P-Cards and Workday

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    • #292522

      This SIG Buy-side Member is from the Finance and Insurance industry. They recently implemented Workday as their ERP system and are now in the process of developing a P-Card (Purchasing Card) program. They would like to speak with other practitioners who have successfully implemented a P-Card program in combination with Workday.

      Will you kindly provide your insights to the following:

      1 – The planned use-case for a P-Card is the following: Internal customer creates a purchase requisition. Supplier will not accept a purchase order, e.g., order should be placed via the supplier’s website and P-Card will be used for payment.  Procurement will upload the P-Card transactions from the bank into Workday and “verify” them (i.e., match them to a purchase order).  Has this process been implemented by other SIG members already?

      2- If you are using a process like this, who has P-cards?  (Are they limited to your procurement/sourcing department or do departments have their own?)  Who handles the verification / matching process?

      3 – How have you defined your company policy around P-cards and Travel cards, and have you had to enforce the use of P-cards instead of travel cards?

      4 – Have you been able to use the data from P-cards to identify sourcing opportunities that resulted in savings?

       

    • #295291
      Anonymous
      Guest

      1. We do not have this scenario within our organization.  For credit card purchases (outside of punchouts) on the supplier’s website, the purchasing card is used to make the payment, then the holder of the p-card reconciles the transaction when received in Workday to charge the cost center and company. 
      2. Typically, administrative assistants are holders of p-cards. We do have a limited amount of cards issued to Procurement Specialists and Accounts Payable Specialists.  The holder of the card does the reconciliation in Workday and managers approve the transaction. 
      3. While there are a handful of people at the company that hold both p-cards and corp travel cards, the vast majority are holder of one or the other.  If the holder travels at all for the company, they will have a corp travel card.  If they never travel, or seldom travel, they are usually administrative assistants who need it for general business purposes. We do not restrict who has one or the other.  We obtain proper approvals of management before issuing either card to an employee. 

    • #295292
      Anonymous
      Guest

      We terminated our P-Card program four years ago.  Everything except travel goes through the purchase order process.

    • #295293
      Anonymous
      Guest

      Q2: If you are using a process like this, who has P-cards?  (Are they limited to your procurement/sourcing department or do departments have their own?)  Who handles the verification / matching process?

      – We switched from p-cards to “Corporate Credit Cards” recently (within the last year). Every admin has one and most every senior manager and director have one for expense. Our AP department sets the card policy, breaking policy rules results in your card being taken away and you cannot have another. 

       – Each transaction has to be logged in the corporate card system with a receipt and reason for purchase. 

       – Only procurement and the IT department are permitted to buy IT hardware/software over 75$ (exception being things like new keyboards and other basic computer accessories needed to work although we also have Ariba and use Staples to avoid having people use cards for these purchases) 

      – All expense reports must be submitted within 60 days of the purchase. 

      Q3: How have you defined your company policy around P-cards and Travel cards, and have you had to enforce the use of P-cards instead of travel cards?

      – Previously to the new card system travel expenses were not permitted on the corporate cards and employees had to submit an expense report for their personal cards when they returned. The new policy allows “reasonable” travel expenses and outlines things like you must select the lowest rates on hotel and airfair 

      Q4: Have you been able to use the data from P-cards to identify sourcing opportunities that resulted in savings?

      The new system we use is cheaper than using both a p-card vendor and a vendor for personal expense reporting. 

       

    • #295294
      Anonymous
      Guest

      I have been involve with organizations who utilize P-cards for small, low risk transactions and also for suppliers who do not accept PO’s.  At our company I have found that there becomes a renewal issue for software when an employee uses their P-card for a low risk desktop software and then they leave the company.  The P-card being deactivated creates an issue where the software subscription cannot be renewed.  

      Our solution was to create a corporate card that AP manages.  Business stakeholders complete a form and AP adds the payments to their transaction registry.  This has helped reduce the downtime of some of our engineering teams due to access deactivations. 

       

    • #295295
      Anonymous
      Guest

      While we do use WorkDay, we do not use it with our P-Card program at this time, nor do we have plans to integrate those either. Our P-Card system is managed by our Comptroller’s Office while we only use WorkDay for HR related items. We do not use it for any financial transactions. 

    • #295296
      Anonymous
      Guest

      Q1:
      Pcard is ideally used for low value / low risk transactions.  Procurement needs to identify categories of spend that can be moved to a card transaction meaning Procurement does not get involved and BU can proceed with the transaction.  (eg Stationery, hotel booking (if a rate card already exists), Govt fees, catering, team dinners/ lunches).  On a 6 month / annual basis an audit of spend types can be assessed to ensure the criteria set is being adhered to.  Post assessment if spend is reasonably high on a category we can assess that spend, include a commercial model and continue on a Pcard or amend the spend channel.

      Q2:
      The purpose of this spend channel (Cards) is to make it easier for the Business to manage day to day transactions.  Every department which incurs spend can have a Pcard and this can be in the possession of anyone in the team or the dept admin.  Since the card is issued by a bank,  a bank statement will be available on a monthly basis and dept head will have visibility of spend on the card. 

      Q3:
      We have a Card policy in place.  Spend eligible for Travel Card and PCard is detailed in the policy.  The policy is available on the company intranet or a shared portal and employees need to adhere to it accordingly.

      Q4:
      Personally we haven’t done this so not sure how this will work.  Spend is done by multiple departments and am not sure if the bank or a spend tool can capture data based on supplier name.  My guess is this could work if all Pcard transactions are routed via a centralised tool.

    • #295297
      Anonymous
      Guest

      Q1:
      The process is decentralised of procurement and finance. It is responsibility of each business unit to reconcile the payments made against their respective credit card. 

      Q2:

      Two staged process:

      Each unit verify their own taransction; then 

       

      – Finance do a second verification before conciling the payments with the bank

       

       

    • #295298
      Anonymous
      Guest

      This may not be answering exactly the question from this organisation, but I would recommend to consider other solutions for tail spend payments – e.g. CANDEX.

       

      10-20 years ago P-Cards were the only option in that space, but now solutions like CANDEX provide other alternatives worth it to consider!

       

      In my organisation P-Cards have not been very succesful. CANDEX is easy to use and offers good control capabilities.

       

    • #295299
      Anonymous
      Guest

      While my company has never had P cards before, I can tell you that our SC team Mgt and Finance exec team would only want Supply Chain to use them. And I think in the absence of the buyer assigned to a certain vendor—a supervisor on the team must approve the transaction.  Overall, they should only be used for a set minimum order quantity and dollar total and never a custom item or tooling fee.  I believe the CPSM study materials also urged for P cards to be used only by the SC team.  

    • #295300
      Anonymous
      Guest

      Q1:
      (i) The process described here is a bit more complicated than necessary, but can be made to work.  Other alternatives are to (ii) pay via pCard and then process through the cardholder’s (or department holder’s) expense claim process.  (iii) While ideally, a Virtual Card payment can be actually linked to a traditional purchase order transaction.  Any of these three processes could be tailored to this company’s needs.  

      Q2:
      The proper answer is ‘It depends.”  You see, pCards have largely replaced the historical divisions between Procurement Cards and Travel Cards.  Now, one type of pCard known as a Multi-Use Card (usually MasterCard or Visa) does it all – with use determined by cardholder profile.  According to CAPS Research’s Cross-Industry Benchmark report, the average corporation spends 2.1% of its total payables via pCards [so a company with $1BB total in payable should have around $21MM in card expenditures] happened to speak with the new Executive Director of CAPS about this and other trends just a week ago.  

      Interestingly, the leading card solution (not a bank issuer or AMEX or Discover) converts between 26% and 49% of AP check payables to vCard settlement (compared with 17% for the average bank card program)  This provider is the largest commercial issuer of MasterCard pCards in North America and processes more vCard transactions than the Top 4 US Bank card issuers combined. Another unique aspect of this provider is that they pay pCard and vCard rebates monthly rather than annually or quarterly like most issuers.  [feel free to contact Mark Trowbridge for provider name] .  

      The strategic driver here is that both pCard and vCard payments should be providing rebates back to the company.  So for this company, ‘best practices’ should be strategically applied to determine where does pCard use makes sense.  

      Typical uses include:

      •Travel & Entertainment

      •Vehicle Fleet Operators (Executive, Sales, Delivery, etc.)

      •Maintenance & Operations

      •Facilities Management

      •Information Technology (Ongoing Subscriptions)

      •Utilities

      •Marketing Expenses

      •Emergency Cards

      •Fuel Cards

      •Etc.

      The trick is not just hand out credit cards.  It is to guide the use of cards to expenditures which are ‘retail like’ in nature where the use of a purchase order and processing of an invoice creates unnecessary tactical effort without corresponding value.  Capturing a rebate on those transactions adds value (“savings”) to the bottom line.  But essential is to design a process and card controls which leverages preferred supplier sources.  For example, modern pCard controls can be tailored to the cardholder – – a delivery driver’s card could be limited to gasoline purchases at defined stations, while not allowing the purchase of snacks inside the station.  You can do this for all cardholder profiles.

      Virtual Card payments are in addition (and are where the big rebates occur) but that is a payment vehicle [like ACH, Wire Transfer, Check] which substantively eliminates the fraud risk of other methodologies and blends seamlessly into a company’s P2P process working in synergy with an ERP system’s procurement and payables terms management and invoice processing (Workday, SAP, Oracle, Dynamics, Infor, etc.).  vCard rebates can be received on anything a purchase order is placed for (or for non-PO payments too), whether direct or indirect in nature.

      Final note here – – card issuers are really, really, really good at building programs which reduce the benefits received by their customer (and maximize revenues for themselves).  Going back 25 years to being a leader in Bank of America’s procurement group and helping the company design its first pCard offering, and since then building pCard programs for many companies and governmental agencies, companies need to understand the interest rate games played by the bank – – like over-application of ‘large ticket’ interchange fees, delayed payment of rebates, elimination of rebates in low-spend months, elimination of rebates for missing annual minimums, etc.

      Q3:

      As mentioned earlier, a good multi-use pCard can do everything a Travel Card can do – – and more.  In most corporations, Travel Cards are being eliminated so as to move to a strong pCard program.  Numerous statistics have shown that the typical cardmember rewards for which Travel Cards are known (i.e. travel discounts, vacation packages, gifts) never provide the financial benefit they claim [because members don’t cash them in or use them wisely].  Travel Cards are difficult to pull out of the hands of executives, but shareholders appreciate the monetary rebates from a pCard actually hitting the bottom line.  

       

      I’ve drafted pCard and T&E program policies and procedures for many companies [am doing ones right now for a $2BB client] and the trick is to make them user-friendly while incentivizing the optimal employee behavior.  The policies must obviously be tailored to the company – and different approaches exist for my clients that have ranged between 195,000 and 150 employees in size.

      Q4:
      Absolutely!  A good pCard program should be feeding detailed merchant/supplier spend data back into your Spend Analysis data set.  Am not sure what Workday configuration you are using for the Spend Analysis [Workday bought ScoutRFx two years ago but also has some vanilla capabilities without the Scout addition], but this needs to be modeled to help you identify sourcing opportunities.

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