses a draft date that is within
14 days of the 16th
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Fleet Capabilities
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Cards issued at a driver or vehicle level
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Enhanced spending controls
– Ability to limit spending to fuel and/or
maintenance only
– Prompts for driver ID and odometer reading
– Velocity controls and hard limits
•
Accepted by Visa and MasterCard merchants
worldwide
•
Enhanced fleet data capture─provided by most
major oil companies
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Merchant Category Codes
•
Provide a method of understanding and
managing company spending by category code
•
Use merchant category codes (MCCs) to
prevent employee misuse
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Open and close MCC blocks for flexibility
as necessary to your organization and
supplier base
•
Automate annual IRS Form 1099-MISC reporting
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Flexible Spending Management
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Authorization parameters
– Monthly spending limit
– Daily spending limit
– Single-purchase limit (SPL)
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Supplier category restrictions
– Travel, casinos, jewelry, liquor, etc.
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Automated Accounting Methods
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Default account code assigned to each card
– Cost center, budget code, company code, etc.
•
General Ledger object codes assigned by type
of purchase
– Office supplies, computer equipment, hotels,
hardware stores, etc.
•
Accounting codes can be changed/edited as
needed
•
Transaction data can be exported for integration
with accounting software
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Addressing Cooperative
Concerns
Cooperative Concern 1
Spend Out of Policy
– (also known as “Maverick Spend”)
– A commercial card is used in a way that does
not conform to the spending policies of the
organization
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Do Commercial Cards Increase
Out-of-Policy Spending?
• Purchase card policy violations account for
0.006% of purchasing card spending—the
equivalent of $60 of policy violations for every
$1 million of purchasing card spending.1
• Cumulatively, noncompliant transactions
account for about 0.021% of travel card
spending (or $210 out of every $1 million of
travel card spending), a figure that has fallen
from 0.035% in 2006 and 0.163% in 2004.2
1 RPMG
2
Research Group, 2010 Purchasing Card Benchmark Survey Report
RPMG Research Group, 2009 Corporate Travel Card Benchmark Survey Report
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Cooperative Concern 2
Card Misuse
– An employee charges a personal expense
through a commercial card and misrepresents
it as a business expense.
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Will Employees Misuse
Commercial Cards?
•
•
•
Purchasing card misuse accounts for .014% of
purchasing card spending, which is the equivalent
of $1.40 of misuse for every $10,000 of purchasing
card spend.
– .008% for fraud and misrepresentation
– .006% for policy violations
Losses are a fraction of the administrative cost
savings and other benefits attributable to card use.
Visa Liability Waiver Program covers your
cooperative up to $100,000 per cardholder in the
event of employee card misuse.
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Dedicated Program
Support
U.S. Bank Support
Greg Wenisch, Relationship Manager
Jennifer Kartes, Program Coordinator
– Custom implementation
– Ongoing strategic consultation
– Training on Web-based access tools
– Problem resolution
– A complete partnership approach to your
business success
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CFC Program Support
•
•
•
•
Manages relationship with U.S. Bank
Provides day-to-day member contact
Establishes new cooperative accounts
Answers general member questions and
concerns
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Get Started Today!
Contact Tara Cromp for more details:
– Phone: 800-424-2954
– E-mail: [email protected]
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How to Submit Your Question
Step 1: Type in your
question here.
Step 2: Click on the Send
button.