Fueling up the P-card and Early Pay Discounts

American Red CrossPresented By: Michael Harris

Senior Director – Finance Business Support

The can’t miss P2P networking event for professionals in:• Accounts Payable

• Finance

• Procurement

• Shared Services

• Supply Chain

• IT & Treasury

innovate.paystreamadvisors.com

Speakers Include:• William Cooper, CPO, University of

California

• June Gregg, Director of Transaction Services, ServiceMaster

• Kim Rankel, Director of Purchase-to-Pay, Eli Lilly and Company

• Ben Shaffer, Director of Payment Services, PG&E

American Red Cross

• Mission StatementThe American Red Cross prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.

• Vision StatementThe American Red Cross, through its strong network of volunteers, donors and partners, is always there in times of need. We aspire to turn compassion into action so that...

all people affected by disaster across the country and around the world receive care, shelter and hope;

our communities are ready and prepared for disasters; everyone in our country has access to safe, lifesaving blood and blood products; all members of our armed services and their families find support and comfort whenever needed; in an emergency, there are always trained individuals nearby, ready to use their Red Cross skills

to save lives.

Shared Services Value

Consolidate - Pick up and move- Gain Control of Processes- Minimal process change- Organization identity- Reduced platform

Standardize - Process Change- Quick Hits- Service Agreements- Continuous Improvement- Improve Customer Service

Integrate - Process focus- Technology deployed- Initial E-Commerce- Workflow- ERP backbone- Web – enabled- Balanced Scorecards- High skilled employees- Benchmarking

Virtual - Customer focus- Stand alone operation- Relationship Mgmt.- Information Mgmt.- Clear business impact- Competitive opportunity- Integrated systems (internal and external)- Performance metrics- Self service capability

Value

Organizational change management

Shared Services Value

SpeedStabilityAccuracy

Reduced CostImprove Quality

Customer Satisfaction

Quality Service

Cost

ARC Historical Look Back

High cost to process over 600,000 annual paper invoices.

Over 18,000 active annual external suppliers paid via check.

Late payments and lost discounts to suppliers.

High risk / Low controls.

Transform with P-Cards

P-Card perception. Redefine the “P”. Procurement versus

Payment. Change of philosophy.• Who should have a P-card?• What is the P-Card invoice value limit?• What about ERP purchase orders?

P-Card Monthly Cycle – Field Cards

Typical Monthly P-Card Cycle

Fie

ld O

ffice

Ban

k S

yste

mF

inan

ceS

uppl

ier Supplier sends

invoice to Field Office

Approve for payment

Pay Supplier with P-Card

Supplier receives payment

Supplier processes payment

Bank settles and records payment

Cardholder reconciles payments

Cardholders Supervisor Approves

Reconciliation

Liaison confirms reconciliation

Charges posted to General Ledger

Payment made to bank

Bank receives payment

P-Card Monthly Cycle – AP Internal Cards

Typical Monthly P-Card Cycle – Internal AP

Acc

oun

ts

Pa

yab

leB

ank

Sys

tem

Fin

ance

Su

pplie

r Supplier sends invoice to Field

Office

Approve for payment

Pay Supplier with P-Card

Supplier receives payment

Supplier processes payment

Bank settles and records payment

Cardholder reconciles payments

Cardholders Supervisor Approves

Reconciliation

Liaison confirms reconciliation

Charges posted to General Ledger

Payment made to bank

Bank receives payment

Key invoice into ERP

P-Card Paygroup

Benefits

Reduction in paper invoices to AP. Increase on-time settlement with

suppliers. Electronic reconciliation with workflow

approval and general ledger coding. Reduction in ERP vendor master. Reduction in overall AP cost to process. Maximize P-Card spend

Challenges

Increases ERP General Ledger reconciliations due to differences in keyed transactions versus P-Card settlement.

• Supplier processing fees.• Supplier gives a discount.• Supplier time lag in processing

transaction.

P-Card Spend History

P-Card Spend

0

50

100

150

200

250

FY03FY04

FY05FY06

FY07FY08

FY09FY10

FY11FY12

Fiscal Year

$ m

illi

on

s

P-Card $million

Where we are today

Over 10 years P-Card experience. 6800+ number of P-Cards issued to staff. 500,000 annual P-Card transactions. Use of ghost cards for central travel

booking. Online reconciliation system. Multi-million dollar annual rebates. Reduced ERP suppliers down to 6,500.

Transform Discounts

Identify opportunities. 80/20 spend analysis. Put a process in place. JUST ASK! Focus, Measure & Improve.

Early Payment Discounts

Early Payment Discounts

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

FY

01

FY

02

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

Fiscal Year

Do

llar

s

Taken

Lost

Early Payment Discounts

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

Perc

enta

ge

Take

n

FY01 FY03 FY05 FY07 FY09 FY11

Fiscal Year

Percentage Taken

Percentage Taken

New Challenges

Bringing in payables for over 600 Chapters.

Circa 500,000 annual paper invoices. Rolling out standard processes and

improved controls to non-standard operating units.

Looking Forward

Electronic P2P System implemented. Scanning & Workflow Technology. Virtual Cards. Convert from P-Card to ACH with early

payment discount.

American Red Cross – Accounts Payable Motto.

More Money For The Mission!

Thank You!

Q & A

The can’t miss P2P networking event for professionals in:• Accounts Payable

• Finance

• Procurement

• Shared Services

• Supply Chain

• IT & Treasury

innovate.paystreamadvisors.com

Speakers Include:• William Cooper, CPO, University of

California

• June Gregg, Director of Transaction Services, ServiceMaster

• Kim Rankel, Director of Purchase-to-Pay, Eli Lilly and Company

• Ben Shaffer, Director of Payment Services, PG&E