12 program support responsibilities.

May 15, 2017 Lynn Larson

The trifecta of Commercial Card program management is the program manager/administrator (PM/PA), procurement, and accounts payable (AP). However, the latter two might get overlooked when program roles are developed. Does your organization assign specific card-related responsibilities to procurement and AP? They can fulfill an important support function, regardless of which department the PM/PA resides in. Even though department roles vary from one organization to the next, you still can ensure the following 12 tasks are assigned to an appropriate party. Your card program will benefit from everyone working together.

Procurement

Program success is dependent on supplier acceptance of Commercial Cards. Procurement (or a related department) should:

Address card acceptance in competitive bids/RFPs
Specify card-related terms in supplier contracts; for example, prohibit surcharges for card acceptance and mandate compliance with the Payment Card Industry Data Security Standard (PCI DSS)
Notify AP about card-accepting suppliers

AP

AP is in a gatekeeper position to uphold policies and/or contracts concerning payment method. They should:

Remove card-accepting suppliers from the master vendor file (unless there is a good reason, along with accompanying controls, to pay a particular supplier more than one way)
Not set up new suppliers in the master vendor file until they verify the intended payment method
Refuse to process check requests for suppliers that accept cards
Reduce the frequency of check runs to encourage supplier acceptance of electronic payments

Both Departments

Tasks for both procurement and AP include the following.

Contribute to the establishment of, or updates to, an internal “payments policy”
Train their staff on their card-related roles and responsibilities
Monitor suppliers/payments to ensure card payments occur as expected
Look for additional opportunities to use cards—plastic or virtual—based on payment history
Track the impact of card payments (e.g., process savings, PO reduction, etc.), which helps fuel program metrics

How many of the 12 things noted herein does your organization consistently do? How can you strengthen program support roles? See also a related blog post on how management needs to address two aspects of the staff members (like procurement and AP) responsible for executing the organization’s payment plan.

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…

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A winning program goal strategy.

April 26, 2017 Lynn Larson

Has your organization reviewed its Commercial Card goals lately? Goals are a fundamental part of a card program, yet many organizations fall short in terms of goal setting and/or monitoring. Using my past experience as an example, the P-Card program that I managed was successful in many ways. For instance, it had executive buy-in and policies that allowed card usage for just about everything. We cruised along. Yet, for years we failed to: 1) research what our program could have captured and 2) subsequently develop specific goals derived from our overall B2B payments. As a result, we did not know what we were missing. Is this true of your organization? Where does your program stand in relation to goals? Following are five questions to help you assess your program goals, plus three additional action items critical for success.

Assess Your Program Goals

Optimally, you will be able to answer “yes” to each question below.

Are the goals measurable? Common program goals pertain to annual card spend and the number of transactions, process savings, invoice reduction within AP, changes to the number of full-time equivalents (FTEs) within AP and/or procurement, the number of suppliers converted to card payments, revenue sharing incentives, etc.
Are the goals still relevant? While it is common to document goals when first implementing a card program, some organizations do not create new ones as the initial goals are surpassed.
Has your organization evaluated its B2B payments in recent years, especially its check payments, to identify the current potential for Commercial Cards? Engage with your card issuer to determine which suppliers accept cards and then prioritize the suppliers to target.
Are goals reasonable/achievable, based on research of your B2B payments? You cannot randomly aspire to spend $25M via cards if your annual B2B payments are only $20M. It is also not realistic to expect a 100% conversion rate from checks to cards.
Do your card limits support program goals? For example, if Commercial Cards are the preferred payment method, then spend limits should be generous enough to accommodate such a goal.

In sports, a game plan guides the play of the team or individual. In card programs, quantifiable goals serve as a guide for program management, helping to drive optimal performance.

Beyond Goal Setting

Goals remain incomplete until you do the following.

Create and follow an action plan for achieving the goals. Reviewing card limits is just one element. Ideally, the program manager, AP, and procurement will work together to build a structure for card program success. On a related note, see actions to increase card payments.
Track and communicate the progress. This could also include highlighting the cost of any missed opportunities.
Adjust as needed. If your progress toward goals is slow or has stalled, identify the hurdles and what will move your program forward more quickly.

If your organization does all three of these things, you are at the top of your game. However, if you would like assistance with anything in the realm of card program goals, contact Recharged Education.

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U.S. regulatory compliance issues.

April 18, 2017 Lynn Larson

How well does your organization comply with U.S. regulatory requirements like 1099 reporting, sales and use tax, and OFAC? It is safe to say that few people would declare regulation as the favorite part of their job, but non-compliance can mean fines, penalties, and/or increased scrutiny from regulators. As the lead researcher for AP Now’s 2017 survey on regulatory compliance issues, I saw firsthand that there is room for improvement. As a payment professional, you can help your organization step up its efforts. Following are tidbits from AP Now’s survey results, including where Commercial Cards fit into the regulatory picture.

1099 Reporting

Commercial Cards are a win here. To reduce the burden of federal 1099 reporting for domestic payments, expand the usage of Commercial Cards—regular cards and/or electronic payables (e.g., Virtual Cards). As a reminder, the regulatory responsibility shifted several years ago, adding to the benefits of card usage. As stated within www.irs.gov, “Under section 6050W of the Internal Revenue Code, payment settlement entities (merchant acquiring entities and third party settlement organizations) must report payment card and third party network transactions. This reporting requirement began in early 2012 for payment card and third party network transactions that occurred in 2011.”

For your reportable non-card payments, do what you can to minimize the pain. Per the AP Now survey results:

Among organizations that do TIN matching, 81% receive fewer than 10 B-Notices annually.
While about half of respondents’ organizations use the IRS TIN matching system at some point, only 14% follow the best practice of doing so throughout the year when new vendors are added and in conjunction with annual reporting.

Sales and Use Tax

Some survey respondents volunteered that their biggest problem related to tax compliance is card payments. One person commented that, with P-Cards, it is difficult to determine what is being purchased and where it will be used. Further, survey results indicate that about one-fifth of organizations generally disregard or exclude card payments from their use tax accrual process.

Lack of an effective accrual process puts your organization at risk of a use tax assessment that could reach or exceed $1M; see the related blog post by Recharged Education, including tips for improving your approach. Begin by confirming who is responsible for tax compliance for your card program. Do not assume that the tax group is handling it.

OFAC

The Office of Foreign Assets Control (OFAC) maintains the Specially Designated Nationals and Blocked Persons list (“SDN list”), which people also refer to generically as the OFAC list. It reflects individuals, companies, groups, etc. for which assets are blocked, and U.S. persons and companies are generally prohibited from dealing with them. For OFAC resources, visit the website at: https://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx.

Per the survey results, 40% of organizations check the list, which is promising. Awareness appears to be growing. The best practice is to check the list for each new vendor, regardless of payment method, and keep related records of your efforts. Has your organization assigned this responsibility to a specific department?

Final Thoughts

As recommended in the AP Now report of survey results, combatting the challenges begins with actively pursuing channels to better understand the regulatory requirements and determining where your organization falls short. From there, incorporating knowledge of the requirements into best practices is the right path. This includes:

Assigning related responsibilities
Providing training
Updating policies and procedures as needed
Exploring technology options when warranted

Survey Results

To purchase the complete survey results, visit the AP Now website: http://www.ap-now.com/products/item100.cfm.

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