GSA SmartPay2 Basic Charge Card Payment Reconciliation

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GSA SmartPay2 Basic Charge Card Payment
Reconciliation
Perry Hampton Bradley Forrestel Office of Charge
Card Management (OCCM) 12th Annual GSA SmartPay
Training Conference August 10 12, 2010
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Agenda

• Program Background Basics
• The Importance of Payment Reconciliation
• General Payment Reconciliation Step-by-Step
  Process
• General Payment Reconciliation Best Practices
• Resources
• Questions

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Value to the customer

• After this course, participants should be able
  to
• Identify ways to improve payment reconciliation
  processes at your agency/organization
• Understand how to apply payment reconciliation
  best practices to your charge card program
• Collaborate with payment reconciliation experts
  who provide information/tools for enhancing
  payment reconciliation

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Program Background Basics
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Polling the Audience

• How many audience members are
• A. Level 1 A/OPCs
• B. Level 2 A/OPCs
• C. Level 3 A/OPCs
• D. Im not an A/OPC
• E. Unsure
• Is your role as an A/OPC your
• A. Primary Duty
• B. Collateral Duty
• C. Not Applicable

?
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Polling the Audience

• How many audience members are new to the GSA
  SmartPay Training Conference this year?
• A. Yes, this is my first year
• B. No, I have attended before
• What business line are you affiliated with?
• A. Purchase
• B. Travel
• C. Fleet
• D. All
• E. Unsure

?
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GSA SmartPay2 Program Overview
DID YOU KNOW 943 was spent using Federal charge
cards every second in FY09

• Enables over 350 Federal agencies/organizations
  to
  obtain charge card products and services
  through
  master contracts that GSA established
  with
  three banks Citibank, JPMorgan Chase, and U.S.
  Bank
• Agencies/organizations issued task orders against
  these master contracts to obtain charge card
  products and services
• Agencies/organizations pay no direct fees to use
  the program
• Period of performance for existing contracts is
  through 2018

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Office of Charge Card Management

• Provide a comprehensive and flexible master
  contract
• Offer strong customer orientation and frequent
  customer contact/support through
• Test and share best practices
• Engage in continuous market research and regular
  meetings with industry
• Deliver Beyond Plastics strategy and
  conferences
• Provide balanced customer advocacy and program
  leadership
• Training workshops, guides and GSA SmartPay
  Annual Training Conference

GetSmart quarterly newsletters Monthly meetings Agency POCs Strong web presence Ad hoc working groups Customer satisfaction surveys Social Networking exploration
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The Importance of Payment Reconciliation
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Benefits of Payment Reconciliation

• Why Reconcile?...especially if the
  invoice/payment
• Is automated?
• Avoid out of balance conditions between agencies/
  organizations
  and issuers
• Maximize refunds by ensuring payments are
  
  accurate and timely
• Identify problems quickly and act upon them
• Avoid hidden delinquencies
• Frequent reconciliations lead to smooth program
  close-out
• Reconciling frequently is a best practice

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Reconciliation Issues

• Payment made to the wrong account
• Checks recorded as a lesser or greater amount
• than what was presented to the bank
• Balance transferred to the wrong account
• Payments taken from the bank account without the
  agencys/organizations knowledge
• Rolling balances payment is applied to oldest
  balance first
• Documentation is not retained, or lost
• Payments posting to the transaction account
  versus the central account

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Payment Reconciliation step-by-step process
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Traditional Payment Reconciliation Process Flow

• Account management and reconciliation process
  flows vary among agencies/ organizations due to
  different organizational structures,
  roles/responsibilities, and established
  policies/procedures

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Polling the Audience

• How does your agency/organization perform payment
  reconciliation?
• A. Through an automated system
• B. Through a manual system
• C. Through a system that is automated,
  but includes manual components
• D. I dont know

?
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Polling the Audience

• For those who use a manual system, how long (on
  average) does it take for your agency/organization
  to perform payment reconciliation?
• A. 1 7 Days
• B. 7 14 Days
• C. 14 30 Days
• D. 30 Days
• D. I dont know

?
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Polling the Audience

• For those who use an automated system, how long
  (on average) does it take for your
  agency/organization to perform payment
  reconciliation?
• A. 1 7 Days
• B. 7 14 Days
• C. 14 30 Days
• D. 30 Days
• D. I dont know

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Depending on A/OPC diligence, automated
processes generally takes less time than a manual
process (several days to several weeks, rather
than months)
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Sample Timeline - Payment Reconciliation Process
Flow (Manual)
Notification Day 1 Review 2-5 Days Reconciliation 4-6 Days Transmission 3-10 Days Payment 2-8 Days
Send transaction statements to cardholders. Stamps date of receipt (date serves as the prompt payment start date) with 30 days to make payment. Reconciles transaction invoices against bank statements. Verifies all matched transactions. Prepares packets containing transaction invoices and bank statements and mails to Payment Office. Certifies all documents and makes payments to the bank.
Sample timeline

• Sample TOTAL TIME 12 - 30 days
• Manual reconciliation process takes several weeks
  up to a month or more
• Manual processing for payment reconciliation is a
  common practice and can be cumbersome by nature
• Potential risk of human error in manual
  processing could delay payments

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Sample Timeline - Payment Reconciliation Process
Flow (Automated)
Notification Day 1 Review 1-3 Days Reconciliation 1-3 Days Transmission 1-3 Days Payment 2-8 Days
Sends transaction statements to cardholders. System acknowledges date of receipt (date serves as the prompt payment start date) with 30 days to make payment. System reconciles transaction invoices against bank statements. Verifies all matched transactions. System automatically submits transaction invoices and bank statements to Payment Office. Certifies all documents and make payments to the bank.
Sample timeline

• Sample TOTAL Time 6 18 days
• Depending on A/OPC diligence, automated processes
  generally takes less time than a manual process (
  6 18 days versus 12 30 days)
• System automation and increased training helps to
  improve and streamline the payment reconciliation
  process
• Success is highly dependent on the diligence of
  individual A/OPCs and availability of time
  devoted to payment reconciliation

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Polling the Audience

• True or False there are penalties for delinquent
  accounts that are not paid on time.
• A. True
• B. False

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ANSWER TRUE. According to the Prompt Payment
Penalty Act (PL 97-177), there are penalty
implications for not reconciling in a timely
manner, which can lead to delinquent
accounts. Did you knowThe frequency of payment
reconciliation greatly reduces the risk of
delinquencies.
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Penalties

• The Prompt Payment Penalty Act (PL 97-177) states
  that interest penalty must be paid if payment is
  not made within 30 days of receiving a proper
  invoice
• Agencies/organizations are required to pay the
  interest rate under criteria established by the
  Renegotiation Act (PL 92-41)
• There are penalties for delinquent accounts, and
  the frequency of payment reconciliation greatly
  reduces the risk of delinquencies

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Late Payment Penalty Letters

• Required to pay off outstanding balances on
  government accounts within 30 days of their due
  date
• The date stamping of invoices is a key step in
  determining the prompt payment status of an
  account
• This largely manual process can be inconsistently
  practiced, leading to uncertainty and/or disputes
  about when interest payments are due and the
  period used to calculate interest
• When payments are not made in a timely fashion,
  interest penalty letters and non-payment interest
  claims may be generated
• Interest accrues on accounts starting 31 days
  past the prompt payment start date based on the
  Applicable Federal Rate (AFR)
• Interest penalty letters are generated by the
  bank (timeline for generating interest penalty
  letters vary depending on agency/organization)
• Non-payment can place agencies/organizations at
  financial and legal risk

Applicable Federal Rate (AFR) refers to the
interest rate published by the US Treasury to
calculate imputed interest charges
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Polling the Audience

• Does your agency/organization have a Prompt
  Payment Act (PPA) process established?
• A. Yes
• B. No
• C. I dont know

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Did you knowestablishing a Prompt Payment Act
(PPA) process at your agency/organization is a
best practice.
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Sample Penalty Letters and Claims Monitoring
Process
Prompt Payment Act (PPA) Initial Penalty Letter Final Penalty Letter Claims
PPA starts when the date of receipt is stamped on the bank invoice At 60 days, SP2 contractor bank sends initial penalty letter to the Contracting Officer and A/OPC A/OPCs work with bank to resolve penalty letters Bank sends list of all outstanding penalty letters and claims to A/OPC and Contracting Officer After about 60 days (at 120 days), bank sends final penalty letter to the Contracting Officer and A/OPC At 180 days, bank files a non-payment interest claim on the interest penalty letter Contracting Officer works with Payment Office to resolve claims Bank terminates delinquent accounts at 210 days

• Note the PPA process can differ among
  agencies/organizations depending on the
  established policies and procedures they have
  with their SP2 contractor bank
• Agencies/organizations with a strong PPA process
  have a greater change of alleviating a
  non-payment interest claim to the government

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General Payment Reconciliation Best Practices
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Best Practices

• Reconcile frequently ideally weekly, but at
  least once a month
• Reconcile interface files/mappers to statement
  invoices
• Confirm payment by Designated Billing Office
  (DBO) and generate invoice status reports
• Review payment reconciliations to ensure
  agency/organization and bank records agree
• Notify GSA SmartPay2 contractor bank of disputes
  as quickly as possible, and monitor the status of
  disputed transactions
• Contact your GSA SmartPay2 contractor bank to
  learn about the tools they provide you with to
  assist in the payment reconciliation process

Mappers are used in JPMorgan Chases PaymentNet
system and can be customized. For more details,
contact your JPMorgan Chase account manager
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Reconciling interface files/mappers to statement
invoices

• If paying based on cycle date (once per month),
  compare
  mapper file to statement/invoice
• Generate Account Statement and Summary Report
• Notify issuer of any discrepancies
• If paying semi-monthly, weekly, daily, etc.,
  reconcile mappers to statement/invoice generated
  at cycle
• Ensure totals match including dollar amount and
  transaction counts
• Notify issuer of any discrepancies
• Confirming payment
• Generate Invoice Status Report
• Confirm Payment and follow up with Designated
  Payment Office

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Managing Disputes
To avoid reconciliation issues when managing
disputes,
agencies/organizations should allow the
dispute process to work as designed

• Under the GSA SmartPay2 Master Contract,
  cardholders must
  notify the issuer of dispute within 90 calendar
  days from the transaction date
• The bank provides a temporary provisional credit
  for a charge that is under dispute while the bank
  simultaneously researches the dispute upon
  resolution
• If dispute is settled in favor of the cardholder
  the provisional credit(s) remains issued to the
  account
• If dispute is settled in favor of the merchant,
  the provisional credit(s) is removed and the bank
  will bill the cardholder by applying a debit
  transaction
• Avoid deducting disputed transactions from the
  balance due as provisional credit will be or has
  been issued
• Note refer to your agency/organization policies
  on the process for reconciling disputed
  transactions

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Resources
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General Resources

• GSA SmartPay Website www.gsasmartpay.gov
• For a listing of definitions as they related to
  the Master Contract, see section C.1.4
  Definitions (available on the GSA SmartPay
  website)
• Federal Acquisition Regulations (FAR)
  www.acquisition.gov/far
• Agency/organization specific policies and
  established procedures
• Bank Contact Info
• Citibank http//www.cards.citidirect.com/welcome.
  asp
  1-800-790-7206 (customer service)
• JP Morgan Chase https//www.paymentnet.com/Login.
  asp
  1-888-297-0781 (customer service)
• U.S. Bank https//access.usbank.com/cpsApp1/index
  .jsp
  1-888-994-6722 (customer service)

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Other Reconciliation-related Courses being
offered at Conference

• Reconcile Now, Relax Later (JPMorgan Chase)
• DTS (Defense Travel System) CBA Reconciliation
  Module Training (Citibank)
• CBA Reconciliation (U.S. Bank)
• Department of the Navy (DON) Purchase Card
  Managing Delinquencies and Credit Balances
  (Citibank)
• Delinquency and Dispute Management (U.S. Bank)
• WEX Online Data Analysis Reporting Tools
  (Citibank)

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Other GSA SmartPay Courses being offered

• GSA SmartPay2 Purchase Card Basics
• GSA SmartPay2 Travel Card Basics
• GSA SmartPay2 Fleet Card Basics
• GSA SmartPay2 Master Contract Basics
• GSA SmartPay Program Update
• GSA SmartPay in More than One Flavor Innovative
  Products Services
• Effective Oversight of Your GSA SmartPay Program
• Navigating the GSA SmartPay Website

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Question Answer Session
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Thank you! Contact Us Perry Hampton,
perry.hampton_at_gsa.gov Bradley Forrestel,
bradley.forrestel_at_gsa.gov GSA SmartPay Program
Support Phone [phone] E-mail gsa_smartp
ay_at_gsa.gov
www.gsasmartpay.gov
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