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Citi Perspectives for the Public Sector |
2014
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According to the GSA’s website, those
purchases also generate an average of $300
million in rebates each year and an estimated
$1.7 billion in administrative savings from the
replacement of purchase order processes with
electronic purchase and payment processes.
With sequestration, however, card spending
dropped, creating a noticeable decline in
the benefits to be had from their use over
traditional procure-to-pay processes.
Responding to budget cuts
Federal agencies are emerging from
challenging times by deploying electronic
workflows that eliminate manual and paper
processes that are costly, error-prone and
lack the business analytics needed. As they
move to digitize invoice approval and payment
processes, there is continued opportunity to
turn an accounts payable department into an
earnings generator using card solutions.
Card solutions can be embedded into an
organization’s accounts payable process to pay
targeted suppliers that commonly accept card
payments – expanding analytics, spend controls
and rebates as significant value drivers.
The key to executing such a strategy is
identifying incremental card spending
opportunities by analyzing an organization’s
accounts payables activities, a common
commercial practice.
Citi’s Working Capital Analytics (CWCA) is one
service that provides such analysis. It involves
breaking down accounts payable transactions
across all payment mechanisms, not just cards,
to unlock card program opportunities. Through
a comprehensive and customized review of
spending and payment data, CWCA flags
opportunities for increasing early payment
discounts, purchasing card rebates and for
strategically using commercial card float to
enhance working capital. Federal agencies
that have utilized the service are identifying
opportunities to grow their purchasing card
programs with minimal changes to processes,
systems or policies.
Thinking outside the box
Astute financial and purchasing officers are
coming together to recognize the combined
financial, procurement and operational
efficiencies of card programs and, with the
right card program provider, are extracting
greater value from their programs.
Increasingly, they are looking outside the box
for ways to expand their programs and the
benefits of card usage.
Take the example of a state-level transportation
department in the U.S. that leverages close
relationships with asphalt and concrete vendors
to quickly negotiate acceptance of card payment
mechanisms. The move was a win-win for the
state and its vendors. For the vendors, the
migration from check payments collapsed their
days of payment outstanding from many weeks
to two days. For the transportation department,
processing efficiencies, early payment discounts
and card rebates improved dramatically.
Role of an experienced partner
No matter where public sector organizations
sit on the card usage spectrum, from
implementing a program for the first time to
squeezing additional benefits from a high-
performing program, the card provider they
choose plays a tremendous role in their
success. An experienced provider can lend
invaluable insights every step of the way,
assessing opportunities and then expertly
guiding the execution of solutions to ensure
that the time invested generates high returns.
Keys to successful purchasing card programs
When choosing a provider, program managers
should look for:
• Knowledge and experience working with the
complex multi-jurisdictional corporate and
public sector enterprises
• Ability to deliver best practices for policy
and operational efficiency relevant to your
mission and processes
• Best-in-class program management and
auditing tools for establishing purchasing
limits, auditing and analyzing card usage, and
mitigating misuse
• Spending analytics and reporting capabilities
that aid strategic sourcing, policy compliance
and usage optimization
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