Procurement cards in the P2P
environment at UCT
Natalie Pitcher
Historical Background
General
• Leading research university in Africa and globally
• 25,000 students; 30% postgraduates; 18% foreign
• 5,000 staff; 20% academics
Procurement at UCT
• ERP system: SAP
• Centralised supplier negotiation
• Decentralised purchasing (approx. 200 purchasers)
• Total spend in 2011: R1,4bn
• Diverse spend due to research activity
Historical Background
2002: First cards issued with BoE
• Low value high volume (LVHV) purchases
• Convenient payment tool for field trip expenses
• Piloted MasterCard PCards in SA
• Piloted SAP-integrated ‘SmartLink’ software
• 2004: Move to Nedbank with takeover of BoE
Common application of Pcard
Stationery and office consumables (LVHV)
• Line item detail enabled from preferred suppliers
Online payments
• Local and foreign air tickets and accommodation
• Conference fees
• Membership subscriptions
• Books and software
Convenient alternative to:
• Travel allowance
• Reimbursement or cash advance e.g. field trips
Pcard statistics
Cardholders in December 2011
•
600 (current - 677)
Transaction volumes
• 32,627 – total no of transactions
• 6,407 – foreign currency transactions
Transaction values
• R57m – annual spend
• R4,7m – ave monthly spend (2012 – R5,2m)
• R15m – foreign transactions
Spend by GL account for 2011
Cardholder Profile
•
Cardholders are selected based on role not rank, which is determined by need :
– Used by UCT executives for travel and entertainment
– Departmental purchasers can use the pcard as a primary payment tool
– Miscellaneous purchasing such as refreshments and catering
– Project managers for daily expenses
– Field workers paying travelling expenses
– Academics paying for travel, conferences, online payments
– Any staff member requiring reimbursements or advances on a regular basis
Pcard Daily Roles
Pcard
Administrator
Card
Processor
Card Holder
Card Holder
•
Daily transaction
downloading
Card
Processor
•
Transaction
processing
Card Holder
•
Makes a purchase
Pcard process
Daily
Cardholder
Creates online order
•Makes payment by
swiping card
•Sends supporting
docs to card
processor
Monthly
Card
Administrator
•Upload daily files
received from Bank
Card
Processor
• Match supporting
docs to
transactions listed
in SAP
•Allocate the
transaction to cost
centre, fund and
general ledger
Card
Administrator
Line Manager
•Upload statement
file from Bank
•Run statement
match report
against daily files
•Payment to Bank
•Bank
reconciliation
•Cardholder
reports to LM
•LM will review all
expenses made
via pcard
•Sign off expense
report
Finance
Manager
•CP reports to the
LM
•Unapproved
transactions are
reviewed
•Expense voucher
report is reviewed
Create purchase order
Enter GRV/Amend
purchase order
Process Invoice
AP account reconciliation
Pay the vendor
Pcard payment
Traditional purchase order
payment
Comparative Analysis
Create online order/ swipe
card
Vendor delivers goods &
invoices/Bank pays Vendor
Post allocation of cost
Summary
Order supplies
Organisation
Vendor delivers/ invoice
received
Organisation
pays one
vendor = Bank
Bank pays vendor immediately
Supplier
Benefits of the Pcard
•
Cost saving :
– Processing cost relating to card transactions cost about 25% of traditional purchase
orders
– Purchase order do not need to be amended to match the GRV and Invoice
– There are no “open” purchase orders which need to be investigated and resolved
– Card belongs to an individual, they are accountable for every transaction
– Pin chipped cards ensure latest encryption technology is applied
– Card holders are able to process transactions , thus relieving purchaser workload
– Improved cashflow for supplier
Controls
• Pcard policy is approved by UCT council
• Application process requires appropriate authorisation and
accountability
• Monthly credit limits can be increased/decreased
• Transacting for another staff member requires an authorised
requisition
Monitoring and Reporting
– Monthly Card Holder expense voucher report must be signed
off by the Line Manager
– All Card Holders pcard expenses are reviewed by Finance
manager checking budget compliance amongst maintaining
other financial disciplines
– Internal and external audits
– Systematic structured audit program – future development
Fraud & Corruption
• All financial processes carry risk but with the correct
reasonable controls this can be managed
• Fraudulent transactions are charged back by the Bank
provided they are disputed in time
• Card transactions are very transparent and visible,
which often reveal if cardholders have been corrupt
in other areas of business
Future Developments
• Increase spend via card with more vendors
• Encourage online transactions especially office
consumables which account for the highest number
of transactions
• Upgrade pcard software to Xponential
• Provides improved reporting tool
• Enables change to Visa which has better
acceptance in the world, especially Africa
• Allows payment of traditional purchase
orders/invoices by card
Implementation consideration
• Research
• Choose your issuing bank carefully
• Bank needs to understand needs and provide full solution
• Ensure adequate resources are available
• Identify appropriate use - costly and time consuming business
processes
• Investigate data integration solutions to ensure:
– All transactions reach the financial system
– Does the solution allow for flexible cost allocation
Conclusion
•
Pcard is powerful payment tool
•
Provides convenient payment solution in Global village environment
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