"It started in 2014 when we were looking at a way to relieve the pain that many departments were feeling around reconciliation of the hotel direct bill process," said state of California business partnership and travel manager Bill Amaral. "We were in the middle of a procurement for travel payment, and virtual card rose to the top as a solution."
The first step was easy. Amaral made virtual card a minimum requirement for any payment provider to participate in the 2014 bid. Citibank won the business. Then the hard work began.
Amaral's vision to transition the state's travel payment process almost entirely to virtual card meant getting the governor involved with travel policy, digging into payment processes and training with 270 state agencies. Amaral ultimately also will integrate virtual card with the online booking tool.
Hotel payment topped his agenda, but to reap rewards from a payment effort, Amaral had to lay a solid foundation. Only 2 percent of hotel bookings were made through TravelStore, California's agency of record, and just 20 percent complied with the managed payment method. Amaral asked for, and got, a mandate from the governor to require employees traveling on the state's behalf to book through the agency or Concur. Today, hotel booking compliance is up to 70 percent, surpassing the industry average. What does that mean for payment?
Since virtual payment is initiated during booking, channel compliance is key. With a secure mandate, Amaral began California's virtual card pilot in November 2017 with Citibank's Conferma partnership. He enlisted 4,000 Department of General Services employees, including himself, plus a handful of smaller state agencies. For now, employees are required to call the agency to take advantage of virtual pay.
A successful pilot took some educating. "We trained in person at first," said Amaral. "We literally had to explain to executives what virtual payment is, but once you talk through the process, they realize they've seen it before." Amaral trained participants on Conferma's mobile app and how to refax authorization forms on the fly should the hotel need them when travelers arrive. "We honestly have not had problems, [at check-in]" said Amaral. And the pilot has delivered material benefits to the state.
Reduced reconciliation times is a big one. Each state agency's own accounting department manually matches traveler-submitted hotel folios to direct bill statements, often without names associated to the charges. With the pilot group, that process previously took 12 to 14 days, said Amaral. "With [Conferma's] SNAP reports, it now takes a few hours."
Virtual card has reduced cash advances issued to travelers for hotel expenses, which had become a common practice among state agencies to avoid long reimbursement times for employees. It has also pulled travelers away from using personal cards for hotel costs. Both of these changes will funnel more spend into the payment program, Amaral said. This will boost the state's rebate and drop those dollars back into the state's general fund, maximizing tax dollars.
The promise of virtual cards enabled the state to revamp qualification criteria for issuing individual bill, individual pay corporate cards. This has helped reduce cards in force from 17,000 to 900, slashing the state's exposure to card misuse or fraud.
Travelers, too, have benefited. "They no longer have to 'float' large business travel expenses for the state," said Amaral.
Amaral is working with TravelStore, Conferma and Concur to integrate virtual card fully, which will require many state agencies to reconfigure tools and processes. Most are on board. "We've implemented very few programs that California's agencies and travelers actually want. This one is different." Amaral is also eyeing virtual pay potential for air and car rental.