March 28, 2001
Paper for the copy machine: $25. Subscription to professional journal: $120. Registration for a professional seminar: $245. University purchases made without filing a requisition form and waiting for a purchase to arrive: priceless. The procedure through which goods are purchased by departments is changing.
Last month, the university launched the pilot program for a new university credit card designed to streamline non-capital purchases. The Purchasing Card enables authorized personnel to purchase many goods valued at less than $2,500 without going through the labor-intensive process of requisitioning, ordering and receiving.
"It's a more efficient way of conducting business for smaller-dollar transactions," says purchasing card administrator Steve Sovinsky, who has been working on the introduction of the Purchasing Card for the past four months. "The byproduct of that efficiency is a tremendous cost savings."
According to Sovinsky, the current process, with its series of requisitions and approvals, puts an unnecessary burden on personnel in the individual departments, purchasing and accounts payable. Each purchase has to be entered into the Tulane accounting system, a process that involves requisition, purchase order, invoicing, accounts payable review and disbursement of check. The process is the same whether the purchase is a brand new computer system or a box of paper clips.
"With the number of people involved, the labor cost sometimes outweighed the actually cost of the invoice," Sovinsky says. "With the high volume of transactions occuring, it's just not efficient to have so many activities involved with each purchase."
Authorized holders of the Tulane Visa credit card, administered by First USA Bank, will be able to purchase goods as needed in person or by phone, fax or the Internet. After a purchase is made, the purchaser logs on through the Purchasing Card administration Web site, where the transaction is reviewed and allocated to the appropriate general ledger accounts.
At the end of the monthly billing cycle, the university disburses a single check to cover all purchases made in that period. Although the individual card holder's name will be on the card, Sovinsky emphasizes that it is a corporate card and that no personal credit information is required of the user. In addition to using the P-Card for purchases from outside vendors, the card will soon be available for many interdepartmental transfers.
Certain types of purchases are specifically prohibited for purchase with the P-Card. It is not intended to replace the corporate cards currently issued for travel and entertainment expenses, and merchants such as airlines, car rental agencies and hotels are blocked from accepting the card.
Other prohibited items include alcohol, chemicals, consulting or personal services, gasoline, honoraria, leases, maintenance agreements, cash advances, and personal or non-university purchases. Sovinsky hopes the card will allow the purchasing department to focus on improving pricing agreements with vendors and customer service to university faculty and staff.
Currently, the card cannot be used for grants, but Sovinsky says plans are to roll out grants on a test basis with the universitywide rollout in the coming months and to add grants to the list of authorized transactions shortly thereafter.
"A large number of universities are doing this, from the largest to the very smallest," he says. "It goes along with greater personal accountability. The expectation is that people will do their job right. You need to have adequate controls in place, but at the same time, employees should be given the flexibility to place orders and arrange for receiving on their own authority. With this authority comes the responsibility for securing the card and properly reviewing and approving transactions prior to settlement."
Training for the pilot group of Purchasing Card users began last month. Sovinsky attributes much of the implementation's success to the joint efforts of accounting, TIS and the Project Managment and Technology Group. Sovinsky anticipates a universitywide roll out over the next several months. Department heads interested in obtaining a purchasing card can sign up online at the purchasing card's Web site, http://www. tulane. edu/~pcard.
Tulane University, New Orleans, LA 70118 504-865-5000 firstname.lastname@example.org