This fact is astounding: The City of Lenexa (Kansas) uses traditional P-Cards for more than 70% of its business-to-business (B2B) payments. How have they done it? What are their future plans? My interview with Dana Simms, Senior Accountant, follows. It demonstrates the value of organization-wide support, patience, and perseverance.
Keys to Success
Q: To what do you attribute such great success?
A: One, the support of our management team. Without their support and backing, there would be no motivation among city staff to use Purchasing Cards. Two, employees appreciate the ability to make purchases they need when needed. Employees do not want to process a requisition or a check request and wait two days to maybe two weeks for a check to make the purchase. Three, the implementation of select ghost accounts. We have established ghost accounts for Verizon, the Information Technology department, and the Finance department. These two departments can pay invoices on a Purchasing Card that may be over the normal card limits, which are $2,500 per transaction and $5,000 per month.
Editorial note: Some end-user organizations, like the City of Lenexa, have proven that traditional ghost accounts work for them. These accounts, with limits that refresh each month/cycle, function like a regular P-Card. However, common drawbacks include lack of dispute rights and difficulty identifying or enforcing accountability since the account is not issued to a particular employee. An organization should discuss the pros and cons of ghost accounts with its card provider.
Q: What do you think are unique characteristics of Lenexa (regarding your card program) compared to other cities or even other organizations?
A: Our management team and governing body have always been progressive with their thinking and actions. If something makes sense, saving time and money, then they are eager to take advantage of the opportunity.
Early Challenges
Q: What were some of your biggest challenges to overcome to get Lenexa to where it is at today?
A: The biggest challenge was getting the employees to use their cards at the point of purchase. It was easier for them to place a purchase on a house account and/or have the vendor invoice the City. The first step was to close all house accounts. Then, if an invoice was entered for payment, we contacted the employee (purchaser) and asked them to place it on their purchasing card. It only took a few times of returning invoices to employees for them to realize the payment process was easier via card.
Editorial note: Access a previous blog post that addresses the importance of ensuring cards are easy to use and three key elements to assess in this quest.
With the right support, cards can emerge as the focal piece of your payment strategy.
Current Challenges
Q: What are your biggest card program challenges now?
A: Two things, both of which pertain to vendors and card acceptance. Some vendors want to add a surcharge to accept purchasing cards. Kansas has a “no surcharges” law, but there really are not any enforcement processes in place. If a vendor applies a surcharge, we attempt to contact them. Another challenge is the card acceptance fee. Some vendors are willing to absorb the fees on small-dollar items, but not on bigger items such as construction or equipment/vehicles.
Editorial note: The merchant ID and physical business address for that ID determines whether surcharging is permissible. In other words, a merchant abides by the laws in the merchant’s state, regardless of the laws in other states to which the merchant ships goods or in which it provides services. See more on surcharging...
Current/Future Plans
Q: Where does Lenexa plan to go from here? Perhaps you just want to maintain your current level.
A: We would like to continue to grow the program. Employee and vendor education, along with monitoring purchases, are big factors in being able to do this.
Final Thoughts
The City of Lenexa has the right idea. When you have achieved a high level of card success, do not simply stop. Continue to look for new opportunities.
Another thing to focus on is program management and the elements that could be improved. What are your pain points? Could your policies and procedures be revitalized? Could you expand or refine the training program? What about purchase-to-pay efficiencies?
If your organization would like assistance with any program improvement endeavors, submit a contact form to learn how Recharged Education can help.
About the Author
Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…
Subscribe to the Blog
Receive notice of new blog posts.
