Working Capital & Expense Management: Purchasing Card for Low Value High Frequency Invoices

Philip Glickman
Director, Regional Business Development Head, Citi

Ho Weng Kit
Vice President, MasterCard Worldwide

Worlds Most Awarded Commercial Card offering

4000+
Global Commercial Card Programs

3
MILLION

113
Global Fortune 500 Clients

LARGEST

Card Holders

Global Commercial Cards issuer on Visa/MasterCard

$30
BILLION
In Annual Charge Volume

35+
MILLION
Merchants Accept Citi-issued Visa/ MasterCard Products

100+
MILLION
Card Transactions Processed Annually

20%
Annualized Growth In Business Volume over 3 Years

LARGEST
Travel Card Program in Industry History for a US Government Agency

WIDEST RANGE
of Card Payment Products Including: BIPC, Corporate (T&E), One, CTA, Fleet, Meeting, Project, Purchasing, VCA

65
Local Currency Markets for the Largest Local Currency Program Available

100+
Countries Supported Across the World

Our Global Partners

2 2

Why Organizations are expanding their use of Purchasing Cards

Current state
Typically 60% of an organizations payments are less than $1,000 and represent less than 5% of spending

Savings and Efficiencies

Average cost of P-Card process: $22 (vs. $92) 68% reduction in procurement cycle time

50% of suppliers are used only once per year

80% of suppliers are used only twice per year

31% reduction in number of suppliers in AP Master File

P-Cards save the typical AP department three to five days per month in documentation activities

Traditional Procurement Process Purchase Card Process

Purchase Order

Approval

Purchase

Shipping Receipt

Invoice

Invoice

Payment

Purchase

Approval

Payment

Note: Source: Palmer & Gupta, Purchasing Card Benchmark Survey Results 2010

Process Change to Process Saves

Employee
Identify Needs

Manager

Purchasing

Finance

Supplier

Procurement

Raise Requisition

Approve Requisition

Prepare RFQ Select Supplier Prepare Purchase Order Reconcile Order

Submit Quote

Confirm Purchase Order

Receive Goods

Deliver Goods

Reconcile Delivery Order

Reconcile Delivery / Purchase Orders Manual Data Entry / Posting 3-Way Matching Vendor Payment Submit Invoice

Payment

Process Change to Process Saves

Employee
Identify Needs

Manager

Purchasing

Finance

Supplier

Procurement

Raise Requisition

Each Purchase Costs RM50 - RM150 to process

Approve Requisition Prepare RFQ Select Supplier Prepare Purchase Order Reconcile Order Reconcile Delivery / Purchase Orders Manual Data Entry / Posting 3-Way Matching Vendor Payment

Submit Quote

Confirm Purchase Order

Receive Goods

Deliver Goods

Reconcile Delivery Order

Submit Invoice

Payment

Process Change to Process Saves

Employee
Identify Needs

Manager

Purchasing

Finance

Supplier

Procurement

Raise Place Requisition Order

Approve Requisition

Prepare RFQ Select Supplier Prepare Purchase Order Reconcile Order

Submit Quote Process Order

Confirm Purchase Deliver Goods Order

Receive Goods Reconcile Delivery Order Reconcile Delivery Data Feed and /Statement Purchase Orders

Deliver Goods

Submit Invoice Manual Data Entry / Posting 3-Way SingleMatching Payment to Citibank Vendor Payment

Payment

Verify Purchases

Approve Statement

CitiManager
Benefits at a Glance Simplified Access: Improved user interface offers single, secure sign-on access to a full suite of innovative online tools Powerful Functionality: Intuitive navigation makes it easy to take advantage of Citis robust tools Improved Efficiency: Save valuable time and effort managing your Citi Commercial Card account

Single Sign-on to All Core Functionalities

CCRS Documents (Files) Mobile/ Email Alerts Online Maintenance Online Applications Dashboards and Reports Training (CLASS) GCMS Transaction Management

Statements

Unique to Citi Commercial Cards Only

Card Management Simplified

Enhanced Management Reporting

Program Performance Designed to monitor key program metrics related to credit usage and compliance trends
Spend Analysis Allow users to view trends and spending patterns across time periods and hierarchies Vendor Management Allows users to view trends and spending patterns across various key vendor group

A Step Forward

Citi Virtual Card Accounts: Overview

Efficiency Product Description
Non-plastic, Unique account numbers for purchases Underlying real account number is never shared with suppliers or merchants Functions like a typical credit card number Suppliers process virtual cards like any standard credit card Create VCNs via three interfaces Streamlined record keeping with one-toone VCN transaction mapping

Client can attached invoice number, other data to each VCN to simplify reconciliation, reporting

Security & Control

Real billing card number never shared with suppliers
Single-use numbers lock-down potential misuse Set each VCN with appropriate controls ensuring appropriate use by the supplier, including: Single or Multi-use VCN Amount Limits: Exact, Maximum or Range Validity Period MCC Groups

Batch file, real-time API, and web interface

Intelligent Virtual Card Reporting

Reporting

For Each Transaction: Rich Transaction Data Virtual Card Number Client Custom Data Fields

Data Analysis
Monthly Spend by Purchase Type

Allocation
Record accounting codes up front

Reconciliation
Match transactions to payment instructions by invoice or ref #

Meeting Actuals vs. Budget

Additional info to enrich data analysis

GL 1 GL 2 GL 3 Use this data to automatically allocate to the proper GL Easily track matched, expired, and active virtual cards

Thank you.

Citi Virtual Card Accounts: How to identify the right solution?

What were situations where your company decided not to deploy a purchasing card ? What were the obstacles faced? Are there hurdles preventing the use of cards to pay certain vendors or certain categories of spend?

Can VCA help reduce risk or increase visibility to enable additional card use?

How can the additional security, control, and custom data from VCA help?

Are there opportunities to optimize existing cards programs or payment processes using VCA?

Are there ways to put VCA to work in your organization beyond Procurement and Accounts Payable?

Identify opportunities by analyzing your Accounts Payable file using Citis Working Capital Analytics Tool

Look for targeted use cases in other groups: HR/Recruiting, Legal, Property Management, Advertising, etc.

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efficiency, renewable energy & mitigation

Sample Scenario: Centralized Payments

Single-use virtual card numbers for increased security, control, data, and workflow features
Virtual Card Request & Use
Invoices or purchase orders 1. Generate virtual card numbers using VCA website Set per-transaction controls: invoice amount, supplier, validity period Capture custom data: invoice number, cost center, etc. 2. Send virtual card numbers to suppliers

Supplier

A
Supplier

B
Supplier

C
Reporting & Allocation

Client
Citi receives transaction data after the supplier processes the order. Transaction-level data with virtual card number & custom data fields A. Client matches to invoice or PO by linking to custom data fields

B. Client automatically allocates charges based on cost center / GL information in custom data fields

Sample Scenario: Accounts Payable Integration

Automatically request virtual card numbers directly from an ERP or AP system for approved PO/invoices. Capture invoice # up-front to automate post-transaction reconciliation
Virtual Card Request & Use
1. Invoices marked ready to pay for card-accepting suppliers 2. Clients send payment instruction file requesting single-use virtual card number for each payment (specifies amount, supplier, invoice numbers, and supplier email address) 3. Virtual card number emailed to each supplier. Supplier processes payment and transaction data sent to Citi.

Client ERP
Batch file request

Supplier A

Supplier B

Supplier C

Supplier D

VCNs

Global Data Repository

VCA
Reporting & Allocation

Global Data Repository

Citi receives transaction data after the supplier processes the order. Client receives transaction-level reporting with transaction-specific details (Virtual card number & custom data fields which they captured at time of virtual card creation)

Client
Client automatically matches transaction to invoice using info captured in custom data

Maximize Your Purchasing Opportunities

Old Thought Process

Monitor Spend
Manage Working Capital

New Thought Process

What can we put on the card?

Cut Costs

Why are we not putting this on card?

Automate Payments

Enhance Controls