State of Washington

Improving the Value and Performance of your Pcard Program

State of Washington

Improving the Value and Performance of your Pcard Program

October 1, 2013October 1, 2013

Increase Card Program Value

Find more value in your card program with U.S. Bank Program Optimization.

• Simple performance evaluation process• Identifies program expansion opportunities• Provides recommendations with ROI payback• Includes implementation action plan• Serves as foundation for Working Capital DNA

(complete payables strategy review)

Tangible Benefits

Benefit Description

Greater Financial Gain

Improve working capital Reduce transaction costs Increase rebate opportunity Lower supplier costs

Improved Supplier

Management

Negotiate deeper price discounts Act on payment term discounts Consolidate suppliers

Increased Spend Visibility

Gain greater visibility to payment detail and enterprise spend Enable more informed decision making Leverage robust reporting

Enhanced Control

Improve oversight and management Block unwanted spend Prevent and detect fraud more easily

Card Program Trends and Best Practices Best practice organizations capture significantly more

spend on cards than the average:• 93% of travel . . . average is 72%• 71% of transactions < $2,500 . . . average is 52%• 53% of transactions $2,500 - $10,000 . . . average is 31%

76% of organizations expect to increase purchasing card spend…expected overall increase is 32%

Checks represent 70.4% of overall organizational payments

RPMG 2011 Travel Card Industry Benchmark Survey / RPMG 2012 Purchasing Card Benchmark Survey

Commitment/ Action

Optimization Process

Benchmark/ Capturing

OpportunityCollect Data

Understand Objectives/ Challenges

• Present Program• Develop Initial

Plan• Interview Key

Personnel

• Collect andAnalyze AP Data

• Discuss PreliminaryFindings

• Provide Benchmark Comparison

• Identify Opportunity• Build Business Case

• Obtain Executive Approval

• Build/ExecuteAction Plan

• Measure Results• Conduct Additional

Analysis

Analysis Process

ExistingProgram

Best PracticeBenchmark

Spend Gap/Business

Case

Opportunity Identification

Average Tran SizeOverall Existing

SpendOverall Existing

Trans Benchmark1 Benchmark Spend Benchmark Trans<$2,500 9,283,431$ 30,945 80% 7,426,745$ 24,756 $2,500 - $10,000 23,019,722$ 7,194 35% 8,056,903$ 2,518

$10,000 - $100,000 41,728,310$ 3,629 5% 2,086,416$ 181 Totals 74,031,463$ 41,767 17,570,063$ 27,455

Benchmark Sample

Financial Benefit Sample

Benefit Category Benefit AmountP-Card Rebate 690,000$ Transaction Cost Savings 409,281$ Cash Float Savings 43,012$

Total Financial Benefit 1,142,293$

P-Card Rebate

Transaction Cost Savings

Cash Float Savings

Closing the Gap - Initial Focus

Start with easy opportunities that require minimal change. Common examples include:

Slippage – suppliers that already accept card payment from your organization but that are being paid via other methods

Suppliers within common card categories Capturing spend that’s currently being made outside of

existing policies.

Program Slippage Report

Supplier NameCardable Avg. Tran

Amount

4,171

499

28,188

35,108

20,540

1,180

2,362,150 115

Total 2,535,554 12,264 207 105,547,234 89,451

GULFSTREAM 70,560 548 129

3,128,905 111

XEROX CORPORATION 8,248 20 412 3,124,591 89

VERIZON 17,737 113 157

59,562,748 14,279

OFFICE DEPOT 19,634 105 187 37,368,840 74,857

WW GRAINGER(*P) 2,419,375 11,478 211

Metrics

Card Annualized Spend Amount Card No. of Trans

Card Avg. Tran Amount

Cardable Annualized

Cardable No. of Trans

Visa Acceptor: Yes

Cardable Payment Methods: CHECK

Excluded Supplier Name: None

Top Suppliers: 75

Excluded Business Unit Name: NoneExcluded Cost Center Name: None

Commercial Card vs. Cardable Spend by Supplier

Client Name: ABC Company

Transaction Limit < 2,428,455Spend Category Name: All

Closing the Gap - Advance to Next Level

Apply advanced U.S. Bank payment technologies:

Improved controls/analyticsPost invoice payment with Access Online Payment PlusConsolidated payment file deliveryGhost cards / AP cardsVirtual PaySpend AnalyticsExpense management integrationGlobal travel card issuanceManaged spend / meeting cards

Working Capital DNA

Checks

Card

ACH

Rigorous Evaluation Tools Program assessment / financial benefit Detailed reporting for opportunity identification Peer industry benchmark Best practice diagnostic Dashboard Modeling

Dashboard Modeling Capability

More value and improved performance Schedule follow-up meeting to discuss current

card program performance and preliminary objectives

Next Steps