Implementing a Purchase Card Scheme
In a previous article,
Regardless of the scale of the implementation, the organisation needs to work with the key stakeholders to agree an implementation plan. This plan needs to detail the resource requirements of an implementation and the estimated timescales for the implementation. Audit will also need to ensure that the process for comparing transaction logs to the monthly statement is sufficiently robust to be able to identify any instances of fraud and that the risk of any fraud is minimised. Administration procedures need to be documented in order to detail how data will be processed once the file has been received from the bank. Policies need to include information about the retention and storing of receipts, the allocation of spend to budgets, VAT reconciliation and the integration of procurement card spend with any commitment accounting principles in place.
Staff should take the time and effort to determine which of them to determine how many of the organisation’s suppliers are able to accept payment from a card. Different suppliers will accept different cards, but banks and card companies may be able to help identify which suppliers accept payment using their card schemes. Additionally, organisations should seek to determine what level of data a supplier can provide them with when they are processing a card transaction.
It is also important to draft a short document for cardholders to remind them of their responsibilities when using cards. A cardholder guide should include details of the following:
Card issuing banks should have a template cardholder guide that can be used as a basis for the organisation’s own guide.
In order to implement a procurement card programme, all the data on individual cardholders and the appropriate spend limits needs to be co-ordinated before the cards can be distributed.
Each cardholder will need to have their monthly and transaction limits documented, while programme, departmental and merchant category limits will also need to be set up. In organisations that are choosing to implement a large number of cards, a hierarchical design for different levels of cardholder is usually drawn up, and spend limits applied to each level as appropriate. Using the hierarchy, the organisation can list the individuals who will become cardholders. Each cardholder will have to complete an application form and send it to the issuing bank. Using the application forms and the preset limits, the bank can assemble the scheme and start the production of the cards.
The organisation may also choose to implement a card management solution in order to help cardholders reconcile and allocate their spend to budget codes. Implementing a successful procurement card programme requires organisations to be both committed and co-ordinated. Sound preparation in the form of spend and process analysis is likely to make a significant difference to the work of implementing a procurement card programme. This solution will need to be tested with template files from the issuing bank, which are then processed and uploaded to the general ledger.
The first step in rolling out a card programme is to communicate with the cardholders. Each cardholder needs to receive a copy of the cardholder guide as well as a copy of the procurement card programme policy and procedures. The staff most affected by a procurement card implementation will be cardholders themselves and staff working on transaction reconciliation in the finance department. All of these staff will need to be trained in order for them to understand their new responsibilities. Some additional staff, such as line managers will not become cardholders but will need to understand how approvals and other responsibilities will change.
Once the rollout has been completed, the organisation can start to work with their bank and stakeholders to monitor the progress of cardholders and to prepare for the first month’s statement to arrive from their issuing bank.