Finance & Resources Guidance Letter Ccwater FG5/2005
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Finance & Resources Guidance Letter CCWater FG5/2005 Date issued: 3 October 2005 Status: Mandatory Effective date: 3 October 2005 Updated: 30 September 2010 Government Procurement Card Expenditure Addressed to: All Staff Purpose: This Finance & Resources Guidance Letter explains how CCWater staff can purchase and pay for travel and subsistence, goods and services using the Government Procurement Card. Action: All Government Procurement Card holders. Contact: Usha Nayyar Finance & Resource Manager 0121 345 1023 e-mail: [email protected] CCWater FG5 GPC Expenditure 2005 [30 September 2010] Page 1 of 15 CCWater Government Procurement Card Expenditure CONTENTS 1 GPC SCHEME 3 INTRODUCTION 3 GPC BENEFITS 3 COST OF GPC 4 SAVINGS 4 CARD APPLICATIONS 4 CARD HOLDER NOMINATIONS 4 PROCESSING APPLICATIONS 4 AMENDMENTS TO CARD HOLDER DETAILS 5 USING THE CARD TO MAKE A PURCHASE 5 USING THE CARD TO MAKE INTERNET PURCHASES 6 EXCEPTIONS 6 CANCELLATIONS & REFUNDS 6 COMPLETING THE PURCHASING CARD TRANSACTION LOG 6 THE STATEMENT 7 ACCOUNTING FOR PURCHASING CARD EXPENDITURE 7 AUTHORISED SIGNATORY’S RESPONSIBILITIES 7 FINANCE & RESOURCES RESPONSIBILITIES 8 SAFEGUARDING THE USE OF THE CARD 8 SCHEME ADMINISTRATION 8 MANAGEMENT REPORTS 9 LEAVERS 9 LOSS/THEFT OF THE CARD 9 2 CONTACTS 10 CONTACT PEOPLE & USEFUL TELEPHONE NUMBERS 10 FINANCE & RESOURCES STAFF NOMINATED TO AUTHORISE CARD APPLICATIONS & AMENDMENTS 10 3 DETAILED FLOWCHARTS 11 CCWater FG5 GPC Expenditure 2005 [30 September 2010] Page 2 of 15 1 GPC SCHEME INTRODUCTION 1.1 The scheme to introduce Government Procurement Cards (GPC) across government departments and agencies was launched by the Paymaster General in October 1997. The aim of the scheme was to reduce the administration costs of low value procurement and improve the efficiency of purchasing across government. 1.2 The GPC has been developed as a mechanism for streamlining the clerical processing of low value transactions. A purchasing card can be used to buy goods or services in the same way that a personal credit card is used. Any establishment displaying the VISA symbol will accept the card. The cards are issued by Barclays Bank. 1.3 CCWater issue cards directly to staff whose role it is to order goods or services. The goods can be ordered without having to raise and input a requisition into the conventional purchasing system. Staff simply contact the supplier and order the goods directly, quoting their card number. 1.4 At the end of the month the bank issues a statement to each card holder showing all their transactions for the period in question. CCWater receives a consolidated statement covering all card holders and makes one payment to settle the account. 1. 5 In this way all card purchases by-pass the conventional order processing and payment approval system. 1.6 Important features of the GPC include the enhanced controls that can be applied and the management reporting facilities. Control mechanisms include: • A card holder single transaction limit; • A monthly spend limit; • A department spend limit; and • Blocking of spend by merchant categories. 1.7 The GPC has the full support of both Treasury and NAO. GPC BENEFITS 1.8 Benefits include: • Significantly reduced processing costs; • Less paperwork and administration; • Shorter delivery times; • Improved employee productivity; • Better controls; CCWater FG5 GPC Expenditure 2005 [30 September 2010] Page 3 of 15 • More flexible management information; and • Improved supplier relationships. COST OF GPC 1.9 CCWater has entered in to an agreement with a commercial bank to provide the GPC’s. Under the terms of the agreement the service is free. 1.10 The supplier pays a commission to their bank on each transaction. This charge is offset by much faster payment and reduced administration costs. SAVINGS 1.11 Fewer purchase orders, requisitions, bank payments plus reduced invoice processing and fewer invoice queries cut paperwork administration to a minimum. Independent research shows typical process savings of 60%. It is estimated that across government 1.5 million low value orders are placed each year. At a processing cost of about £70 for each order, this gives the potential for achieving significant savings. CARD APPLICATIONS 1.12 Cards will be issued to staff and Board Members who have a recurring need to purchase low value goods and services (single transactions below £3,000) and have the support of their budget holder to be issued with one. Purchasing cards will not normally be issued to: • Agency staff; • Casual staff; and • Permanent staff with less than 6 months service. 1.13 The issue of cards to these groups will be permitted in exceptional circumstances if there is a valid reason for doing so and the justification is fully documented. Cards come with significant responsibilities in their use and they will only be issued after training has been given. CARD HOLDER NOMINATIONS 1.14 The Procurement Card Nomination Form must be completed by the nominated card holder and their budget holder. The form should be sent to Finance & Resources who will approve the card holder nomination and the credit limits/merchant category usage. 1.15 Finance & Resources will set the transaction limit and monthly credit limit based on the card holders anticipated spend. PROCESSING APPLICATIONS CCWater FG5 GPC Expenditure 2005 [30 September 2010] Page 4 of 15 1.16 Once the nomination has been approved Finance & Resources will send the bank application form to the card holder for completion of personal details. The card holder must read the terms of use for the card before completing the form. The application form must then be returned to Finance & Resources who will complete the remainder of the form. 1.17 The bank will forward new GPCs to the Finance & Resources who will distribute cards to individual card holders. If the card holder is unable to receive the card it will be kept securely in Finance & Resources until the individual is available and the card holder can sign for receipt of the card. Cards will be sent to the CCWater by special delivery and should be signed by the card holder on receipt. AMENDMENTS TO CARD HOLDER DETAILS 1.18 The Amendments to Card Holder Details Form must be completed by the card holder and authorised by the budget holder. This form should also be used to inform Finance & Resources of any changes of card holder name. USING THE CARD TO MAKE A PURCHASE 1.19 CCWater has set a maximum transaction limit of £3,000. This means that no single transaction for goods or services above this amount can be purchased using a GPC. The transaction limit has been set at £3,000 to enable Corporate Services staff to centrally purchase goods and services on behalf of the office. The majority of card holder transaction limits will be lower. 1.20 When you need to make a purchase the card holder should: • Check to see if the total value of the purchase is within their single transaction limit and monthly credit limit. If the item exceeds the limit, then the normal purchasing procedures must be followed; and • Check if it can be sourced from a supplier, who is able to accept Visa. The card will be accepted wherever the Visa logo is displayed. The card holder should confirm with potential/existing suppliers if they are card capable. If they are not please notify Procurement who may request the supplier to adopt the system. (Failure by them to use cards may lead to CCWater buying from alternative sources). 1.21 If the intended purchase meets the above criteria, the purchasing card should be used to purchase the product or service. The card can be used for: • Point of sale (face to face with the supplier); • Telephone/verbal ordering; • Ordering by facsimile; • Ordering by Internet; • Booking forms/subscriptions etc; • Training courses; and CCWater FG5 GPC Expenditure 2005 [30 September 2010] Page 5 of 15 • Car park charges. 1.22 IT IS ESSENTIAL THAT all card holders maintain transaction records. Each transaction should be recorded as it is made on the Purchasing Card Transaction Log. USING THE CARD TO MAKE INTERNET PURCHASES 1.23 You can use the purchasing card to pay for goods or services ordered on the Internet as long as the site is using a secure communications link (usually displaying a locked padlock on the taskbar or the site’s address is fronted with “https”). EXCEPTIONS 1.24 Purchasing cards must only be used for legitimate expenditure incurred in the course of CCWater duties. They may not be used for private purchases of any kind, for fuel or for home to office travelling expenses for staff. 1.25 As a control mechanism, the following merchant categories will be blocked: • Cash withdrawal; • Fuel; and • Personal services. 1.26 Purchasing cards do not give the card holder the authority to circumvent any central call-off contracts nor do they give the authority to purchase commodities subject to central buying. CANCELLATIONS & REFUNDS 1.27 When a transaction is cancelled the supplier will process a credit, including the related VAT. A transaction record will be produced showing the credit and must be retained and submitted for authorisation in the same way as a normal transaction. The transaction must be clearly shown as a credit entry on the transaction log and the account codes to be credited shown against it. A VAT Credit Note should be obtained from the supplier. COMPLETING THE PURCHASING CARD TRANSACTION LOG 1.28 When you place an order you should record this on the Purchasing Card Transaction Log. The card holder should keep information on orders placed, receipts obtained and purchases made, etc. This will enable you to check that the monthly statement is correct, but also provide other information when required.