The benefits of using payment cards

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The benefits of using payment cards

• Ian Makgill, Ticon UK Ltd

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The benefits of using payment cards
Contents
Understanding cards
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Cards and e-procurement, where do cards sit?
More than senior staff travel
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How do cards benefit your organisation?
4
Building the business case for cards
5
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The benefits of using payment cards
Understanding cards the card system
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The benefits of using payment cards
Understanding cards data
Level 1 transactions

• Similar to bank statement information.
• E.g. Supplier name, date, value.
• Plus Merchant Category.

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The benefits of using payment cards
Understanding cards data
Level 1 transactions
Level 2 transactions

• Similar to bank statement information.
• E.g. Supplier name, date, value.
• Plus Merchant Category.

• Same as level 1, but with the total amount of VAT
  quoted separately.

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The benefits of using payment cards
Understanding cards data
Level 1 transactions
Level 2 transactions
Level 3 transactions

• Similar to bank statement information.
• E.g. Supplier name, date, value.
• Plus Merchant Category.

• Same as level 1, but with the total amount of VAT
  quoted separately.

• E-Invoicing data line item detail, VAT per line.
• Specialised fields available e.g. Hourly Rate.

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The benefits of using payment cards
Understanding cards data
Level 1 transactions
Level 2 transactions
Level 3 transactions

• Similar to bank statement information.
• E.g. Supplier name, date, value.
• Plus Merchant Category.

• Same as level 1, but with the total amount of VAT
  quoted separately.

• E-Invoicing data line item detail, VAT per line.
• Specialised fields available e.g. Hourly Rate.

Issues

• Merchant category is broad and self set.
• Information has limited procurement value.

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The benefits of using payment cards
Understanding cards data
Level 1 transactions
Level 2 transactions
Level 3 transactions

• Similar to bank statement information.
• E.g. Supplier name, date, value.
• Plus Merchant Category.

• Same as level 1, but with the total amount of VAT
  quoted separately.

• E-Invoicing data line item detail, VAT per line.
• Specialised fields available e.g. Hourly Rate.

Issues
Issues

• Merchant category is broad and self set.
• Information has limited procurement value.

• Limited take up by suppliers.
• Doesnt provide procurement data.

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The benefits of using payment cards
Understanding cards data
Level 1 transactions
Level 2 transactions
Level 3 transactions

• Similar to bank statement information.
• E.g. Supplier name, date, value.
• Plus Merchant Category.

• Same as level 1, but with the total amount of VAT
  quoted separately.

• E-Invoicing data line item detail, VAT per line.
• Specialised fields available e.g. Hourly Rate.

Issues
Issues
Issues

• Merchant category is broad and self set.
• Information has limited procurement value.

• Limited take up by suppliers.
• Doesnt provide procurement data.

• Less than 1 of suppliers provide it
• Only 5 of acquired merchants provide it

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The benefits of using payment cards
Understanding cards the economics
Costs to the supplier
Benefits to the supplier

• The supplier has to purchase the tools to acquire
  cards. This can be
• IT hardware (e.g. tills)
• Website
• Bureau
• They need to have an acquiring deal with a bank,
  this means that they will pay a fee for the
  transaction.
• P-Card Percentage fee.
• Debit Fixed fee or ad-valoreum.

• Suppliers can trade with any cardholder.
• Suppliers get paid in four days, guaranteed.
• Suppliers dont have to chase payment.
• Suppliers can sign up to a single data standard.

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The benefits of using payment cards
Understanding cards does early settlement count?

• Local Gov spends over 38bn pa
• 50 of Local Gov spend is with SMEs.
• 40 of SMEs believed that being paid within 20
  days would be their preferred option for helping
  them to cope with the economic downturn.
• The average amount owed to an SME at any one
  time is approximately 30,000.
• 31 of SMEs say they can no longer trade if
  faced with overdue invoices of up to 20k.

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The benefits of using payment cards
Cards and e-procurement, where do cards sit?
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The benefits of using payment cards
Cards and e-procurement, where do cards sit?
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The benefits of using payment cards
Cards and e-procurement, where do cards sit?
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The benefits of using payment cards
Cards and e-procurement, where do cards sit?
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The benefits of using payment cards
Cards and e-procurement, where do cards sit?
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The benefits of using payment cards
Cards and e-procurement, where do cards sit?
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The benefits of using payment cards
Cards and e-procurement, where do cards sit?
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The benefits of using payment cards
Cards and e-procurement, where do cards sit?
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GPC Spend by Merchant Category
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GPC Spend by Merchant Category Top 5
Local Government
All Sectors
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The benefits of using payment cards
Understanding cards benefits
Less low value paper

• When you know who paid and where the money went,
  do you need an approved order and an approved
  invoice for a 30 purchase?

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The benefits of using payment cards
Understanding cards benefits
Less low value paper
Better MI

• When you know who paid and where the money went,
  do you need an approved order and an approved
  invoice for a 30 purchase?

• How good is the MI that you have on key
  categories? Travel? Temp Staff? Vehicle parts?

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The benefits of using payment cards
Understanding cards benefits
Less low value paper
Better MI
Early pay for suppliers

• When you know who paid and where the money went,
  do you need an approved order and an approved
  invoice for a 30 purchase?

• How good is the MI that you have on key
  categories? Travel? Temp Staff? Vehicle parts?

• Direct payment to suppliers without any loss of
  interest.

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The benefits of using payment cards
Understanding cards benefits
Less low value paper
Better MI
Early pay for suppliers

• When you know who paid and where the money went,
  do you need an approved order and an approved
  invoice for a 30 purchase?

• How good is the MI that you have on key
  categories? Travel? Temp Staff? Vehicle parts?

• Direct payment to suppliers without any loss of
  interest.

More e-procurement use

• Cards can integrate to existing e-procurement
  systems, through logding and embedding cards.
  Enabling more suppliers, means greater up-take.

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The benefits of using payment cards
Understanding cards benefits
Less low value paper
Better MI
Early pay for suppliers

• When you know who paid and where the money went,
  do you need an approved order and an approved
  invoice for a 30 purchase?

• How good is the MI that you have on key
  categories? Travel? Temp Staff? Vehicle parts?

• Direct payment to suppliers without any loss of
  interest.

More e-procurement use
Cost savings

• Cards can integrate to existing e-procurement
  systems, through logding and embedding cards.
  Enabling more suppliers, means greater up-take.

• Suppliers are often willing to give 5 discounts
  for seven day settlement. What about 4 days?

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The benefits of using payment cards
Understanding cards benefits
Less low value paper
Better MI
Early pay for suppliers

• When you know who paid and where the money went,
  do you need an approved order and an approved
  invoice for a 30 purchase?

• How good is the MI that you have on key
  categories? Travel? Temp Staff? Vehicle parts?

• Direct payment to suppliers without any loss of
  interest.

More e-procurement use
Cost savings
Low investment

• Cards can integrate to existing e-procurement
  systems, through logding and embedding cards.
  Enabling more suppliers, means greater up-take.

• Suppliers are often willing to give 5 discounts
  for seven day settlement. What about 4 days?

• A full purchase card scheme can be implemented
  for nothing, whilst good usage will deliver a
  rebate.

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The benefits of payment cards
Building the case for cards
Time is money

• The cost of an order, and the cost of an invoice
• Vs. the cost of a Visa payment

Multiplied by the opportunity

• How many times can you make the saving happen?
• Can your suppliers accept Visa?
• What is an acceptable threshold?

Costing the programme

• Resourcing costs
• Technical costs

Placeholder foryour text

• Cash savings
• Rebates

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The benefits of using payment cards
Is there catch?
Authority is key
Why senior staff would back you?

• The cost of success is low, but success requires
  commitment
• You have to have a clear business case for the
  programme
• You have to monitor and manage the programme
• You have to have high level backing for a scheme

• Used properly, cards will deliver savings to the
  organisation
• Cards can deliver prompt payments
• It is likely that 25 of your invoices will be
  less than 500 and from suppliers that take cards
• Basic programmes cost nothing
• Larger schemes will generate rebates

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Do You Have Any Questions?
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Ian Makgill, Ticonian.makgill_at_ticon.uk.com020
7836 1999