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Originally published in How a Well-Run P-Card System Should Work Since P-card programs at most companies are relatively new, accounts payable professionals are in a great position to set them up to run efficiently and productively. They are not hampered by legacy procedures, bad practices and a "because that’s the way we always did it" attitude. At Recap’s Enhancing Accounts Payable Operations conference, Joseph J. Mezyk, Jr., vice president, Mercantile Bancorporation Inc., explained how the program is run at his company and how he deals with the common problems that arise from it. Background The bank has issued 800 cards generating approximately 2,500 transactions a month Mezyk estimates. Each month, the payables department must:
It is the goal of the bank to verify all the transactions before the bill is actually paid. The Processing Cycle In order to make the program work, tight guidelines and schedules were set up. The dates set out in the program are firm ad everyone is expected to adhere to them. A hardcopy of the master bill is sorted first by cardholder and then by transaction date. The managers review and approve the purchasing card settlements of their subordinates. The ultimate responsibility is placed on the manager’s shoulder. Then,
The bank follows a growing trend now being used at some other companies and the cards are used for both T&E and small purchases. In this case the purchase dollar level cut-off is $500.00. It is administered by a program manager who devotes half her time to this project. Mezyk says this may become a full-time position as usage increases although he is hopeful that automation will take care of some of the additional work. An automated general ledger interface is just the first step in this direction. Electronic Transaction Detail Mercantile uses ProCard Inc.’s Pro Values Service, a VISA product to help with the program. The transactions are extracted and aligned with the invoice. Then the information is loaded into an Excel spreadsheet where it is:
Processing of Individual Settlements When the cardholder settlements are received each month by the sixteenth, the program manager sorts the envelopes in cardholder sequence. A special attempt was made to put the information in envelopes that would not be lost in the shuffle. Orange envelopes are used for the program and Mezyk says that none have been lost. Each envelope contains:
All the envelopes are inspected and checks and other extraneous forms are removed. However, only a sampling of the settlements are audited. The individual cardholder billing summary total is verified against the master account statement and the settlement is given a review for reasonableness. The general ledger charge information is also updated in the Excel spreadsheet as needed. Processing of Master Information The Excel edit file is uploaded to the mainframe where a batch program reformats the data into general ledger transactions. Where needed, intercompany entries are created. A recap report is generated showing all the P-card related entries. The resulting file is merged with other general ledger data for processing. A hardcopy of the Excel spreadsheet is filed with the settlements as a voucher supplement. The problem has made life in accounts payable a little easier. The only keying that has to be done in accounts payable is the rekeying due to changes in the general ledger codes where necessary. Problems While the program has eliminated some of the tedious work in accounts payable, it is not without its own headaches. Mezyk talked about some of the issues that were raised by the program. It will come as no surprise to those working in accounts payable to find out that the end-users cause many of the problems. These include:
Additionally, he says that sales tax is not always identified and that the general ledger categorization and business unit allocations are not always perfect. All these issues are being addressed. The Future Despite the fact that the P-card road has not been perfectly smooth, Mezyk remains optimistic about the programs. He believes that it is an important tool in managing the payment process and is promoting its further use. He says that the program has eliminated roughly half of the requests coming into accounts payable for reimbursement. However, he says that automation is required to achieve payback in his institution. He continues to be concerned about the quality of the settlements as people continue to make mistakes. However he believes that good controls are the answer to any of the quality misuse issues. Accounts payable professionals looking for a model to base their programs will find one in Mezyk’s profile. His realistic appraisal of the problems that he encountered will also help those developing programs recognize the potential weak points adequately address them. "How a Well Run P-Card System Should Work" ©1998 Institute of Management and Administration, Inc. For subscription information call (212) 244-0360 or send e-mail to SUBSERVE@IOMA.COM For more information
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