Paper to Electronic - Card

1. Paper to Electronic - Card GFOA Conference August 2012│ Tucson, AZ

2. Bank of America David A. Randolph, Vice President • Card Account Manager • Southwest Government • 602.523.6996 • David.a.randolph@baml.com Experience • 16 Years with Bank of America • 10 Years within Treasury / Card • State , County, City, Higher Education, School Districts, and Commercial Clients

3. City of Chandler Sharon Brause, CPPB, CPCP • Procurement Officer • 480-782-2407 • Sharon.Brause@ChandlerAZ.gov Experience • 20+ years in the Public Sector • 14 years in Banking Industry

4. Bank of America – National Card Portfolio Overview Traditional Payments Paymode - X Suite ePayables Commercial Cards • Over 52 years of experience in the Card industry, beginning with Bankamericard (Visa) • Provide Card solutions to about 12,000 companies with an annual corporate card volume of about $24 billion • Created the first dedicated vendor enrollment team to enroll your trading partners into ePayables • $300MM 18-month Global Treasury investment, (e.g. Push Payments, Receipts Imaging, Global Card, Works) Purchasing Card Travel Card Pre-paid (incentive) ePayables Card Shuffler Push Pay Paymode - X Paymode – X + Paymode – X eInvoicing Check Wire ACH • Achieved 15% in Card portfolio growth in 2009 • Achieved 31% in Card portfolio growth in 2010* • Achieved 13% in Card portfolio growth in 2011 • *Above standard industry growth rates

5. Bank of America – Arizona Card Portfolio • Provide Card solutions to approximately 28 organizations in AZ • 2010 annual Card volume of about $53 million • 2011 Jan – Oct Card volume of about $68 million • Estimated 2012 total volume $78 million • AZ Public Sector Group - City of Chandler • Purchase Card Program – September 2000 • ePayables Program – March 2009

6. Payments Evolution How does Card compare? 1

7. Payments Evolution

8. What is a “Purchase” Card? 1

9. What is a “Purchase” Card? • Payment Tool – Not simply a credit card • Based on standard, Visa/MasterCard credit card • Provides enhanced Internal controls & reporting • Includes technology to streamline your purchasing process • Purchasing Cards are given to employees to acquire goods and services for their organization • Used to pay Accounts Payable invoices through ghost card application • Central bill/central pay/corporate liability • Most public and private organizations have Purchasing Card programs

10. Associations (Visa/MasterCard) Total Systems (TSYS) Merchant Works / Reporting Transaction Flow Authorization

11. Why Purchase Card? 1

12. Question: Why Purchase Card? Answer: Smart Spending • Reduce costs associated with traditional fee-based payment types • Typically, 80% of transactions only represent 20% of total dollars spent • Streamline purchasing and payment procedures through less paperwork and processing time • Reduce the administrative burden

13. Question: Why Purchase Card? Answer: Smart Spending Purchasing cards deliver savings of 76% over traditional purchase orders (POs). Purchasing cards eliminate 6.3 days from the procure-to-pay process. $89.21 9.26 Savings Savings $67.38 6.3 days 2.96 $21.83

14. Question: Why Purchase Card? Answer: Smart Spending • Provides cash payout incentive when rebate terms met • Rebate payout based upon current annualized program spend • Calculation: Annual program spend x .0117 (117 BPS) • Program Volume: 2,000,000 x 117 BPS = $23,400 rebate • Extends float and allows for more accurate cash balance tracking • 1099 Relief • The combination of Regulations issued in August 2010 along with a Notice released in December 2010 means that card transactions are no longer subject to IRS reporting and withholding rules • Check transactions in 2011 and 2012 remain subject to the same rules as before • The planned expansion of reporting for check transactions has been repealed • IRS Resources: http://www.federalregister.gov/articles/2010/08/16/2010-20200/information-reporting-for-payments-made-in-settlement-of-payment-card-and-third-party-network

15. Question: Why Purchase Card? Answer: Smart Spending • Authorization Controls • Merchant Category Code Blocking • Dollars per transaction, month, billing cycle or day • Number of transactions per day, month or billing cycle • Pre-purchase Approvals • Accountability • Ensure cardholders account for all spending • Ensure managers are aware and accountable for their employee spending • Audit Reporting • Visa/MasterCard Liability Protection….

16. Visa Liability Waiver Program • Visa’s misuse protection program is automatically provided with all Bank of America purchasing card programs and comes free of charge to AZ entities. • In the event that abuse occurs, members will be protected. • This coverage will be subject to the terms and exclusions of the misuse protection program • The Visa Liability Waiver Program protects members against eligible losses that may be incurred through card misuse by a terminated employee • This coverage is included on all Bank of America Visa Corporate Card programs and based on the terms of the program will provide up to $100,000 reimbursement of eligible losses per cardholder. • The Visa Liability Waiver Program applies to all transaction types • Internet • Mail Order • Telephone Order • Face to Face • Ghost Accounts • Department Cards

17. Card Evolution Why Automated AP Card? 1

18. Question: Why Automated AP Card? Answer: Smart Spending • Benefits to you: • Elimination of expenses associated with check i.e. printing, mailing, bank fees, fraud, etc • Extends float and allows for more accurate cash balance tracking • Provides cash payout incentive when rebate terms met • Program Volume: 10,000,000 x 117 BPS = $117,000 rebate • Incorporates into current AP process • Provider support for vendor enrollment • Benefits to your vendors: • Converts the payment to electronic settlement thereby eliminating processing fees (internal and/or bank analysis charges) associated with accepting a check • Removes the mail float and funds availability factors from the collection process • Electronic delivery of the remittance information • Avoid giving out sensitive account number information

19. Question: Why Automated AP Card? Answer: Smart Spending

20. How to Get Started….. 13

21. How Do I Get Started? • Consultation • Talk to a financial institution to understand: • Commitment for Card • Experience in AZ • Tools offered to manage a Card program • Additional services (Declining Balance Cards, Automated AP Card solutions, Receipt Imaging Services) • AP Analysis • Pick a project……. • Agreements & Credit • Consortiums / Public Sector Groups • Internal Support • Finance, AP, Purchasing, IT • Implementation • Implementation Engineer • In depth understanding payment processes, GL chart of accounts, Organization structure, Reports, GL Export file • Training

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23. Thank you!David A. Randolph602.523.6996david.a.randolph@baml.com 13