GSA SmartPay2 Basic Charge Card Payment Reconciliation

1. GSA SmartPay2 Basic Charge Card Payment Reconciliation Perry Hampton Bradley Forrestel Office of Charge Card Management (OCCM) 12th Annual GSA SmartPay Training Conference August 10 – 12, 2010

2. Agenda • Program Background & Basics • The Importance of Payment Reconciliation • General Payment Reconciliation Step-by-Step Process • General Payment Reconciliation Best Practices • Resources • Questions

3. Value to the customer After this course, participants should be able to: • Identify ways to improve payment reconciliation processes at your agency/organization • Understand how to apply payment reconciliation best practices to your charge card program • Collaborate with payment reconciliation experts who provide information/tools for enhancing payment reconciliation

4. Program Background & Basics

5. Polling the Audience • How many audience members are: A. Level 1 A/OPCs B. Level 2 A/OPCs C. Level 3 A/OPCs D. I’m not an A/OPC E. Unsure • Is your role as an A/OPC your: A. Primary Duty B. Collateral Duty C. Not Applicable ?

6. Polling the Audience • How many audience members are new to the GSA SmartPay Training Conference this year? A. Yes, this is my first year B. No, I have attended before • What business line are you affiliated with? A. Purchase B. Travel C. Fleet D. All E. Unsure ?

7. GSA SmartPay2 Program Overview DID YOU KNOW… $943 was spent using Federal charge cards every second in FY09 • Enables over 350 Federal agencies/organizations to obtain charge card products and services through master contracts thatGSA established with three banks: Citibank, JPMorgan Chase, and U.S. Bank • Agencies/organizations issued task orders against these master contracts to obtain charge card products and services • Agencies/organizations pay no direct fees to use the program • Period of performance for existing contracts is through 2018 7

8. Office of Charge Card Management • Provide a comprehensive and flexible master contract • Offer strong customer orientation and frequent customer contact/support through: • Test and share best practices • Engage in continuous market research and regular meetings with industry • Deliver “Beyond Plastics” strategy and conferences • Provide balanced customer advocacy and program leadership • Training workshops, guides and GSA SmartPay Annual Training Conference 8

9. The Importance of Payment Reconciliation

10. Benefits of Payment Reconciliation Why Reconcile?...especially if the invoice/payment Is automated? • Avoid out of balance conditions between agencies/ organizations and issuers • Maximize refunds by ensuring payments are accurate and timely • Identify problems quickly and act upon them • Avoid hidden delinquencies • Frequent reconciliations lead to smooth program close-out • Reconciling frequently is a best practice 10

11. Reconciliation Issues • Payment made to the wrong account • Checks recorded as a lesser or greater amount than what was presented to the bank • Balance transferred to the wrong account • Payments taken from the bank account without the agency’s/organization’s knowledge • Rolling balances – payment is applied to oldest balance first • Documentation is not retained, or lost • Payments posting to the transaction account versus the central account 11

12. Payment Reconciliation step-by-step process

13. Traditional Payment Reconciliation Process Flow • Account management and reconciliation process flows vary among agencies/ organizations due to different organizational structures, roles/responsibilities, and established policies/procedures 13

14. Polling the Audience • How does your agency/organization perform payment reconciliation? A. Through an automated system B. Through a manual system C. Through a system that is automated, but includes manual components D. I don’t know ?

15. Polling the Audience • For those who use a manual system, how long (on average) does it take for your agency/organization to perform payment reconciliation? A. 1 – 7 Days B. 7 – 14 Days C. 14 – 30 Days D. 30+ Days D. I don’t know ?

16. Polling the Audience • For those who use an automated system, how long (on average) does it take for your agency/organization to perform payment reconciliation? A. 1 – 7 Days B. 7 – 14 Days C. 14 – 30 Days D. 30+ Days D. I don’t know ? Depending on A/OPC diligence, automated processes generally takes less time than a manual process (several days to several weeks, rather than months)

17. A/OPC Sends invoice report to Payment Office for payment SP2 Contractor Bank Sends invoice to A/OPC A/OPC Reviews bank invoice A/OPC Reconciles and verifies transactions Payment Office Certifies report and makes payment Sample Timeline - Payment Reconciliation Process Flow (Manual) Sample timeline • Sample TOTAL TIME: 12 - 30 days • Manual reconciliation process takes several weeks up to a month or more • Manual processing for payment reconciliation is a common practice and can be cumbersome by nature • Potential risk of human error in manual processing could delay payments 17

18. SP2 Contractor Bank Sends invoice to A/OPC A/OPC Reviews bank invoice in automated system and sends to Payment Office for payment Payment Office Certifies report and makes payment Sample Timeline - Payment Reconciliation Process Flow (Automated) • Sample TOTAL Time: 6 – 18 days • Depending on A/OPC diligence, automated processes generally takes less time than a manual process ( 6 – 18 days versus 12 – 30 days) • System automation and increased training helps to improve and streamline the payment reconciliation process • Success is highly dependent on the diligence of individual A/OPCs and availability of time devoted to payment reconciliation Sample timeline 18

19. Polling the Audience • True or False: there are penalties for delinquent accounts that are not paid on time. A. True B. False ? ANSWER: TRUE. According to the Prompt Payment Penalty Act (PL 97-177), there are penalty implications for not reconciling in a timely manner, which can lead to delinquent accounts. Did you know…The frequency of payment reconciliation greatly reduces the risk of delinquencies.

20. Penalties • The Prompt Payment Penalty Act (PL 97-177) states that interest penalty must be paid if payment is not made within 30 days of receiving a proper invoice • Agencies/organizations are required to pay the interest rate under criteria established by the Renegotiation Act (PL 92-41) • There are penalties for delinquent accounts, and the frequency of payment reconciliation greatly reduces the risk of delinquencies 20

21. Late Payment Penalty Letters • Required to pay off outstanding balances on government accounts within 30 days of their due date • The date stamping of invoices is a key step in determining the prompt payment status of an account • This largely manual process can be inconsistently practiced, leading to uncertainty and/or disputes about when interest payments are due and the period used to calculate interest • When payments are not made in a timely fashion, interest penalty letters and non-payment interest claims may be generated • Interest accrues on accounts starting 31 days past the prompt payment start date based on the Applicable Federal Rate (AFR)* • Interest penalty letters are generated by the bank (timeline for generating interest penalty letters vary depending on agency/organization) • Non-payment can place agencies/organizations at financial and legal risk *Applicable Federal Rate (AFR) refers to the interest rate published by the US Treasury to calculate imputed interest charges 21

22. Polling the Audience • Does your agency/organization have a Prompt Payment Act (PPA) process established? A. Yes B. No C. I don’t know ? Did you know…establishing a Prompt Payment Act (PPA) process at your agency/organization is a best practice.

23. 31 Days 61 Days 120 Days 180 Days 210 Days Account Delinquent Initial Penalty Letter Final Penalty Letter Bank Files Claim Bank Accrues Interest Sample Penalty Letters and Claims Monitoring Process • Note: the PPA process can differ among agencies/organizations depending on the established policies and procedures they have with their SP2 contractor bank • Agencies/organizations with a strong PPA process have a greater change of alleviating a non-payment interest claim to the government 23

24. General Payment Reconciliation Best Practices

25. Best Practices • Reconcile frequently – ideally weekly, but at least once a month • Reconcile interface files/mappers* to statement invoices • Confirm payment by Designated Billing Office (DBO) and generate invoice status reports • Review payment reconciliations to ensure agency/organization and bank records agree • Notify GSA SmartPay2 contractor bank of disputes as quickly as possible, and monitor the status of disputed transactions • Contact your GSA SmartPay2 contractor bank to learn about the tools they provide you with to assist in the payment reconciliation process *Mappers are used in JPMorgan Chase’s PaymentNet system and can be customized. For more details, contact your JPMorgan Chase account manager 25

26. Reconciling interface files/mappers to statement invoices • If paying based on cycle date (once per month), compare mapper file to statement/invoice • Generate Account Statement and Summary Report • Notify issuer of any discrepancies • If paying semi-monthly, weekly, daily, etc., reconcile mappers to statement/invoice generated at cycle • Ensure totals match including dollar amount and transaction counts • Notify issuer of any discrepancies • Confirming payment • Generate Invoice Status Report • Confirm Payment and follow up with Designated Payment Office 26

27. Managing Disputes To avoid reconciliation issues when managing disputes, agencies/organizations should allow the dispute process to work as designed: • Under the GSA SmartPay2 Master Contract, cardholders must notify the issuer of dispute within 90 calendar days from the transaction date • The bank provides a temporary provisional credit for a charge that is under dispute while the bank simultaneously researches the dispute; upon resolution: • If dispute is settled in favor of the cardholder the provisional credit(s) remains issued to the account • If dispute is settled in favor of the merchant, the provisional credit(s) is removed and the bank will bill the cardholder by applying a debit transaction • Avoid deducting disputed transactions from the balance due as provisional credit will be or has been issued • Note: refer to your agency/organization policies on the process for reconciling disputed transactions 27

28. Resources

29. General Resources • GSA SmartPay Website: www.gsasmartpay.gov • For a listing of definitions as they related to the Master Contract, see section C.1.4 Definitions (available on the GSA SmartPay website) • Federal Acquisition Regulations (FAR): www.acquisition.gov/far • Agency/organization specific policies and established procedures • Bank Contact Info • Citibank: http://www.cards.citidirect.com/welcome.asp 1-800-790-7206 (customer service) • JP Morgan Chase: https://www.paymentnet.com/Login.asp 1-888-297-0781 (customer service) • U.S. Bank: https://access.usbank.com/cpsApp1/index.jsp 1-888-994-6722 (customer service)

30. Other Reconciliation-related Courses being offered at Conference • Reconcile Now, Relax Later (JPMorgan Chase) • DTS (Defense Travel System) CBA Reconciliation Module Training (Citibank) • CBA Reconciliation (U.S. Bank) • Department of the Navy (DON) Purchase Card – Managing Delinquencies and Credit Balances (Citibank) • Delinquency and Dispute Management (U.S. Bank) • WEX Online Data Analysis Reporting Tools (Citibank)

31. Other GSA SmartPay Courses being offered • GSA SmartPay2 Purchase Card Basics • GSA SmartPay2 Travel Card Basics • GSA SmartPay2 Fleet Card Basics • GSA SmartPay2 Master Contract Basics • GSA SmartPay Program Update • GSA SmartPay in More than One Flavor: Innovative Products & Services • Effective Oversight of Your GSA SmartPay Program • Navigating the GSA SmartPay Website

32. Question & Answer Session

33. Thank you! Contact Us Perry Hampton, perry.hampton@gsa.gov Bradley Forrestel, bradley.forrestel@gsa.gov GSA SmartPay Program Support Phone: (703) 605-2808 E-mail: gsa_smartpay@gsa.gov www.gsasmartpay.gov 33