Defend against holiday temptations.

November 27, 2017 Lynn Larson

’Tis the season to be more vigilant. Is your organization ramping up its internal fraud prevention and detection efforts in case anyone is tempted to finance their personal holiday shopping via a P-Card? Less serious, but still a concern, are cardholders who might think their P-Cards can be used to fund department parties, office holiday décor, and/or employee gifts. Maybe this is allowed at your organization, but most prohibit such purchases. To help prevent P-Card misuse and abuse this holiday season, following are some things your organization can do.

Provide Reminders About Appropriate Card Usage

Communication is key. Remind cardholders and manager-approvers about what is and is not allowed on P-Cards. Focus on potential purchases related to the holidays, such as what is noted in the introduction above, but also include a link to the complete list within your policies and procedures.

If your organization is more lenient, like allowing card use for a holiday lunch, ensure you have very clear rules. For example, state that a P-Card may be used for “one holiday lunch per cost center per year, for which the total cost per person does not exceed $X” and require the cardholder to include an attendee list within their transaction documentation.

This might also be a good time of the year to execute annual refresher training.

Holiday surprises can be great, but not when they are in the form of fraudulent or inappropriate transactions.

Apply Greater Scrutiny of Cardholders and Their Transactions

An effective auditing strategy is necessary at all times, but the holiday season can warrant some extra efforts. Tweak your transaction audit criteria accordingly. The following could be warning signs that something is amiss, but do not jump to conclusions. Anything unusual deserves more research.

A notable increase in spend—whether dollars or transaction volume—by a particular cardholder
A cardholder with little P-Card activity all year suddenly becomes more active
Increased purchases with “retailers,” such as department stores and restaurants
Purchases that do not align with a cardholder’s specific job responsibilities
A spike in weekend purchases or purchases with new suppliers
An epidemic of lost receipts
A cardholder initiates more transaction disputes than usual or reports more external fraud

The last bullet point could lead to the discovery of “friendly fraud.” There is nothing friendly about it, but it is the common term for when a cardholder makes a purchase and then disputes the transaction with the bank. Meanwhile, they have pocketed the purchase.

In addition to strategic auditing, consider increasing the percentage of transactions you randomly audit.

Final Thoughts

The combination of increased communication and thorough auditing will help protect your organization this holiday season. While I believe people are generally good and employees should be trusted, the holidays are a time when temptations can get the best of someone.

Learn more about Purchasing Card controls...

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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Is workplace impropriety the elephant in the room?

November 15, 2017 Lynn Larson

First Harvey Weinstein, then Capitol Hill. Fall 2017 has had its fill of news about workplace scandals. While Hollywood and Washington D.C. may seem completely different than our less glamorous jobs, no industry is immune from the type of misconduct we have been hearing about. The stories are sickening. Yet, I also wonder about the incidents that never make headlines—the uncomfortable workplace scenarios for which there is no outright policy violation. What should someone do in these cases, especially when the instigator holds a position of power?

In my first job out of college, my manager’s boss was what I would classify as a creep. He never violated any company policies, but his “innocent” comments—paired with his obvious stares—were telling. He made me uncomfortable, but nothing he did was “reportable.” I absolutely felt my subordinate status, as well as my tender age of 22, so I ignored his behavior and tried to avoid him. My colleagues might have been dealing with the same thing, but no one talked about it. There were only rumors about his preference in hiring peppy, petite females.

Looking back, I wish I had felt more empowered to speak up, to respectfully convey how I felt. However, I imagine he would have stressed his innocence, and I would have walked away feeling stupid and doubting myself. Who knows how speaking up would have impacted my career. Whether a blatant offense or subtle innuendo, those at the receiving end do not always have good options. A recent CNN article about Capitol Hill makes this abundantly clear. In one way or another, victims are faced with consequences, even if they ultimately triumph.

What To Do

Back to my earlier question of what to do. I strive to offer blog posts with action items, but this time I do not have clear answers. We teach children about “stranger danger” and warn teens about online predators. I’m not convinced that there is enough dialogue with young people entering the work force about the improprieties they may encounter and what their options might be. We need to better prepare them because we cannot assume that employer policies and related training, no matter how strong, will protect everyone. I realize that workers of any age can be victims. I’m specifying young people because I believe this is when the education should begin—at the ground level. However, for anyone who experiences workplace discomfort due to another employee (“reportable” or not), the best path may be to consult with HR.

Last, but not least, I have to put in a word for the truly innocent people who are falsely accused. Unfortunately, there will always be a handful of people who take advantage of the system out of spite. I don’t know what else to say. Being careful about the colleagues with whom we associate will not guarantee anything.

Final Thoughts

Commercial Card content will return for the next post. I was compelled to write about workplace misconduct this week because of my own mild experience that came flooding back to me while reading articles on the well-publicized scandals. I cannot imagine the pain that surely comes with greater ordeals.

Security Alert

On a completely different note, LinkedIn accounts are getting hacked. For more information, I published a related article today: https://www.linkedin.com/pulse/linkedin-accounts-getting-hacked-lynn-larson/

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Middle market program challenges.

September 13, 2017 Lynn Larson

Unlike large corporations, middle market organizations tend to have fewer resources to apply to a card program. This is just one of many hurdles they may face. To get some outside perspective on the topic, Recharged Education invited Shanda Goodwin, CPCP, Heartland Financial USA Inc., to weigh in. She understands the unique aspects of this sector and how to get programs on the right track. In the article below, she outlines five common challenges and offers some insight to help the middle market begin tackling them.

Middle Market Companies: Common challenges in developing & implementing a commercial card program as part of their payment strategy and considerations for overcoming them.

by Shanda Goodwin, CPCP, Heartland Financial USA Inc.

As a commercial card payment solution provider for a family of community banks throughout the country, many of the clients in our portfolios are middle market companies usually with revenues of $5 million or more and an average of 50 to 1000 employees. Many times implementation and ongoing management of a card program can be challenging for these clients due to a variety of reasons associated with size and resources. However, like all roadblocks, most can be overcome. Having positive partnerships and the right conversations can drive the innovation needed to create positive results.

Overcome multiple challenges by finding the right provider partner to help put your program on a clear path.

Common Challenges

If you fit within the middle market arena, you likely have experienced one or more of the following challenges:

1. Finding the right fit provider/issuer

Having common values of local ownership that is focused on relationships with conversations that are consultative versus sales driven can be hard to find. Once the sales process and card issuance occur, support for ongoing development of the program is missing.

2. Lack of internal IT support needed to address implementation of card technology platforms or data feeds

So often owners and those in procurement or accounts payable also have many other roles to fill within the company, creating a lack of resources in general for the program. This, along with limited ERP platforms, can make integrating with file feeds challenging.

Tip: Some card technology platforms can now support integration with less robust ERP systems. Finding this information on the front end of conversations is critical for the success of the program once launched.

3. Perception that there will be a loss of control over spend if employees have a card

As a community bank issuer, many of our clients are in a transition phase with their company moving from a highly centralized style of management to roles now becoming more defined with a higher number of employees than when the company first began. Loss of control in implementing a commercial card program for an additional method of payment is a common misconception. Implementing a program actually brings MORE control and added visibility, creating new opportunities and the ability to leverage a payment strategy with vendors for the organization.

Research by RPMG Research Corporation has found that financial loss experienced by card misrepresentation and internal or external fraud in relation to P-Card are relatively low—well under 1% of card spend.
Understanding the coverage available through the Visa Liability Waiver program (or similar), along with the use of a cardholder agreement for those utilizing a card within the program, can mitigate these risks.

4. Lack of awareness of what program best practices look like

Due to their size and the need to wear so many different hats, the foundation of the card program may be missing key pieces such as:

Definition of roles and a separation of duties for those managing the card program
Defining clear objectives and goals for the program – what processes are targeted for improvement?
Creating policies and procedures for built-in controls, along with employee training at implementation and ongoing training requirements
Winning over senior management for support of the card program and its value add for the company

5. Leveraging relationships with vendors—creating a payment strategy in pricing

Maximize your negotiating power for payment terms and discounting. Identifying all payment methods, and partnering with accounts payable and procurement to incorporate commercial card acceptance into supplier contract terms, can bring everyone to the table, including suppliers, for a win.

Our commercial card team here at Heartland consistently participates in calls with suppliers to help facilitate conversations surrounding the benefits of card acceptance including gaining a competitive advantage over other similar vendors by offering additional payment methods for their customers. We emphasize that card acceptance can provide electronic remittance records and carries less risk of return funds as these payments are secure funds tied to a credit line. On the contrary, check payments provide limited remittance information and can be returned for stop payment or lack of funds in the account. Faster, more secure and electronic methods of payment often drive better payment terms for the buyer. Card payments benefit all parties involved.

Conclusion

For successful card program implementation and ongoing program management, understand your current payment processes and where improvements are needed. Then determine which provider will “provide” the best fit to help you identify and address internal roadblocks. There are many choices available to the middle market when it comes to banking and commercial card issuers. It is always best practice to consider more than one for their overall product and technology offerings, as well as the true level of service they provide.

About the Author

Shanda Goodwin, CPCP and CPS Account Specialist Senior for Commercial Card Payment Solutions, a division of Heartland Financial USA Inc., has more than 20 years in the community banking industry with experience in product development including retail, commercial and treasury management products, now specializing in implementation and ongoing support of commercial card programs.

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About Heartland Financial USA Inc.

Heartland Financial USA, Inc. is a diversified financial services company with assets exceeding $8 billion. The company provides banking, mortgage, private client, investment, insurance and consumer finance services to individuals and businesses. Heartland currently has 108 banking locations serving 85 communities in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas and California. Additional information about Heartland Financial USA, Inc. is available at www.htlf.com.