GSA SmartPay Conference
Purchase Card Optimization
Robert Robbins
Citi® Commercial Cards, Government Services
The Tenth Annual GSA SmartPay® Conference
Towards New Horizons!
Denver, Colorado
July 22nd - July 24th, 2008
Objective
y Define non-purchase card payment analysis
y Describe tools to complete Accounts Payable analysis
y Demonstrate benefits from implementing optimization findings
Agenda
1. Optimization definition
2. Analysis process
3. Tools for analysis
4. Implementation strategies
5. Program benefits
6. Getting started
Optimization Defined
y Identify and analyze non-purchase card payments to card accepting
vendors
y Strategize and implement a plan to move those transactions to purchase
cards
Why Optimize
Payments grew 26% and purchase card spend totaled only 8.8% of all
payment types – Aberdeen Group, March 2007
y Quantify cost savings from increased usage of commercial card
y Identify opportunities to adopt best practices
– Improve procedures
– Strengthen management of payables
y Increase spend volume and subsequent rebates
Optimization Considerations
y How dominant is check payment in A/P process today?
– Determine check payment cost
– High volume check payments justify the change
y Can your current card program support increased volume?
– Evaluate purchase culture in your organization
– Review the strength of current policies and procedures
y Will organization support implementation of analysis recommendations?
– Cross organizational support and resources
Analysis Process
Three way partnership – Agency, Citi and Association
y Obtain accounts payable file of check payments
y Identify transaction thresholds
y Create list of merchants
y Merchant match
y Review and categorize results
Optimization Strategy
y Segment categorized results
y Establish program goals
y Target spend segments
– By field locations
– By merchant
– By transaction threshold
y Consider pilots
y Obtain management support
AP File Summary By Card Acceptance
OVERALL
Count of Records
Count of Records Less Than $5000.01
Count of Records Greater Than $5000.00
Total Spend
Spend Less Than $5000.01
Spend Greater Than $5000.00
% of Overall
661,499
581,902
79,597
$4,414,354,558.02
$318,465,263.39
$4,095,889,294.63
CARD ACCEPTING MERCHANTS
Count of Records
Count of Records Less Than $5000.01
Count of Records Greater Than $5000.00
Total Spend
Spend Less Than $5000.01
Spend Greater Than $5000.00
383,749
347,853
35,896
$1,585,482,316.77
$184,915,828.78
$1,400,566,487.99
NON-CARD ACCEPTING MERCHANTS
Count of Records
Count of Records Less Than $5000.01
Count of Records Greater Than $5000.00
Total Spend
Spend Less Than $5000.01
Spend Greater Than $5000.00
269,206
234,049
35,157
$2,828,872,241.25
$133,549,434.61
$2,695,322,806.64
100%
88%
12%
100%
7%
93%
% Within Card Accepting
Merchants
% of Overall
100%
91%
9%
100%
12%
88%
58%
60%
45%
36%
58%
34%
% Within Non-Card Accepting
Merchants
% of Overall
100%
87%
13%
100%
5%
95%
41%
40%
44%
64%
42%
66%
Top MCC Categories by Sum of Spend
MCC
7999
4900
6300
7299
1520
7399
8099
9399
8220
5511
8398
5814
5039
8911
5969
5999
7922
8011
1771
5046
5947
8999
8299
8062
5812
MERCHANT_CATEGORY_NAME
RECREATION SERVICES (NOT ELSEWHERE CLASSIFIED)
UTILITIES-ELECTRIC GAS WATER SANITARY
INSURANCE SALES UNDERWRITING AND PREMIUMS
OTHER SERVICES (NOT ELSEWHERE CLASSIFIED)
GENERAL CONTRACTORS-RESIDENTIAL BUILDINGS
BUSINESS SERVICES-NOT ELSEWHERE CLASSIFIED
MEDICAL SVCS HEALTH PRACTICE-NOT CLASS ELSEWHERE
GOVERNMENT SERVICES-NOT ELSEWHERE CLASSIFIED
COLLEGES UNIV PRO SCHOOLS JUNIOR COLLEGES
AUTO + TRUCK DLRS NEW + USED SALES SVC PARTS
CHARITABLE AND SOCIAL SERVICE ORGANIZATIONS
FAST FOOD RESTAURANTS
CONSTRUCTION MATERIALS NOT ELSEWHERE CLASSIFIED
ENGINEERING ARCHITECTURAL AND SURVEYING SERVICES
DIRECT MARKETING-OTHER DIRECT MARKETERS-NOT ELSEW.
MISCELLANEOUS AND SPECIALTY RETAIL STORES
THEATRICAL PRODUCERS-EXCL MOTION PIX TICKET AGNCY
DOCTORS (NOT ELSEWHERE CLASSIFIED)
CONCRETE WORK CONTRACTORS
COMMERCIAL EQUIPMENT NOT ELSEWHERE CLASSIFIED
GIFT CARD NOVELTY AND SOUVENIR SHOPS
PROFESSIONAL SERVICES-NOT ELSEWHERE CLASSIFIED
SCHOOLS + EDUCATIONAL SVC-NOT ELSEWHERE CLASSIFIED
HOSPITALS
EATING PLACES RESTAURANTS
Number of
Transactions
830
9614
2925
1838
640
2004
14102
881
1310
763
1490
860
2177
447
1127
1924
348
13438
891
1169
1560
859
919
8211
955
Sum of Spend
$72,879,939.23
$42,153,092.39
$41,981,658.76
$37,983,093.57
$30,225,309.91
$19,873,208.94
$18,472,866.25
$17,274,632.77
$12,095,130.82
$12,062,689.78
$12,043,697.10
$11,103,654.91
$10,226,073.65
$9,813,146.47
$8,958,742.94
$7,528,056.71
$7,272,590.22
$7,136,920.87
$6,555,975.62
$6,050,344.72
$5,566,991.11
$5,423,411.69
$5,349,638.37
$4,902,447.39
$4,901,182.80
Avg $ /
Transaction
$87,807.16
$4,384.55
$14,352.70
$20,665.45
$47,227.05
$9,916.77
$1,309.95
$19,607.98
$9,232.92
$15,809.55
$8,083.02
$12,911.23
$4,697.32
$21,953.35
$7,949.20
$3,912.71
$20,898.25
$531.10
$7,358.00
$5,175.66
$3,568.58
$6,313.63
$5,821.15
$597.06
$5,132.13
Top MCC Categories by Transaction Count
MCC
8099
8011
4900
8062
4812
4214
6300
5039
7399
8734
5999
7299
2741
5947
8398
5199
5994
9402
8220
5943
7011
1711
5046
5969
8071
MERCHANT_CATEGORY_NAME
MEDICAL SVCS HEALTH PRACTICE-NOT CLASS ELSEWHERE
DOCTORS (NOT ELSEWHERE CLASSIFIED)
UTILITIES-ELECTRIC GAS WATER SANITARY
HOSPITALS
TELECOMMUNICATION EQUIPMENT INCL TELEPHONE SALES
TRUCKING-LOCAL-LONG DIST- MOVING-STORAGE-LOC DEL
INSURANCE SALES UNDERWRITING AND PREMIUMS
CONSTRUCTION MATERIALS NOT ELSEWHERE CLASSIFIED
BUSINESS SERVICES-NOT ELSEWHERE CLASSIFIED
TESTING LABORATORIES (NON-MEDICAL)
MISCELLANEOUS AND SPECIALTY RETAIL STORES
OTHER SERVICES (NOT ELSEWHERE CLASSIFIED)
MISCELLANEOUS PUBLISHING AND PRINTING
GIFT CARD NOVELTY AND SOUVENIR SHOPS
CHARITABLE AND SOCIAL SERVICE ORGANIZATIONS
NONDURABLE GOODS (NOT ELSEWHERE CLASSIFIED)
NEWS DEALERS AND NEWSSTANDS
POSTAL SERVICES-GOVERNMENT ONLY
COLLEGES UNIV PRO SCHOOLS JUNIOR COLLEGES
STATIONERY OFFICE AND SCHOOL SUPPLY STORES
LODGING-HOTELS MOTELS RESORTS
HEATING PLUMBING AIR CONDITIONING CONTRACTORS
COMMERCIAL EQUIPMENT NOT ELSEWHERE CLASSIFIED
DIRECT MARKETING-OTHER DIRECT MARKETERS-NOT ELSEW.
MEDICAL AND DENTAL LABORATORIES
Number of
Transactions
14102
13438
9614
8211
5256
3735
2925
2177
2004
1964
1924
1838
1584
1560
1490
1475
1383
1339
1310
1253
1204
1174
1169
1127
982
Sum of Spend
Avg $ / Transaction
$18,472,866.25
$1,309.95
$7,136,920.87
$531.10
$42,153,092.39
$4,384.55
$4,902,447.39
$597.06
$4,582,542.33
$871.87
$1,507,785.24
$403.69
$41,981,658.76
$14,352.70
$10,226,073.65
$4,697.32
$19,873,208.94
$9,916.77
$619,160.95
$315.26
$7,528,056.71
$3,912.71
$37,983,093.57
$20,665.45
$3,185,962.09
$2,011.34
$5,566,991.11
$3,568.58
$12,043,697.10
$8,083.02
$2,059,850.13
$1,396.51
$730,379.73
$528.11
$4,198,807.74
$3,135.78
$12,095,130.82
$9,232.92
$951,723.31
$759.56
$1,065,292.49
$884.79
$2,433,260.44
$2,072.62
$6,050,344.72
$5,175.66
$8,958,742.94
$7,949.20
$721,013.78
$734.23
Top MCC Categories by Average Transaction Size
under Single Transaction Limit
MCC
7699
5713
5039
5074
7991
5697
4900
7372
9222
5712
7379
780
5172
5999
5655
8249
7629
7333
5947
5211
5714
7032
7911
2791
4457
MERCHANT_CATEGORY_NAME
MISCELLANEOUS REPAIR SHOPS AND RELATED SERVICES
FLOOR COVERING STORES
CONSTRUCTION MATERIALS NOT ELSEWHERE CLASSIFIED
PLUMBING AND HEATING EQUIPMENT
TOURIST ATTRACTIONS AND EXHIBITS
TAILORS SEAMSTRESSES MENDING ALTERATIONS
UTILITIES-ELECTRIC GAS WATER SANITARY
COMPUTER AND DATA PROCESSING SERVICES
FINES
FURNITURE HOME FURNISH + EQUIP EXCL APPLIANCES
COMPUTER MAIN.-REPAIR-SERVICES NOT ELSEWHERE CLASS
LANDSCAPING AND HORTICULTURAL SERVICES
PETROLEUM AND PETROLEUM PRODUCTS
MISCELLANEOUS AND SPECIALTY RETAIL STORES
SPORTS APPAREL RIDING APPAREL STORES
VOCATIONAL AND TRADE SCHOOLS
ELECTRICAL AND SMALL APPLIANCE REPAIR SHOPS
COMMERCIAL PHOTOGRAPHY ART GRAPHICS
GIFT CARD NOVELTY AND SOUVENIR SHOPS
LUMBER BUILDING MATERIALS STORES
DRAPERY WINDOW COVERINGS AND UPHOLSTERY STORES
SPORTING AND RECREATIONAL CAMPS
DANCE HALLS STUDIOS AND SCHOOLS
TYPESETTING PLATE MAKING + RELATED SERVICES
BOAT RENTALS AND BOAT LEASES
Number of
Transactions
312
333
2177
114
65
4
9614
203
102
696
84
117
286
1924
21
82
63
20
1560
424
14
23
8
20
6
Sum of Spend
$1,534,865.45
$1,588,774.72
$10,226,073.65
$530,208.47
$297,923.43
$18,158.89
$42,153,092.39
$886,537.17
$442,198.40
$2,997,679.12
$353,407.09
$479,985.88
$1,157,828.56
$7,528,056.71
$81,820.25
$308,635.01
$233,884.88
$72,168.46
$5,566,991.11
$1,499,522.62
$49,177.25
$80,742.50
$28,073.00
$67,106.29
$19,693.93
Avg $ /
Transaction
$4,919.44
$4,771.10
$4,697.32
$4,650.95
$4,583.44
$4,539.72
$4,384.55
$4,367.18
$4,335.28
$4,307.01
$4,207.23
$4,102.44
$4,048.35
$3,912.71
$3,896.20
$3,763.84
$3,712.46
$3,608.42
$3,568.58
$3,536.61
$3,512.66
$3,510.54
$3,509.13
$3,355.31
$3,282.32
Top Vendors by Transaction Count
MERCHANT
CITIBANK SOUTH DAKOTA NA
AEP
AUTOMOTIVE RENTALS INC
AM WATER CO
BELL ATLANTIC WV INC
US SECURITY ASSOCIATES INC
AT&T MOBILITY
MOUNTAINEER GAS
FRONTIER
UNITED BANK
LANIER WORLDWIDE INC
CHARLESTON SANITARY BD & CITY OF CHAS FEES
GUTTMAN OIL CO
WV ASSOC OF REHAB FACILITIES
UNITED PARCEL SERVICE
BB & T
AT&T
BRICKSTREET MUTUAL INSURANCE CO
KANAWHA VALLEY FAMILY PRACTICE CT
CAMC
FEDERAL EXPRESS CORP
ALLEGHENY POWER
ALLEGHENY POWER
ASSOCIATED RADIOLOGISTS INC
WASTE MANAGEMENT OF WV INC
Number of Transactions
106047
13266
8450
7305
6872
5621
5086
4845
4626
4602
4592
4554
3460
3400
3375
3091
3039
2920
2893
2834
2196
2196
1926
1888
1867
Sum of Spend
$179,878,264.65
$16,108,133.94
$5,921,549.65
$3,065,526.22
$20,367,065.95
$378,105.36
$756,474.16
$6,794,174.47
$1,898,097.74
$25,711,355.10
$1,048,097.56
$748,712.76
$19,744,886.62
$9,853,110.70
$750,439.06
$3,717,628.86
$881,798.07
$41,899,643.76
$1,522,462.50
$2,960,664.65
$187,283.92
$11,447,804.03
$4,797,921.21
$89,568.95
$190,812.97
Avg $ / Transaction
$1,696.21
$1,214.24
$700.78
$419.65
$2,963.78
$67.27
$148.74
$1,402.31
$410.31
$5,587.00
$228.24
$164.41
$5,706.61
$2,897.97
$222.35
$1,202.73
$290.16
$14,349.19
$526.26
$1,044.69
$85.28
$5,213.03
$2,491.13
$47.44
$102.20
Top Vendors by Sum of Spend
MERCHANT
CITIBANK SOUTH DAKOTA NA
BONHAM ELEMENTRY SCHOOL
BERKELEY CO BD OF EDUCATION
WV TEACHERS DEFINED CONTRIBUTION SYSTEM
WV PAVING INC
FAIRPLAINS ELEMENTARY
CABELL CO BD OF EDUCATION
ACADEMY OF CAREERS & TECHNOLOGY
BRIDGEPORT HIGH SCHOOL
ATHENS SCHOOL
CEREDO ELEMENTARY
CLAY-BATTELLE HIGH SCHOOL
WALSH CONSTRUCTION CO
MARION CO BD OF EDUCATION
CONFIDENCE ELEMENTARY SCHOOL
COLLINS MIDDLE SCHOOL
BRICKSTREET MUTUAL INSURANCE CO
CHAPMANVILLE HIGH SCHOOL
ALCON DIV J F ALLEN CO
JEFFERSON CO BD OF EDUCATION
HUNTINGTON BANK
HEALTH PLAN OF THE UPPER OHIO
ALDERSON ELEMENTARY B A U RECYCLING CLUB
AHERN & ASSOC INC
OHIO CO BD OF EDUCATION
Number of Transactions
106047
1054
1002
702
1764
729
755
786
789
632
535
563
24
604
711
625
2920
625
658
510
143
12
586
171
614
Sum of Spend
$179,878,264.65
$147,517,138.08
$81,972,824.51
$79,398,495.55
$77,411,630.15
$75,278,872.27
$70,805,631.00
$69,096,706.97
$59,946,747.34
$56,782,109.05
$49,048,746.58
$46,302,615.05
$45,901,646.76
$45,733,043.32
$43,442,038.83
$43,176,680.34
$41,899,643.76
$37,861,476.59
$37,440,666.81
$34,536,524.65
$32,507,400.22
$32,396,569.16
$30,135,803.44
$29,437,613.90
$29,399,104.95
Avg $ / Transaction
$1,696.21
$139,959.33
$81,809.21
$113,103.27
$43,884.14
$103,263.20
$93,782.29
$87,909.30
$75,978.13
$89,845.11
$91,679.90
$82,242.66
$1,912,568.62
$75,716.96
$61,099.91
$69,082.69
$14,349.19
$60,578.36
$56,900.71
$67,718.68
$227,324.48
$2,699,714.10
$51,426.29
$172,149.79
$47,881.28
Top Card-Accepting Vendors by Transaction Count
MERCHANT
CITIBANK SOUTH DAKOTA NA
AEP
AUTOMOTIVE RENTALS INC
BELL ATLANTIC WV INC
US SECURITY ASSOCIATES INC
MOUNTAINEER GAS
FRONTIER
UNITED BANK
GUTTMAN OIL CO
UNITED PARCEL SERVICE
AT&T
BRICKSTREET MUTUAL INSURANCE CO
KANAWHA VALLEY FAMILY PRACTICE CT
CAMC
ALLEGHENY POWER
ALLEGHENY POWER
ASSOCIATED RADIOLOGISTS INC
WASTE MANAGEMENT OF WV INC
WVU RESEARCH CORP
RADIOLOGICAL PHYSICIAN ASSOCIATES INC
DOMINION HOPE
SUDDENLINK
ALLEGHENY POWER
SHARP ELECTRONICS
PRESTERA CENTER
Number of Transactions
106047
13266
8450
6872
5621
4845
4626
4602
3460
3375
3039
2920
2893
2834
2196
1926
1888
1867
1849
1700
1681
1570
1513
1512
1483
Sum of Spend
$179,878,264.65
$16,108,133.94
$5,921,549.65
$20,367,065.95
$378,105.36
$6,794,174.47
$1,898,097.74
$25,711,355.10
$19,744,886.62
$750,439.06
$881,798.07
$41,899,643.76
$1,522,462.50
$2,960,664.65
$11,447,804.03
$4,797,921.21
$89,568.95
$190,812.97
$22,954,420.26
$68,185.62
$6,952,610.39
$203,322.35
$4,914,640.94
$309,495.46
$14,814,765.64
Avg $ / Transaction
$1,696.21
$1,214.24
$700.78
$2,963.78
$67.27
$1,402.31
$410.31
$5,587.00
$5,706.61
$222.35
$290.16
$14,349.19
$526.26
$1,044.69
$5,213.03
$2,491.13
$47.44
$102.20
$12,414.51
$40.11
$4,136.00
$129.50
$3,248.28
$204.69
$9,989.73
Top Card-Accepting Vendors by Sum of Spend
MERCHANT
CITIBANK SOUTH DAKOTA NA
CABELL CO BD OF EDUCATION
WALSH CONSTRUCTION CO
MARION CO BD OF EDUCATION
COLLINS MIDDLE SCHOOL
BRICKSTREET MUTUAL INSURANCE CO
JEFFERSON CO BD OF EDUCATION
HUNTINGTON BANK
HEALTH PLAN OF THE UPPER OHIO
AHERN & ASSOC INC
OHIO CO BD OF EDUCATION
MINNESOTA LIFE INSURANCE CO
CHARLES E YEAGER CAREER CENTER
UNITED BANK
WVU RESEARCH CORP
BELL ATLANTIC WV INC
GUTTMAN OIL CO
WELLS FARGO
MARCH WESTIN CO INC
PRIMECARE MEDICAL OF WV INC
AEP
TRUMBULL CORP
PRESTERA CENTER
CLAY CO BD OF EDUCATION
UNISYS CORP
Number of Transactions
106047
755
24
604
625
2920
510
143
12
171
614
24
643
4602
1849
6872
3460
262
15
963
13266
27
1483
506
106
Sum of Spend
$179,878,264.65
$70,805,631.00
$45,901,646.76
$45,733,043.32
$43,176,680.34
$41,899,643.76
$34,536,524.65
$32,507,400.22
$32,396,569.16
$29,437,613.90
$29,399,104.95
$27,122,618.65
$25,976,251.01
$25,711,355.10
$22,954,420.26
$20,367,065.95
$19,744,886.62
$19,226,915.12
$16,781,647.78
$16,722,418.95
$16,108,133.94
$15,769,924.34
$14,814,765.64
$14,720,203.04
$13,259,485.75
Avg $ / Transaction
$1,696.21
$93,782.29
$1,912,568.62
$75,716.96
$69,082.69
$14,349.19
$67,718.68
$227,324.48
$2,699,714.10
$172,149.79
$47,881.28
$1,130,109.11
$40,398.52
$5,587.00
$12,414.51
$2,963.78
$5,706.61
$73,385.17
$1,118,776.52
$17,364.92
$1,214.24
$584,071.27
$9,989.73
$29,091.31
$125,089.49
Analysis Tools
y Association participation
– Merchant match
– MasterCard EMS
– Visa Intellilink
y Citi data mining tools
– Ad-hoc custom reporting queries
y Citi reporting support
– Card spend tracking
Slide 18
g1
We actually usually use the AP or ATA tools.
ps30864, 5/2/2008
Implementation Plan
y Specific spend segments targeted
y Define plan and allocate resources
y Identify executive sponsors
y Initiate any policy enhancements
y Provide data to key participants
y Monitor action plans
y Measure results and provide feedback
y Communicate results
Optimization Timeline
y AP file with 12 months data – 2-4 weeks
y Citi analyzes data – 1-2 weeks
y Results with opportunities identified – 1-2 weeks
y Citi and You design plan – 2-4 weeks
y Implementation – 16-24 weeks
y Track progress
y Six months to enhance agency performance
Optimization Benefits
y Increased efficiency
y Accounts Payable cost reduction
y Consolidate payment tracking
y Supports strategic sourcing
– OMB Circular A-123
y Enhances socio-economic reporting
y Rebate increase
How to get started
y Consult with Accounts Payable
y Discuss with your Citi Account Manager
y Propose to management for support
y Citi will help you throughout the process
Summary
y Explained what Optimization is and does
y Covered how the AP analysis takes place
y Discussed the benefits of implementing the spend analysis findings
Reminders
y Thank you for attending this session
y Visit the Citi® Welcome Center
– Exhibit Area Entrance, Sheraton Denver
– Conference Slide Show – come see yourself shine
y Visit the Citi® One-on-One Mini-Sessions
– Governor’s Square Rooms 10 and 11
y Please take a moment to complete your GSA survey for this session
24
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