Paper to Electronic - Card
GFOA Conference
August 2012│ Tucson, AZ
Bank of America
David A. Randolph, Vice President
 Card Account Manager
Southwest Government
 602.523.6996
 David.a.randolph@baml.com
Experience
 16 Years with Bank of America
 10 Years within Treasury / Card
 State , County, City, Higher Education, School
Districts, and Commercial Clients
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City of Chandler
Sharon Brause, CPPB, CPCP
 Procurement Officer
 480-782-2407
 Sharon.Brause@ChandlerAZ.gov
Experience
 20+ years in the Public Sector
 14 years in Banking Industry
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Bank of America – National Card Portfolio Overview
 Over 52 years of experience in the Card industry,
beginning with Bankamericard (Visa)
 Provide Card solutions to about 12,000 companies with
an annual corporate card volume of about $24 billion
 Created the first dedicated vendor enrollment team to
enroll your trading partners into ePayables
 $300MM 18-month Global Treasury investment, (e.g.
Push Payments, Receipts Imaging, Global Card, Works)
Purchasing
Card
Travel Card
Pre-paid
(incentive)
Check
Wire
ACH
ePayables
Card Shuffler
Push Pay
Paymode - X
Paymode – X +
Paymode – X
eInvoicing
Card Products
Volume – 2011
Purchasing Card
$11,414,890,905
ePayables
$10,030,186,000
Travel Card
$2,964,841,373
Corporate One Card
$3,515,768,362
Total
$27,925,686,640
 Achieved 15% in Card portfolio growth in 2009
 Achieved 31% in Card portfolio growth in 2010*
 Achieved 13% in Card portfolio growth in 2011
*Above standard industry growth rates
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Bank of America – Arizona Card Portfolio
 Provide Card solutions to approximately 28
organizations in AZ
 2010 annual Card volume of about $53 million
 2011 Jan – Oct Card volume of about $68 million
 Estimated 2012 total volume $78 million
 AZ Public Sector Group - City of Chandler
 Purchase Card Program – September 2000
 ePayables Program – March 2009
Card Products
Purchasing Card
$57,650,624
ePayables
$10,847,621
Total
$68,498,245
Card Products
Purchasing Card
ePayables
Total
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Volume – 2011
Volume – Jan
‘12 – Jun ‘12
$53,473,735
$6,342,083
$59,815,818
Payments Evolution
How does Card compare?
Payments Evolution
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What is a “Purchase” Card?
What is a “Purchase” Card?
 Payment Tool – Not simply a credit card
 Based on standard, Visa/MasterCard credit card
 Provides enhanced Internal controls & reporting
 Includes technology to streamline your purchasing process
 Purchasing Cards are given to employees to acquire goods and services for their organization
 Used to pay Accounts Payable invoices through ghost card application
 Central bill/central pay/corporate liability
 Most public and private organizations have Purchasing Card programs
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Transaction Flow
Authorization
Merchant
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Associations
(Visa/MasterCard)
Works / Reporting
Total Systems
(TSYS)
Why Purchase Card?
Question: Why Purchase Card?
Answer: Smart Spending
 Reduce costs associated with traditional fee-based payment types
– Typically, 80% of transactions only represent 20% of total dollars spent
– Streamline purchasing and payment procedures through less paperwork and processing time
– Reduce the administrative burden
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Question: Why Purchase Card?
Purchasing cards deliver savings of
purchase orders (POs).
76% over traditional
$89.21
Answer: Smart Spending
Purchasing cards eliminate 6.3 days from the procure-to-pay process.
9.26
Savings
Savings
$67.38
6.3 days
2.96
$21.83
Traditional PO
P-card
Cost/ transaction
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Traditional PO
P-card
Cycle time
Question: Why Purchase Card?
Answer: Smart Spending
 Provides cash payout incentive when rebate terms met
– Rebate payout based upon current annualized program spend
– Calculation: Annual program spend x .0117 (117 BPS)
 Program Volume: 2,000,000 x 117 BPS = $23,400 rebate
 Extends float and allows for more accurate cash balance tracking
 1099 Relief
– The combination of Regulations issued in August 2010 along with a Notice released in December 2010 means that card
transactions are no longer subject to IRS reporting and withholding rules
– Check transactions in 2011 and 2012 remain subject to the same rules as before
– The planned expansion of reporting for check transactions has been repealed
– IRS Resources: http://www.federalregister.gov/articles/2010/08/16/2010-20200/information-reporting-for-paymentsmade-in-settlement-of-payment-card-and-third-party-network
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Question: Why Purchase Card?
Answer: Smart Spending
 Authorization Controls
– Merchant Category Code Blocking
– Dollars per transaction, month, billing cycle or day
– Number of transactions per day, month or billing cycle
– Pre-purchase Approvals
 Accountability
– Ensure cardholders account for all spending
– Ensure managers are aware and accountable for their employee spending
– Audit Reporting
 Visa/MasterCard Liability Protection….
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Visa Liability Waiver Program
 Visa’s misuse protection program is automatically provided with all Bank of America purchasing card
programs and comes free of charge to AZ entities.
– In the event that abuse occurs, members will be protected.
– This coverage will be subject to the terms and exclusions of the misuse protection program
 The Visa Liability Waiver Program protects members against eligible losses that may be incurred
through card misuse by a terminated employee
– This coverage is included on all Bank of America Visa Corporate Card programs and based on the terms of the
program will provide up to $100,000 reimbursement of eligible losses per cardholder.
 The Visa Liability Waiver Program applies to all transaction types
– Internet
– Mail Order
– Telephone Order
– Face to Face
– Ghost Accounts
– Department Cards
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Card Evolution
Why Automated AP Card?
Question: Why Automated AP Card?
Answer: Smart Spending
 Benefits to you:
– Elimination of expenses associated with check i.e. printing, mailing, bank fees, fraud, etc
– Extends float and allows for more accurate cash balance tracking
– Provides cash payout incentive when rebate terms met
 Program Volume: 10,000,000 x 117 BPS = $117,000 rebate
– Incorporates into current AP process
– Provider support for vendor enrollment
 Benefits to your vendors:
– Converts the payment to electronic settlement thereby eliminating processing fees (internal and/or bank analysis
charges) associated with accepting a check
– Removes the mail float and funds availability factors from the collection process
– Electronic delivery of the remittance information
– Avoid giving out sensitive account number information
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Question: Why Automated AP Card?
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Answer: Smart Spending
How to Get Started…..
How Do I Get Started?
 Consultation
– Talk to a financial institution to understand:
 Commitment for Card
 Experience in AZ
 Tools offered to manage a Card program
 Additional services (Declining Balance Cards, Automated AP Card solutions, Receipt Imaging Services)
– AP Analysis
 Pick a project…….
 Agreements & Credit
– Consortiums / Public Sector Groups
 Internal Support
– Finance, AP, Purchasing, IT
 Implementation
– Implementation Engineer
 In depth understanding payment processes, GL chart of accounts, Organization structure, Reports, GL Export file
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 Training
Thank you!
David A. Randolph
602.523.6996
david.a.randolph@baml.com