02 Introduction03 This Year’s Progress07 Statistics by Sector08 Where is GPC Visa used?10 The Efficiency Review13 www.purchasingcard.info14 Case Study: The Scottish Executivivi evev15 Case Study: Kent nt n County nty n Council16 Case Study: Edinburgh City Council19 GPC Visa and Travel20 GPC Visa and e-Procurement21 The Sourcing and Buying Cycles22 Quick Wins: Process saviavia ngs25 Quick Wins: Cost saviavia ngs26 Frequently Asked Questions28 Contacts

Contents 01

GPC Visa continues to be an essential tool in the public sector’s drive for efficiency savings. In 2005 GPC Visa has continued to transform the purchase to pay cycle across the public sector from the smallest organisations through to the largest central government departments. All the indicators, from statistics on the number of cards issued to the number of transactions made, demonstrate the importance and value of GPC Visa to the public sector.

Figure 1 (right) shows the estimated savings gained from the use of GPC Visa for each year since its inception, as with all previous years, the figures for savings continue to grow year on year.

Looking at this data it is clear that GPC Visa has had a significant effect on public sector procurement. 2005 saw a further £80,723,272 saved due to increased usage of GPC Visa, with much of these savings being available for redistribution to frontline services. The rate of savings has increased in line with expectation as public sector bodies use GPC Visa as a tool for meeting the requirements of the Efficiency Review.

2005 in figuresNo. of GPC Visa schemes in operation: 526No. of GPC Visa cards in use: 70,078Total spend on GPC Visa cards: £527,287,340No. of transactions on GPC Visa: 2,882,974Average spend per transaction on GPC Visa: £182.90Monetary savings: £80,723,272Paper savings: 28,829,740 sheets of A4 paper

The eighth year of GPC Visa has seen its usage continue to grow at a remarkable pace. For the first time in eight years the annual spend has passed the half a billion pounds mark. In addition to this record, for the third consecutive year an additional £100 million has been spent on GPC Visa against the previous year (see Fig.2 right). Given the importance placed on modernisation in the public sector procurement agenda it is expected that this accelerated growth will continue.

This Year’s Progress

Fig.1: Overview of Annual Savings (£ milions)savings calculated using the NAO approved figure of £28 saving per transaction

1998 2000 2002 20041999 2001 2003 2005

80.7

49.8

19.1

4.6

64.8

35.9

11.7

0.8

1998 2000 2002 20041999 2001 2003

304.5

122.3

19.7

404.8

208.4

61.2

3.2

2005

527.3

Fig.2: Overview of Annual Spend (£ milions)

03

Last year we were able to celebrate the milestone of over £1 billion of cumulative spend on the Government Procurement Card (GPC Visa). This year we can celebrate over £1.5 billion in cumulative spend on GPC Visa. Last year the spend on GPC Visa equalled fifty per cent of the previous seven years and we now have over 500 programmes and 70,000 card holders. The success of GPC Visa surely dispels any concerns that procurement cards may not be a suitable tool for use in the UK public sector. The question we should be asking ourselves now, is not ‘should we use GPC Visa?’ Instead we should be asking ‘why are we not using GPC Visa?’

GPC Visa confirms that best practice business processes and excellent software solutions can be used to deliver efficiency benefits across all areas of the public sector. The three case studies in this report show that GPC Visa is not just a tool for purchasing simple commodities, but can also be used in more advanced procurement areas. This year, as with previous years, we continue to see new and innovative uses for the card. In 2005, GPC Visa programme managers have delivered increased efficiency within financial departments, better contract compliance and improved service delivery for vulnerable citizens relying on social services for support.

What might appear to be a simple purchasing card, is in fact an extraordinarily powerful and flexible tool that has delivered savings of over £80m for the UK public sector. GPC Visa is an example of the success that can be achieved when Government and the private sector work together. Using the experience and expertise of the private sector to design, implement and monitor the GPC Visa programme has allowed the public sector to focus on improving processes and services for the benefit of citizens.

As the GPC Visa programme matures so does the imperative to make use of this valuable tool. The challenge to make our public services more efficient is a significant one, GPC Visa is surely one of the easiest routes to delivering increased efficiency for the public sector. Therefore I urge all public sector organisations to make full use of GPC Visa.

John OughtonApril 2006

Introduction 02

Technology

GPC Visa can work with a full range of e-Procurement technologies

This year saw the pattern of monthly spend not only increase but become more consistent throughout the year (see Fig.3 right). Whilst seasonal slow downs in spending were still evident in January, May and August 2005, the scale of these reductions in spend were less marked. The average monthly spend was up £10 million on last year to almost £44 million per month. These figures reflect the fact that GPC Visa continues to provide the public sector and their suppliers with a regular and reliable means of payment. It is clear that to some organisations using GPC Visa is now ‘business as usual’.

Figure 4 (right), illustrates the relationship between the growth in programmes and the growth in the number of transactions. In line with expectations, as the number of programmes increases year on year so do the number of transactions made. In the limited time the second GPC Visa contract has been running there has been a stable relationship between the number of programmes running and the number of transactions being made.

In addition, whilst the number of transactions made using GPC Visa has grown, so too has the average transaction value (see fig.5 right). Whilst we understand that the transaction value will never grow exponentially, there is an expectation that the value of transactions will continue to increase. In the long term it is anticipated that increase in the average value of transactions will eventually align with inflation. It is also encouraging to see GPC Visa being used with more confidence for larger purchases.

Looking aheadAs part of the Efficiency Review, Buying Solutions have set an aspirational target of £4.5bn spend to be placed through GPC Visa. If GPC Visa usage continues to increase at its current rate of growth, the target will be met by the December 2008 deadline. This is not to say, however, meeting the target is a foregone conclusion; in order to sustain the current rate of growth, not only do more organisations need to implement GPC Visa but those that have begun to use it need to further develop their implementations and look for new areas of spend for the card.

This Year’s ProgressContinued

1998 2000 2002 20041999 2001 2003 2005

2812

16555

419121

683189

2,883526

2,317424

1,778277

1,285212

Fig.4: Total Programmes and transactions by year

No. of programmesTransactions (thousands)

Average transaction value (£)Transactions (thousands)

28114

1,778171

165119

419146

683179 1,285

162

2,317174

2,883182

1998 2000 2002 20041999 2001 2003 2005

Fig.5: Average transaction value and number of transactions

Fig.3: Comparison of spend by month in 2004/2005 (£ milions)

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Spend 2004 Spend 2005

21.921.921.9

31.4 32.632.632.632.632.632.6

46.7

36.336.336.336.336.336.332.532.532.532.532.532.5

29.129.129.129.129.132.632.632.632.632.632.6

35.235.235.235.235.235.232.732.732.732.732.732.7 33.333.333.333.333.333.3

39.439.439.439.439.439.4 40.340.340.340.340.340.3 38.738.738.738.738.738.7

48.945.9

41.6 43.4 41.739.3

42.8

48.250.1

47.4

04

Emergency Services

GPC Visa is used by emergency services for flood and disaster relief

It is evident from the breakdown by sector (see table 1 above) that, to date, GPC Visa is a more established method of payment in the central, civil government and defence than other areas of government. This is partly attributable to the fact that in the first GPC Visa contract (1997 – 2003) the card was only available to central government departments and the Ministry of Defence. It is also noticeable that whilst there are less than three times as many central, civil and defence implementations as there are local government schemes, they spent fifteen times as much on GPC Visa than local government. This has to be taken in context of organisation’s relative budgets, but it does suggest that there is a significant amount of scope for expansion of the local government implementations already in existence.

Table 2 makes a comparison between the percentage of the 2005 resource budget spent on each sector and the percentage of total GPC Visa spend contributed by each sector; again the inequality in use across sectors is highlighted. Whilst it is not surprising that a greater percentage of spend rests in central, civil government and defence, it is not unreasonable to expect a comparative percentage by budget. These shortfalls serve to highlight the task facing other areas of government in their use of GPC Visa, and the potential for greater use across other

areas of government. The potential for greater use is true of the health sector where the relationship between spend and savings could be improved (see Table 3 above).

Table 3 details the savings made by each area of government. This is linked to the number of transactions made and as such holds no real surprises. If the percentage values are studied independently, it would appear that higher education GPC Visa programmes are out-performing health programmes in terms of their savings to spend ratio. However, the average transaction value is over £80 greater in health programmes; suggesting very different uses of GPC Visa.

Statistics by Sector

Central, Civil & Defence Local Government Health Higher Education Total

Savings** £70,949,396 £4,518,696 £2,920,596 £2,334,584 £80,723,272

% of Total GPC Visa Savings 87.89% 5.60% 3.62% 2.89% 100.00%

% of Total GPC Visa Spend 87.89% 5.76% 4.28% 2.06% 100.00%

Table 3: Savings and spend percentages by sector**Savings calculated using the NAO approved figure of £28 saving per transaction

Central, Civil & Defence Local Government Health Education Total

% of 2005 Resource Budget* 48.50% 16.10% 26.20% 9.20% 100.00%

% of Total GPC Visa Spend 87.89% 5.74% 4.28% 2.09% 100.00%

Table 2: Percentage of GPC Visa spend vs percentage of national resource budget*Treasury financial statement and budgetary report 2005

Central, Civil & Defence Local Government Health Higher Education Total

Total Spend on GPC Visa £463,444,466 £30,392,400 £22,572,057 £10,878,417 £527,287,340

Total Transactions 2,533,907 161,382 104,307 83,378 2,882,974

Total Cards 59,558 5,643 2,924 1,953 70,078

Total Implementations 307 130 37 52 526

Table 1: Breakdown by sector

07

The use of GPC Visa for the purchase of travel has always been strong, however, we expect that the growing popularity of internet transactions will see an increase in spend across other categories. We expect that these increases will see the percentile values for travel reduce as programmes mature. The internet has enabled transactions for easily cataloguable items such as Stationery, Computer Equipment and Building Materials, and we expect to see significant increase in spend for these categories over the coming year. Increased spend should also occur in categories such as Books and Periodicals, and Training and Education, where internet transactions for such goods and services are already commonplace.

It is only possible to make a limited comparison of percentage spend across sectors, as it is necessary to work on the assumption that each sector has the same proportional spend in each category to achieve this. In the case of Building Services this is clearly not the case, as the requirement to maintain housing stock will require local government to spend a significantly higher proportion of its budget in this category than in the other sectors. However, the data can be used as an indicator to flag where sector programmes may be able to increase their use of GPC Visa. Therefore it is worth investigating the seeming lack of spend in Building Services and Vehicles Servicing in the health sector and Office Stationery and Temporary Recruitment in local government. There may be a good reason for this, however, the statistics would suggest that these are areas worth exploring for further savings.

As the Edinburgh City Council case study (page 16) illustrates, payment by GPC Visa is an ideal tool for purchasing Building Services and Building Materials. Using GPC Visa is an excellent way to ensure the management of works is not hindered by lengthy paper processes, unnecessary journeys and late payment for suppliers. The case study provides a clear example of how GPC Visa can be used in these categories. Programme managers in all sectors should take note of how this programme is being run and investigate the opportunity for using GPC Visa in the same way within their organisations.

Programme managers looking to increase the usage of GPC Visa in specific categories can follow the approach outlined in the Quick Wins diagrams (pages 22 and 25) to address the issue.

Where is GPC Visa used? 09

% of Total GPC Visa spend

Merchant Category Descriptions Central Government Local Government (+others)

Health Higher Education All Sectors

Auto Rental 0.80% 0.42% 0.23% 0.51% 0.78%

Automotive Fuel 0.48% 0.33% 1.56% 0.23% 0.47%

Books and Periodicals 0.78% 0.80% 1.72% 2.43% 0.83%

Building Materials 2.89% 8.33% 0.17% 2.88% 3.12%

Building Services 0.50% 19.13% 0.12% 0.66% 1.30%

Business Clothing and Footwear 0.37% 0.37% 0.00% 0.30% 0.37%

Catering and Catering Supplies 0.51% 5.27% 0.50% 0.45% 0.72%

Cleaning Services and Supplies 0.34% 0.41% 0.24% 0.26% 0.34%

Clubs/Associations/Organisations 0.43% 6.03% 0.83% 2.11% 0.71%

Computer Equipment and Services 4.15% 5.18% 14.50% 7.27% 4.30%

Estate and Garden Services 0.37% 0.36% 0.16% 0.34% 0.37%

Financial Services 0.07% 0.06% 0.88% 0.12% 0.07%

Freight and Storage 0.23% 0.09% 0.01% 0.22% 0.23%

General Retail and Wholesale 8.90% 11.99% 11.12% 10.77% 9.09%

Hotels and Accommodation 10.29% 5.53% 14.52% 11.49% 10.12%

Leisure Activities 0.86% 0.65% 1.00% 1.02% 0.85%

Mail Order / Direct Selling 1.03% 0.72% 0.32% 0.93% 1.01%

Mail Order and Courier Services 2.40% 1.67% 1.14% 5.48% 2.44%

Medical Supplies and Services 0.78% 3.56% 0.38% 2.05% 0.93%

Miscellaneous 0.11% 0.76% 0.13% 0.03% 0.13%

Miscellaneous Industrial/Commercial Supplies 6.43% 5.55% 1.80% 5.34% 6.35%

Offi ce Stationery Equipment and Supplies 20.43% 5.35% 1.88% 9.65% 19.46%

Personal Services* 0.06% 0.07% 0.01% 0.03% 0.06%

Print and Advertising 1.85% 0.64% 1.16% 1.48% 1.79%

Professional Services 1.86% 0.99% 0.66% 2.36% 1.83%

Restaurants and Bars 1.56% 1.43% 5.38% 1.84% 1.57%

Staff – Temporary Recruitment 2.63% 0.05% 0.00% 0.04% 2.45%

Statutory Bodies 0.27% 0.44% 0.34% 1.33% 0.31%

Telecommunication Services 0.51% 0.48% 0.31% 0.42% 0.51%

Training and Educational 1.51% 0.77% 0.65% 3.51% 1.52%

Travel 24.92% 9.12% 36.90% 23.24% 24.22%

Utilities and Non Automotive Fuel 0.28% 0.47% 0.08% 0.18% 0.28%

Vehicles Servicing and Spares 1.40% 3.00% 1.29% 1.05% 1.46%

Table 4: Merchant category dataThese figures have been compiled from the data available at the time of going to press. The figures should not be taken as a definitive breakdown of the GPC annual spend 2005.

* Personal Services cover services such as counselling, childcare, investigative services and funeral and crematorium services..

Where is GPC Visa used? 08

The Efficiency Review provides public sector bodies with an opportunity to improve their services to citizens. The Efficiency Review is not based on cuts, therefore each part of the public sector has the chance to look at the way they deliver services and redesign the delivery where possible to become more efficient. One part of the Efficiency Review does however, require public sector bodies to make cost savings, which will be generated by spending less for the goods and services each organisation uses. Organisations will be required to detail how much money has been saved through spending less. For the purposes of the Efficiency Review, these savings are referred to as cashable efficiencies. All the money accrued in cashable efficiencies will become available for investment by the organisation making the savings.

A second part of the Efficiency Review focuses on the need to provide better services to citizens, which is referred to as non-cashable efficiency. Much of this efficiency will be achieved by ensuring that less time is spent on administrative tasks and more time is being spent on delivering services to citizens. The key to non-cashable efficiency is increasing the amount of time staff spend on tasks that are ‘out-facing’ or citizen focused. Increasing time spent on these tasks could mean for example a planning officer spending more time handling planning applications or a junior doctor spending more time attending to patient needs. Achieving non-cashable efficiency is a matter of enabling staff who deliver services to citizens to be more effective. This can be achieved by reducing the administrative burden and using the time freed up to support them as they deliver services to the citizen.

GPC Visa is at the cornerstone of public sector efficiency as its use can deliver both cashable and non-cashable efficiencies. GPC Visa can be used by organisations to access contracts with better prices and can improve the way suppliers do business with the public sector. Suppliers such as Argos and Comet are prepared to offer discounts of 5% and 10% respectively to GPC Visa holders. This is because they know that they will receive payment in a timely fashion and won’t have to cope with a burden of paper and the associated reconciliation tasks. Cashable savings can be realised by using framework contracts negotiated on behalf of the public sector such as those offered by Buying Solutions. If buyers access these framework contracts using

GPC Visa they can achieve significant savings. Furthermore, with GPC Visa, organisations can have increased visibility of their procurement spend to help identify when buyers are using contracts or not. Therefore, using GPC Visa to access framework contracts will help buyers to generate genuine cashable savings.

To date, the organisations that have generated the most savings from the use of GPC Visa have taken the time savings from not having to process invoices to support front line services instead. Using GPC Visa and additional third party software means that data can flow directly from the files provided by the card issuing bank into an organisation’s finance system. GPC Visa removes the need for staff to check paper invoices and approvals and then re-key the data into the finance system. This work can be highly repetitive and many organisations use temporary staff to complete this task, using GPC Visa can reduce this burden and allow staff to focus on tasks that are essential for delivering services.

GPC Visa can help organisations of any size deliver improved efficiency, it is scalable enough to be part of an efficiency drive in a small organisation or the sole platform for an efficiency drive in a large organisation. Any organisation seeking to deliver efficiency should utilise this technology to help them deliver better services to their citizens.

The Efficiency Review 10

GPC Visa is regularly used to pay for press and advertising

Press

GPC Visa has saved nearly 29m pieces of A4 paper this year

Paper

In collaboration with Visa Europe and Buying Solutions, Purchasing Card Consultancy Ltd (PCCL) have developed the GPC Visa benchmarking website which can be found at www.purchasingcard.info. This site provides a number of resources to help public sector bodies and their suppliers better understand the benefits GPC Visa can achieve and how to make the most of a card programme once it is in place. The site also covers a range of valuable information, including news, contacts and case studies.

A key part of the website is the benchmarking tool. This is an interactive tool to help buyers and suppliers identify how much time and paper they can save by using GPC Visa. Either as a buyer or a supplier; users of the tool can allocate time to the duration spent on common procurement tasks, such as raising an order or approving an invoice for payment. Users allocate times for common procurement tasks using the conventional paper process, and a time for the equivalent procurement task if they were using a GPC Visa. The timings for the tasks and other factors are multiplied out by the number of invoices to provide a figure for the amount of time that can be saved using GPC Visa across a whole organisation. The benchmarking tool is based on sound experience and compares vital data to help buyers analyse the genuine savings that can be made using GPC Visa, including detailed reports on the savings available to the organisation.

However, the value of the reporting generated by the Benchmarking Tool depends on the accuracy of the data that is entered into the system. Therefore, for the best results it is essential to research the procurement procedures within your organisation before using the tool. Staff should have key facts to hand, including timings of key tasks and the amount of invoices and orders that are being processed per annum. Organisations that are prepared to take time to gather accurate data on their procurement processes will be able to use the tool to create a fully formatted and usable business case.

As well as the benchmarking tool, the website includes a database of suppliers to the public sector that will accept payment by GPC Visa. Each entry includes address and contact data for the supplier as well as the data level that they can provide when making a purchase. At the time of writing this report, only suppliers providing level 2 or 3

data are listed on the database. The website is continually growing and will include details of suppliers that can be used by the public sector to improve procurement efficiency.

To help public sector organisations identify the suppliers who accept GPC Visa, the website will also include a function that will allow buyers to upload a list of common suppliers that can be cross-referenced against the suppliers in the database. This service will allow users to generate a list of the suppliers being used by an organisation that also accept GPC Visa, including the level of data they provide. To help Visa Europe and Buying Solutions provide a high quality service to GPC Visa users, data on common suppliers will be analysed by PCCL to identify the suppliers who appear most often in individual lists. Therefore it will be possible to see if a number of organisations are checking specific suppliers to see if they are already a Visa merchant. If they are not, it will be possible for Buying Solutions to approach these frequently requested suppliers to formally request that they become either a merchant or to increase the level of data they provide. In the interests of security, all retained data is held anonymously and no attributable data is being kept.

www.purchasingcard.info 13

“The knock-on “The knock-on “The knock-on “The knock-on “The knock-on effect of this system is improved cash effect of this system is improved cash effect of this system is improved cash flow for our suppliers while at the same flow for our suppliers while at the same flow for our suppliers while at the same time not impacting on Kent’s cash time not impacting on Kent’s cash time not impacting on Kent’s cash flow” flow” Jeremy BlackmanJeremy Blackman

Case StudyKent County Council

“The knock-on Kent County Council

“The knock-on

IntroductionKent County Council is one of the largest councils in the UK and has over 70 suppliers providing services to 36,000 adults living at home including 19,000 elderly people, and those with mental and physical disabilities. Oliver Mills, Managing Director Adult Services, explains Kent’s priorities as “firstly, to enhance the quality of life for individuals in the county boundary and, secondly to streamline our processes and ensure that everything is managed in the most cost effective manner.”

Social care payments are considered a difficult area to automate as care work is billed by the hour so there is no fixed price for a service or product. In order to cope with this, any procurement system needs to be flexible enough to cope with any anomalies whilst still maintaining the necessary levels of control and checking required of any payment system. Kent’s goal was to identify and implement a system that would reduce bureaucracy and costs, whilst being flexible enough to handle social care payments.

Using GPC VisaThe council selected a GPC Visa solution that they felt would best fulfill their requirements. The proposed solution was to use an embedded, ‘virtual’ Visa purchasing card coupled with Transaction Data Matching (TDM) software. TDM is an automated payment and data matching solution that uses an organisation’s existing accounting and ordering systems, and provides completely automated payment and data reconciliation, without reducing management control. Buyers’ order details are electronically reconciled to a virtual GPC Visa payment that is generated automatically, and then delivers electronic files to the buyer’s finance systems to automate cost allocation. The system is designed to deal with anomalies and inconsistencies, in these instances it will complete the payment but produce a ‘variance’ report which flags the payment for attention.

BenefitsSome of the benefits identified by Kent County Council have included: Guaranteed payment for suppliers and care providers Guaranteed payment for suppliers and care providers within four days whilst not impacting on the council’s

cash flow.

No need to manually check every invoice, freeing up No need to manually check every invoice, freeing up administration staff to concentrate on crucial frontline care work.

Less need to audit retrospectively. Less need to audit retrospectively. Significant reduction in the council’s financial Significant reduction in the council’s financial administration costs.

Moving forwardsTDM is a very effective solution to Kent’s social care invoicing issues. Kent’s priority now is to identify other areas of business where the TDM approach can be implemented as part of their e-procurement strategy.

Jeremy Blackman of Kent comments on the project: “The result is a system which guarantees payment for suppliers within four days through GPC Visa, as opposed to the former 30 day payment terms, where invoices were manually processed on a monthly basis. The knock-on effect of this is improved cash flow for our suppliers while at the same time not impacting on the council’s cash flow, as Kent’s statements from the bank still arrive at the end of each month, and cover all suppliers on the same statement.”

ContactsKent County CouncilNick Vickersnick.vickers@kent.gov.uknick.vickers@kent.gov.uk

IntroductionThe Scottish Executive is the devolved government for Scotland. It was established in 1999 and is responsible for most of the issues of day-to-day concern to the people of Scotland, including health, education, justice, rural affairs, and transport.

The Scottish Executive manages an annual budget of more than £20 billion, of which £6 billion is used to fund the departments and executive agencies of the Scottish Executive itself. Of this, £65 million is spent on transactional purchases required to run the central departments of the Scottish Executive, the Executive agencies and other non-departmental public bodies on a day-to-day basis. This results in over 200,000 purchasing transactions each year with over 6000 suppliers.

Using GPC VisaIn December 1999, the Scottish Executive set up a project team to consider how the purchasing of lower value, one off items could be streamlined using GPC Visa. Their objectives were to: Provide a cost effective means of purchasing goods and Provide a cost effective means of purchasing goods and services with a value below £600.

Enhance standards of service delivery by making Enhance standards of service delivery by making it easier for employees to buy essential day-to-day items. Allow prompt payment of suppliers. Allow prompt payment of suppliers.

The Scottish Executive implemented a pilot scheme for GPC Visa. This pilot proved that GPC Visa could meet the objectives outlined above and provided the mandate to roll out GPC Visa without delay. By the end of 2005, 990 cards had been issued and 2005 saw £5,140,218 spent through the system.

Benefits:Some of the benefits identified by the Scottish Executive have included: Savings in process costs estimated at £125,000 annually. Savings in process costs estimated at £125,000 annually. Savings in time spent putting one-off suppliers onto the Savings in time spent putting one-off suppliers onto the Scottish Executive Accounting System – these savings are estimated at £10,000 annually.

Ease and speed of purchasing for budget holders making Ease and speed of purchasing for budget holders making purchases using GPC Visa, leading to better service to the people of Scotland.

More effective control of expenditure, thanks to More effective control of expenditure, thanks to comprehensive management reporting from

Visa Europe. Prompt settlement for suppliers, helping the Scottish Prompt settlement for suppliers, helping the Scottish Executive to meet Government targets for

prompt payment.

Moving forwardsGPC Visa has proved so successful for the Scottish Executive that it has since played a key role in the Scottish Executive’s e-Procurement initiative –’e-Procurement Scotl@nd’. For more information on e-Procurement Scotl@nd please visit www.eprocurementscotland.com.

Tom Wilson of the Scottish Executive says of the GPC Visa scheme:“The Scottish Executive has a well developed GPC Visa programme for physical cards. Simplicity and ease of the use is the key for low value purchases. It is important to realise where things fit, the physical GPC Visa card is the most effective payment tool for low value payments.”

ContactsScottish Executiveeprocurementscotland@scotland.gsi.gov.ukeprocurementscotland@scotland.gsi.gov.uk

Tom Wilsontom.wilson@ogcbs.gov.uktom.wilson@ogcbs.gov.uk

Case StudyThe Scottish Executive

14 15

GPC Visa is used to buy medical supplies in hospitals

Medical Supplies

Introduction‘Supporting safe buildings in our community.’ This is the mantra behind City of Edinburgh Council’s latest initiative to improve public safety in and around all of the buildings within its remit. As the only council in Scotland that has unique legislation to enforce repairs on private property, it has a very active property conservation section, responsible for monitoring the condition of buildings in the city and organising maintenance work where required. In line with this concern for safety, City of Edinburgh Council is also in need of a robust and streamlined payments system behind the scenes, in order to ensure that repairs and works can be carried out quickly, efficiently and with the minimum of bureaucracy. The council carries out approximately 2,000 projects of this nature a year, amounting to approximately £13 million of spend and generating 14,000 paper invoices.

In light of this, the council set itself three goals in developing a new process: To pay contractors as quickly as possible. To pay contractors as quickly as possible. To have a transparent, simple process through which to To have a transparent, simple process through which to track invoices.

To have a ‘paperless’ back office. To have a ‘paperless’ back office.

Using GPC VisaCity of Edinburgh Council has developed a solution to this problem through the use of a GPC Visa card. They have created a bespoke solution using an embedded Visa purchasing card and Transaction Data Matching (TDM) software that addresses the issues specific to the council’s needs.

The TDM solution is based around a website onto which every project and contract is loaded. Works orders are also issued through the website and each contractor is able, through a secure log in, to access the purchase order. The contractor is then able to issue an invoice from the purchase order and track its progress. The council officer dealing with a particular project is able to log into the site to see the invoices as and when they are raised. Through the website it is possible to approve the invoice for full immediate payment using the embedded card or, in the event of an anomaly, amend the invoice, pay an appropriate amount and arrange to discuss the issue with the contractor ‘offline’. Contractors were invited to a training seminar to explain the new process and how it would impact on them. The feedback

from the seminar and subsequent use of the system has suggested that the system is so easy to use that it would be possible to conduct future training over the phone.

BenefitsSome of the benefits identified by Edinburgh City Council have included: Cash flow for the contractor is dramatically improved. Cash flow for the contractor is dramatically improved. Relationships with contractors have been vastly improved. Relationships with contractors have been vastly improved. Unnecessary administration time has been cut, allowing Unnecessary administration time has been cut, allowing staff to be redeployed to front line services.

Staff workloads are easily monitored and work can easily Staff workloads are easily monitored and work can easily be reassigned as a result of illness or leave.

Moving ForwardsIt is intended that the system will be continually refined to make it more intuitive and add increased functionality. The ability to upload pdf files for contractor’s records is currently being investigated.

One of Edinburgh’s major contractors, G.Grigg and Sons, says of the system:“We have found the system, even from the outset, to be very efficient, easy to understand and extremely effective in processing the payment. The previous system was extensively paper and postal based and this, coupled with unduly extensive payment periods, proved to be frustrating. The new payment system has broadly eradicated the previous problems and has contributed to a widely more efficient payment system which has greatly improved our overall cash flow.”

ContactsEdinburgh City CouncilTim Raynertim.rayner@edinburgh.gov.uk tim.rayner@edinburgh.gov.uk

Case StudyEdinburgh City Council

16

35% of GPC Visa spend is on travel and hotels

Travel

All organisations need some of their staff to travel and the UK public sector is no exception. The management of travel expenditure can be greatly simplified by the use of GPC Visa. Travel and subsistence (T & S) schemes can be established using GPC Visa, these are schemes specifically for travel and provide benefits in the following areas:

A GPC Visa T & S scheme can give organisations full visibility of the suppliers they use for travel. This visibility can in turn drive compliance, as procurement staff can ensure that buyers use the suppliers who are offering preferential rates to public sector staff, or to a contracted supplier offering a specific rate in accordance with a framework contract. It is estimated that nearly £3bn is spent on travel and subsistence in the public sector each year, and with the demands for travel increasing in the public sector* the need for managed procurement in travel is ever more important.

Increasingly travel is being bought through internet sites; rail, air, hotels and taxi needs can be pre-arranged and paid for online, making buying more efficient and allowing individual buyers to time their transactions to gain the benefit of early pricing. Organisations who don’t use purchasing cards will often find their staff paying for travel and subsistence using their own credit cards and reclaiming the money later. Access to GPC Visa allows staff to make bookings for their work travel needs without time consuming paper processes. Approvals can still be sought and recorded if needed, but payments and ticketing can be managed by the individual, ensuring that less time is wasted on workflow and bureaucracy.

Staff required to pay for their own travel and subsistence will inevitably have to engage in the attending paperwork and processes required to ensure compliance with reimbursements. These tend to be lengthy and time consuming both for finance staff and for the staff who have made the purchases. Missing receipts can also cause problems as staff are not able to recover legitimate costs raised on behalf of the organisation. The alternative to reimbursements is cash, given the lack of control this offers to organisations, and the attendant risks, there is understandably a strong desire to limit the amount of cash issued to staff to manage their T & S needs. GPC Visa allows staff to pay suppliers at the point of purchase to cover all their T & S needs, and at the same time gives

the organisation visibility of the spend to ensure that spend is appropriate and compliant and does away with the traditional reimbursement process. GPC Visa almost completely does away with the need for cash and written cheques on T & S spend.

GPC Visa cards provide the carrier with insurance and security protection. Issuing banks provide a range of services to cover against travel inconvenience including delayed baggage and delayed travel. Security controls will protect against fraudulent use of the card if lost or stolen whilst on business and spend limits can ensure that card holders are restricted in their monthly and transactional spend and the types of suppliers they use the card with.

* Barclaycard Business Travel Survey, January 2006

GPC Visa and Travel 19

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The Sourcing and Buying Cycles

Analysis to management: The sourcing cycle Requisition to payment: The buying cycle

GPC Visa

Fig.6: The Sourcing and Buying Cycles© Ticon UK Ltd 2005

The diagram opposite (Fig.6 right) shows that GPC Visa can play a crucial role in the buying cycle. Supported by reconciliation and approval software GPC Visa can automate the buying cycle from approval through to payment. However, whilst GPC Visa will also influence an organisation’s sourcing cycle and the early parts of a buying cycle, it cannot modernise all of the procurement activity in an organisation. To achieve this it will be necessary to consider a wide range of e-procurement technologies and develop an e-procurement strategy. GPC Visa will form an integral part of this strategy.

The task of modernising procurement is not simply a case of selecting technologies to solve individual problems and implementing them. GPC Visa and other procurement technologies should be considered in the wider context of technologies that can interact with each other to deliver improved efficiency and contract compliance. As GPC Visa is such a flexible tool, it can work with a full range of e-procurement technologies to enable a larger number of suppliers, to lower the cost of entry into e-procurement and to help public sector bodies engage with small and medium enterprises (SMEs) and black and minority enterprises (BMEs).

GPC Visa and e-marketplacesMarketplaces allow a number of different organisations to access catalogues and contracts collectively. Remotely hosted contracts are accessed through either a web browser or the existing systems to allow buyers to order goods and make payments. However, for payments to be made between buyer and supplier using a marketplace, the buyer needs to have integrated the marketplace with their finance system and the supplier needs to be able to receive orders electronically. Using marketplaces in conjunction with GPC Visa can allow organisations to utilise the collaborative power of marketplaces without the challenge of integration. Buyers using the marketplace to view catalogues and raise orders, can then make payments to suppliers using GPC Visa. In some cases this also lowers the cost of access to the marketplace as some providers offer a ‘catalogue view only’ license.

GPC Visa and suppliersBringing suppliers into an e-procurement initiative can be a challenge, as it can appear to be both costly and technically demanding for suppliers, this is especially true of SME and BME suppliers. Over 825,000 suppliers in the U.K. accept GPC Visa, which is an easy and attractive way for them to conduct business with public sector bodies. Suppliers choosing to take GPC Visa expand their payment routes to a wide range of potential customers outside of their existing client supplier relationship. The cost of becoming a Visa merchant can be significantly less than engaging with a single e-procurement initiative. GPC Visa can therefore offer an attractive option to organisations looking to transact with more suppliers through marketplaces and other e-ordering solutions.

It is clear that GPC Visa, when used as part of an e-procurement strategy, is actually an assistance and an enabler to e-ordering and marketplace initiatives. Far from being threatened by e-procurement, GPC Visa is a key technology for use in conjunction with e-procurement technologies. For further information on marketplaces and the different e-procurement technologies please contact the Buying Solutions helpdesk (contact details can be found on the last page of this report).

GPC Visa and e-Procurement 21

22Quick WinsProcess Savings

GPC Visa reduces inefficiency in the buying process. Using GPC Visa means that staff whose job it is to complete these inefficient processes can have their time freed by using GPC Visa. The time can then be allocated to more value adding tasks for the organisation. Alternatively an organisation can choose to hire fewer temporary staff or not to hire additional staff to manage inefficient buying processes. The more GPC Visa is used the more staff time can be reallocated. Figure 7 (above), is a ‘quick wins’ guide to the best way to implement GPC Visa in place of inefficient buying processes.

Fig.7: Quick wins – process savings

Mobile Telephony

GPC Visa is regularly used for mobile telephony and data contracts

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Temporary secretaries, nurses, legal and kitchen staff have been hired using GPC Visa

Temporary Staff Quick WinsCost Savings

Fig.8: Quick wins – cost savings

GPC Visa can also reduce costs. In figure 8 (above), part 1 describes how GPC Visa programme managers can identify immediate savings from the use of GPC Visa. It is tempting to think that the public sector don’t use suppliers like Argos and Comet, but in fact a large amount of public sector spend goes through these suppliers. GPC Visa users can gain instant savings with these suppliers when they use their

card. Most suppliers will offer Government bodies a discount if they can offer a corporate contract, and some suppliers will also discount for using GPC Visa because they get earlier payment and increased efficiency in their management of invoices. Figure 8, part 2 describes the process for using GPC Visa to generate cost savings.

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How can card payments be more efficient if we cannot reconcile GPC Visa transaction data?There are a number of companies providing sophisticated software to help you reconcile, categorise and allocate your GPC Visa data. The cost of these solutions can range from hundreds of pounds to thousands of pounds, but the business case for this work is relatively easy to make depending on the volume of orders you can place through a GPC Visa card.

How can card payments be more efficient if we cannot account for VAT when purchasing from level one suppliers?Suppliers can provide you with either basic data or enhanced data. Basic data is the type of data that you would receive in your personal credit card statement. Enhanced data provides a breakdown of that information to include the amount of VAT being paid on a transaction. If suppliers provide basic data the reconciliation process remains the same; enhanced data, when used in conjunction with reconciliation software, can automate the VAT reconciliation process.

Won’t GPC Visa lead to job losses?No. GPC Visa creates opportunities for the organisation to use staff engaged on administrative procurement and financial tasks to spend their time on tasks that add value to the organisation. It is likely that you will require less temporary staff following the implementation of GPC Visa.

When using GPC Visa, where will the savings come from, aren’t they just imaginary?No, the savings are there but you have to recover them from within your organisation. The National Audit Office (NAO) estimates that organisations can save £28 in efficiency per transaction from using GPC Visa, but these savings can only be recovered when allied with a clear strategy for re-organisation and recovery. Not everyone is happy to accept this figure for savings, so you will need to identify a level of saving that is appropriate for your organisation and know how you will recover these savings.

What does it cost to use GPC Visa?Organisations choosing to implement GPC Visa are charged nothing for the core contract offerings; i.e. there are no card or transaction fees and the basic management information suite is provided for free.

Why should we change to GPC Visa if the existing system works?The existing system may work, but at what cost? Does it make sense to employ people whose job is to copy data from a piece of paper into a computer if that data can travel from one computer to another automatically and those people could be employed to help deliver essential services? You can use the benchmarking tool on www.purchasingcard.info to create a business case to determine how much time and therefore money GPC Visa can save you.

Nobody else is using GPC Visa, why should we?There are over 500 implementations of GPC Visa in the public sector, with almost 70,000 cards and over 240,000 transactions processed every month using GPC Visa. Each and every one of these implementations is in place to deliver improved efficiency.

Will e-procurement replace GPC Visa?No, it will not always be possible to use e-procurement, what about travel and subsistence expenses for example? However, even where e-procurement can be used, GPC Visa and e-procurement can complement each other extremely well. It is necessary for organisations to take an intelligent approach to the way they conduct purchases and to consider a full range of technologies. GPC Visa can be used in conjunction with e-procurement, for example, the Scottish Executive uses cards to pay for the majority of the transactions placed through their e-procurement marketplace, in the same way that you might use a credit or debit card when shopping online.

Why use GPC Visa if you cannot restrict the suppliers you can use with it?Firstly, all staff using GPC Visa cards can be restricted to using the cards with only certain types of supplier. However, the key to an effective GPC Visa implementation is to train staff to use the cards in the right way and to monitor the monthly card statements. Spend through GPC Visa creates

greater visibility of off-contract spend. Organisations who are prepared to mandate the use of certain suppliers have remarkably few problems with off-contract spend.

Won’t GPC Visa allow employees to overspend against budgets?You can limit the amount of spend by the value of a single transaction and by monthly spend. Cards can also be blocked at point of sale.

Will there be enough suppliers to work with?Any supplier taking Visa can take payment by GPC Visa, this means that there are over 825,000 suppliers that you can use in the UK alone. Of these suppliers over 13,000 can provide additional data in their statements to improve the management information you receive.

Will our suppliers know what GPC Visa is?They don’t need to, GPC Visa is like any other Visa transaction – any supplier accepting Visa will accept GPC Visa.

Won’t suppliers add on a charge if we pay by GPC Visa?No, using GPC Visa will mean that suppliers will have to pay a small percentage charge on each transaction that they process. However, many suppliers will benefit from accepting payment by GPC Visa, because they receive payment early and because they don’t have to process the transaction using paper. GPC Visa is more efficient for the buyer and the supplier, which is why key suppliers will often offer discounts for GPC Visa users. Some suppliers are so happy to accept payment by card that they sometimes ask for payment from public sector customers to be made by GPC Visa, instead of payment by other means.

What if suppliers will only accept the card for low amounts?Payments of over £5000 are regularly made on GPC Visa.

How can our processes be more efficient if we cannot integrate GPC Visa management information into legacy systems?All GPC Visa issuing banks can provide software to integrate with the majority of legacy systems. If you need clarification on compatibility, contact your issuing bank (contact details can be found on the last page of this report).

Frequently Asked Questions

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Barclaycard BusinessDept. CJ1234 Pavilion DriveNorthamptonNN4 7SG

Terry Noble01604 254 661terry.noble@terry.noble@barclaycard.co.ukbarclaycard.co.uk

The Co-Operative Bank PlcPO Box 1011 Balloon StreetManchesterM60 4EP

Steve McMylor07710 865239steve.mcmylor@steve.mcmylor@co-operativebank.co.ukco-operativebank.co.uk

Lloyds TSB Bank PlcGreat Surrey House 203 Blackfriars RoadLondonSE1 8NH

Jairo Marin020 7463 1232jairo.marin@lloydstsb.co.ukjairo.marin@lloydstsb.co.uk

NatWestCommercial Cards7th Floor2½ Devonshire StreetLondonEC2M 4BA

Alan Fox07768 607439alan.fox@rbs.co.uk

Royal Bank Of Scotland GroupCommercial Cards7th Floor2½ Devonshire StreetLondonEC2M 4BA

Alan Fox07768 607439alan.fox@rbs.co.uk

Ulster Bank LtdUlster Bank Retail Direct11 – 16 Donegall Square EastBelfastBT1 5UB

David Holmes 0845 366 0666david.holmes@ulsterbank.com

OGCbuying.solutions5th FloorRoyal Liver BuildingPier HeadLiverpoolL3 1PE

Customer Services0845 410 2222 www.ogcbuyingsolutions.www.ogcbuyingsolutions.gov.ukgov.uk

VISA EuropeGovernment Services TeamCommercial SolutionsPO Box 39662LondonW2 6WH

David Harrison020 7795 5085harrisod@visa.com

Andrew Farrer020 7795 5749farrera@visa.com

Andrew Watson020 7795 5369watsonan@visa.com

Ticon UK Ltd146 StrandLondonWC2R 1JD

Ian Makgill020 7836 1999ian.makgill@ticon.ian.makgill@ticon.uk.com

Contacts

The data to compile this report was provided by various Departments and Banks and has not been audited by Ticon. Ticon UK Ltd accepts no responsibility for the accuracy of this data

This report has been printed on paper produced from sustainable, managed forests.

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This report was written and produced by Ticon UK Ltdwww.ticon.uk.com