Procurement card saves city time and money
In February 2000, when the purchasing division of Moreno Valley, Calif., received a requisition for a digital camera, it found that its usual vendor was out of stock. The purchasing staff turned to the Internet for a solution and found multiple vendors that could ship the camera within 24 hours. However, most of the online vendors did not accept purchase orders, and the ones that did took days or even weeks to set up a formal terms account.
Each year, the city’s purchasing division processes hundreds of purchase orders that, like the camera, have encumbrance values of $200 to $1,000. In addition, many one-time purchase requisitions are received for items that cost as little as $2. With the overall cost to process a purchase order averaging $50, the division needed a cost-effective way to procure and process payments for low-value items. The division also wanted to purchase products from online vendors without using purchase orders. As a result, the city joined the California Procurement Card Program (CAL-Card) last May.
To initiate the program, the purchasing division submitted an application to the California Department of General Services (DGS), which operates CAL-card. DGS then worked with the procurement card vendor, Minneapolis-based U.S. Bank, I.M.P.A.C. (International Merchant Purchase Authorization Card) Government Services Division, to set up an account for the city. After the bank approved the city’s application, the purchasing division received CAL-Cards, which are essentially VISA credit cards.
Since initiating the program, the purchasing division processes between $70,000 and $100,000 worth of credit card purchases each month. Typical purchases are under $1,000, which, with a few exceptions, is the maximum single transaction limit. The city receives a price discount from its office supplies vendor when using the CAL-Card, and the vendor receives payment from the bank within three days.
Under the CAL-Card program, workflow is balanced, because half the statements arrive on the 15th of each month and the other half on the 30th. The division uses online account management for the program, which allows the purchasing staff to set up, close and make approved changes to cardholder accounts in minutes.
Prior to the CAL-Card program, each purchase was manually entered into the general ledger, and a voucher was sent to the vendor. Now, payment to the bank is handled using an electronic log sheet; with a few clicks of a mouse, hundreds of low-value purchases are uploaded from the electronic log into the general ledger and processed for payment.
Throughout the year, representatives of the CAL-card program and the bank host training sessions for procurement departments throughout the state. Quarterly user meetings also are held by the groups to share information about new program features.
This article was written by Rix Skonberg, purchasing manager for Moreno Valley.