As set forth below, I recently asked how cities that have significantly expanded their
use of credit cards in making city purchases address two problems:
o Keeping payments to the credit card company straight.
o Maintaining underlying vendor payment information.
I received 32 replies. Long Story Short: Most of you asked if I had looked into the
CalCard program, since it had features integral to it that would address these
problems.
Well, we had looked into the CalCard program before sending out our email, but our
initial look did not reveal any significant differences between the CalCard and other
credit cards.
However, I'm really glad we asked y'all for your advice - and then took it. In taking
a second, more detailed look, the CalCard program does have some unique features that
address these (and several other) concerns as follows:
o This is a "master account" program, so there is just one bill for payment each
month, not a separate one for each cardholder.
o Vendor detail in your general ledger is lost with this approach, BUT: the CalCard
program provides supplemental information on purchases by vendor; and as several of
you noted, this is supposed to be for smaller purchases, so the loss of this data in
the general ledger should not be a major concern.
So, we have decided to launch our expanded credit card program using CalCards. For
more information on CalCards, check-out their web site (and thanx to John Coggins in
Chula Vista for providing this to me):
www.pd.dgs.ca.gov
I also want to thank Teri Ferro in Murrieta for taking the time to share her
experiences and insights with me.
So what did we do? Attached for your information is the policy we developed on this,
which is based on the very cool information y'all shared with us. We're are now in
the process of rolling-out cards to the departments based on this policy.
Again, thanx much to all those who responded. And I hope this information and our
policy will be helpful to those who are thinking about implementing an expanded (or
new) credit card program.
- Bill
>>>>THE SURVEY>>>>
Okay, here are two questions for those of you who have moved into extensively using
credit cards for small-dollar, but high-volume purchases. But first, a little
background so you'll understand why we're asking. (Note: Okay, so the explanation is
a little long. But the questions - and hopefully your answers - are pretty short.)
We're on the brink of launching credit cards on an organization-wide basis. We have a
few VISA credit cards now, but they are "generic," and we "check them out" on a
case-by case basis.
We are proposing to issue as many City credit cards as departments request (in the
employee's name, subject to department head approval and a bunch of other conditions I
won't bore you with right now). While I don't know how many of these we will issue,
let's assume we issue at least 50 of them. (We have 342 regular employees; by
comparison, Santa Maria has a comparable number of employees, but they've issued about
200 cards). So here are my questions:
KEEPING PAYMENTS STRAIGHT
With 50 cards, and the potential for a LOT of small charges, we see getting the Bank
of America to correctly post payments to each account as a real problem. If we have
50 active accounts, and each account has just 10 charges each month (and there could
easily be many more than this), that will be at least 500 separate "invoice" entries
(assuming we use the credit card account number as the "invoice" number) on the
remittance advice if we issue one check (which would be our "normal" practice).
We are concerned that the Bank of America will never get this right (maybe I'm putting
myself in their moccasins too much here, since I'm not sure we would get this 100%
right if the roles were reversed!)
To resolve this, we're thinking about setting up each individual account as its own
separate B of A vendor. In this way, each account will be automatically summed up for
B of A, and match directly to their statement. This "one-to-one" matching (which
would eliminate their having to correctly enter 500 separate entries; there would be
just one entry for them for each account) should virtually eliminate this potential
for error.
Also, once we create the separate vendor, it will significantly reduce our data entry
in having to enter the long (16 digit) account number for each charge.
On the other hand, conventional "finance" wisdom tells me I'm supposed to consolidate
vendor payments on one check, not issue 50 separate checks to essentially the same
vendor.
QUESTION: Is getting the bank card vendor to correctly post credit card payments per
account a problem for you? If not, how have you addressed the problem described
above? Does the solution result in more work for Finance (like preparing supplemental
reports) than you used to do before you expanded credit card use?
LOSS OF VENDOR INFORMATION
If we use cards extensively instead of open purchase orders, it seems to us that the
card vendor (in our case the B of A) becomes one of our largest vendors, from a volume
perspective. This means we will lose detail in our system on purchases from specific
vendors (and potentially other detail about the purchase; this depends on other
decisions we make about how we enter charge data).
Right now, the operating departments (and Finance) make extensive use of on-line
inquiry, and we're concerned we'll lose valuable on-line information about our
purchases.
QUESTION: Is this a problem for you? If not, how have you addressed the problem
described above? Does the solution result in more work for Finance (like preparing
supplemental reports) than you used to do before you expanded credit card use?
Okay, a little more info so I can do some "apples to apples" comparisons:
o About how many regular employees do you have?
o About how many cards have you issued?
I'm really hoping to avoid a false start here by benefitting from others' experience -
and not promising our departments more than we can really deliver. So, your thoughts
by Monday, April 3 will really be appreciated.
(Note: Pleasanton, Santa Maria and Paso Robles: No need to reply to this - you've
already given us great help - and much food for thought, since you all three do this
differently!)
As always, I'll post the results. (And I'll put our finalized credit card policy in
the "'resource room" along with Pleasanton and Murrieta's).
Thanx much!
Bill
Bill Statler, Director of Finance
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93405
Phone: (805) 781-7125
Fax: (805) 781-7401
Email: [EMAIL PROTECTED]
275 - City Credit Cards.doc
