<B>One-Cards Crawling Along</B>
By Lynn Woods
Initial excitement about the advent of "one-card" programs--in which a company's separate T&E, purchasing, and fleet cards are rolled into one piece of plastic--has cooled considerably in the past year. In a survey last fall by GE Capital, only 11 percent of the 72 respondents reported having one-card programs, and fully 62 percent were not even considering merging their cards.
The main stumbling block to one-card programs is the back-office integration they require. "A lot of clients have T&E managed one way, in terms of settlement and payment, and purchasing another way," said Rob Abele, president of corporate payment systems at US Bank.
Nonetheless, corporations still are seeking ways to streamline inefficient, redundant processes in their card programs, and a major "one-card" movement is well underway. Rather than throw out the old cards and redo their practices and back-office systems for a new program, a number of firms are expanding their use of T&E cards to include types of expenses typically reserved for purchasing cards, and vice versa.
"We're seeing more customers stretching their card utility," said Cindy Smith, senior vice president of client relations at Paymentech. "They're looking to streamline, to make things easier, to get data in one place. By allocating to general ledgers in a more sophisticated way, they can speed up the whole process." One sign of the shift: More companies are taking liability for T&E, she said.
One company that has gone the route of full liability for its corporate card is Burlington Coat Factory, based in Burlington, N.J. It is issuing new Paymentech T&E cards to its 300-plus store managers, doubling the total number of cards. The store-based cards replace cumbersome checking accounts maintained by each store manager for purchasing supplies. With the elimination of the costs of maintaining the accounts and the check-processing fees, "the soft savings will be great," said operations manager Audrey Wargo, "and there'll be fewer hassles as well."
Initially, the cards will have a monthly spend limit of $1,000, though this may well be increased over time. Cards used by travelers have much higher limits.
Because certain merchant codes on both the store cards and the standard T&E cards are blocked, travelers can't use their cards to purchase office supplies, and store managers can't use theirs for travel. Only the five Paymentech cards that Burlington Coat maintains in its corporate office can be used for both T&E and purchasing.
Although Burlington Coat pays the bank by wire service rather than electronically, Wargo said all card accounts are coded and maintained on the Internet, making them easy to manage. As a precaution related to Y2K concerns, currently Wargo pulls down each bill from the Internet and prints it out for the bookkeepers, who check each line item. Eventually, however, the process will be completely electronic, with receipts stored at each store location.
Wargo is so happy with the program that she'd like to see even more flexibility. Now, if there's a special event that would entail a huge increase in expenditures, Wargo has to e-mail or phone the bank to increase the spending limits of a card, but she'd prefer to be able to do it herself online.
Smith said that in many instances, expanded use of a corporate or purchasing card by a client is a transition to a true one-card program. Heilig-Meyers, a furniture retailer based in Richmond, Va., began to use its Paymentech purchasing card for T&E expenses in March 1998, and phased out its American Express corporate card last November.
Last month, Heilig-Meyers began issuing the purchasing card--now functioning as a true one card--to its fleet managers. It currently has 433 active cards in use. Procurement card administrator Tammy Tickle said the change has resulted in a 15 percent reduction in invoices, exceeding the company's expectations.
Another benefit: "We have stronger controls than in the past on cash advances and checks," Tickle said. Corporate liability for the card hasn't been a problem, in part because the firm puts different limits on card usage. Fleet managers, for example, can't use the card for purchases in hardware stores.
Whether or not they ultimately plan to adopt a one-card solution, many firms are expanding the use of their T&E or purchasing card for special needs that otherwise would get bogged down in delays or extra paperwork. For example, it's more efficient for salespeople to put a client's product-buyback charge on their T&E card than to have it go through a lengthy approval process on the procurement department's purchasing card, Abele said. "Most retailers operate at small margins. The need to settle on the spot is key."
Besides retail firms, utility companies also often resort to expanded use of T&E or purchasing cards. Kansas City Power & Light, for example, relaxes the restriction on merchant category codes on T&E cards in instances where emergency crews are called out to restore power following a storm.
On such occasions, "We'd increase the cash withdrawals and cash advance limits on the corporate cards of crew leaders," said credit card coordinator Roseann Rice. "We don't want our crews wasting time looking for a restaurant [that meets the per diem requirements] when their main task is to get the lights on." In cases where crew directors don't have a T&E card, meals might be charged on their procurement cards, she added.
But at least one card provider--American Express--discourages such use of its T&E cards in this way. "Nine times out of ten, if a client is using a T&E card and is interested in expanding it, we recommend they get a purchasing card, because it collects data in better detail and includes important merchant categories," said spokesperson Melissa Abernathy.
For example, because state tax authorities are interested in sales tax, it's important for the purchasing card to break out in a separate box whether the sales tax was collected or should be collected," Abernathy said. If a T&E card were used, "the company would need a receipt and have to keep a separate log" of the expense. Such requirements undermine the whole purpose of corporate card programs, which is to save paper and time, she added.
However, Smith and Abele said it was customer demand that was driving their extended-usage card programs. Still, in order for such programs to work, it's essential for clients to communicate their special needs to the bank, Abele said.
The main reason is that individual liability of T&E cards puts the bank at greater risk when cardholders are allowed to add, say, $1,000 worth of charges to the card. To cut down on that risk, the bank might consider shifting card liability to the corporation. Or it could strip off charges under certain code classifications.
One client that worked out a special arrangement with US Bank was Freeport, Maine-based L.L. Bean. While the majority of its 700 cardholders only require the card for traditional T&E expenses, the 25 employees who spend weeks on the road working on photo shoots for the company catalog have found the easiest way to pay for expenses was to use their T&E cards.
"Generally, the bank would have closed those merchant category codes on the card," said Cindy Tucci, L.L. Bean's corporate service administrator. But after communicating with the US Bank account manager, she set up higher spending limits for the catalog crew. On the other hand, since those cards retain individual liability, the bank strips off the hotel and air charges.
"You could easily rack up tens of thousands of dollars in hotel charges for a month for the 10 to 20 people on the shoot," she said. "This helps keep the limit down." All costs incurred on the card are routed to the company's catalog cost center, and Tucci said abuse has never been a problem.