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Citi Perspectives for the Public Sector |
2014
27
However, the U.S. government is far from
alone. Government organizations worldwide,
whether fueled by sequestration or other
forces, are confronted with demands to
do more with less. Ultimately, their quest
to improve cost and operating structures
includes taking a closer look at their supply
chains. That’s because reducing paper-based
processes and automating procure-to-pay
cycles can produce measurable paybacks in
terms of cost structures, operating efficiencies
and supply chain visibility.
Mining the benefits of purchasing cards
One procure-to-pay tool in particular that
continues to play a critical role in improving
the financial supply chain is purchasing cards.
Purchasing card programs have been around
for more than two decades and have been
widely used in both the private and public
sectors to acquire everything from small
ticket office supplies to larger ticket corporate
training tuition.
Today’s card programs also include “cardless”
options, such as purchase-order-based
virtual cards that can expand traditional
Purchasing cards can help
drive operating efficiencies
and cost savings
card programs, while providing the same
convenience and control over procurement
activities. Virtual card solutions allow
organizations to generate unique “virtual” card
numbers and dynamically set spending and
reconciliation controls on each virtual account
based on their specific purchasing needs. The
appeal of card programs has often been linked
to streamlining procurement processes. Card
programs, by eliminating administration-heavy
purchase orders, can drive down payment
processing costs and increase productivity.
They also allow buyers to collect significant
levels of transaction detail, which aids supply
chain analyses, including strategic supplier
sourcing strategies and also pre- and post-
payment auditing controls.
What’s more, card programs commonly
generate revenue for the buyer. Unlike check
or ACH payments, payments made with
purchasing cards yield rebates based on
transaction volumes, which translates into
revenue streams. These rebates can turn an
accounts payable cost center into a source
of revenue capable of funding other process
improvements or reinvestments into supply
chain efficiency tools.
One procure-
to-pay tool
in particular
that continues
to play a
critical role
in improving
the financial
supply chain
is purchasing
cards.