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The benefits of card-based purchasing have
strengthened over time, particularly over
the past decade, prompting the world’s best
supply chain managers to deploy purchasing
cards deeper into their accounts payable
processes. This can be largely attributed to the
increased penetration of purchasing cards in
the accounts payable process.
Financial and contracting officers are realizing
that consolidating spending through card
programs simplifies budget tracking and
reporting, increases access to supply chain data
and improves internal controls. Purchasing card
programs can be particularly advantageous for
organizations that are struggling with outdated
or disparate systems that were built for check
or ACH payments. In most cases, these systems
can’t come close to providing the level of
purchasing data and details that robust card
reporting systems can deliver.
With potential misuse and accountability
always top-of-mind in the public sector, large
card program providers also offer online
tools that specifically address the need to
manage and audit card usage. Citi’s web-
based Program Audit Tool, for instance, can
aid card program compliance and help protect
organizations against misuse by identifying
out-of-policy transactions. Organizations can
manage how cards are used through rules that
identify transactions that are inconsistent with
their internal policies. It can be used to enforce
restrictions on cardholder transactions by
factors such as type of merchant, merchant
category or actual merchant name, to name
a few. Plus, reporting features aid program
optimization by providing insights into financial
and transaction data along with other card
program management information.
Standard-setting at the General Services
Administration
While some organizations may be looking to
implement purchasing cards for the first time,
others, such as the U.S. Federal government,
have well-established and highly successful
programs in place.
The U.S. government provides an excellent
example of how purchasing cards can reshape
procure-to-pay processes. Starting in the
1980s, the U.S. government played a pivotal
role in the standards and technology behind
today’s card programs and in fostering
competition among card issuers.
The General Services Administrations (GSA)
manages the commercial card contract for all
U.S. federal agencies and organizations. The
first GSA SmartPay contract was established
in 1998 and its predecessor, GSA SmartPay
2, was established in 2008. Since then, GSA
SmartPay has dramatically reduced check
and ACH payments for a wide range of
goods, services and travel-related expenses.
According to a Richard Palmer and Mahendra
Gupta (RPMG) study, commercial cards
save the government $70 per transaction
by eliminating the use of purchase orders
on transactions below $3,000. However,
some agencies have actually extended the
use of cards to much larger purchases. The
Department of Defense, for example, uses
purchasing cards for commercial transactions
that exceed $100,000.
Today, GSA SmartPay is the largest government
charge card payments program in the world.
Employees in more than 350 federal agencies
and organizations account for some $26 billion
in annual GSA SmartPay program spending.
While some organizations
may be looking to implement
purchasing cards for the first
time, others, such as the U.S.
Federal government, have
well-established and highly
successful programs in place.