Stanley Steemer International Inc., a carpet cleaning company with $117 million of 2003 revenues, provided its 50 company-owned branches with procurement cards to make it easier for them to buy the supplies they needed. Now, in its second year of using the cards, Stanley Steemer has found that they not only make life easier for its branch managers, but also save its accounts payable staff a considerable amount of time.
To date, Stanley Steemer has moved $3.5 million, or about 3.5% of its total spending, onto the cards, and Corporate Controller Joel Karg calls that "the tip of the iceberg." He predicts that the cards will eventually handle 10 times that much spending. "We've encouraged [branches] to put whatever they can on the cards," he says.
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Before getting the procurement cards, branches had to gather paper invoices from their suppliers, attach general ledger codes to each and mail them to headquarters to be paid. Now, branch personnel just go online once a week to key in general ledger codes for each transaction. Once they've done that, "we upload the entire file into our accounting system," Karg says. That eliminates not only the check cutting, but also all the rekeying of purchase data that the A/P department used to have to do. Karg says the time saved by not having to rekey is one of the biggest benefits of the cards.
While he can't quantify the time saved, Karg says that before Stanley Steemer adopted the cards, the two-and-a-half employees in accounts payable were hard-pressed to get all the outgoing checks processed. The use of purchasing cards changed all that, freeing them to do more analysis, he says. "That's the type of thing I'd rather have them spend their time on–looking for things that don't seem right and flagging that to my attention," Karg concludes.
The change doesn't save that much time for branch managers. But they're happy to have more control over purchases and quicker payment for suppliers, Karg says. "We had folks who were running multimillion [dollar] businesses who didn't have purchasing power aside from petty cash." Before they had p-cards, branch managers at times were forced to put urgent expenditures, such as truck repairs, on their personal credit cards–a practice that complicated the A/P department's work and was not appreciated by the managers.
Stanley Steemer's increasing reliance on p-cards is part of a trend among midsize companies over the last two years, according to William Newman, head of commercial cards for global treasury services at Bank One, the bank supplying Karg's cards. While initially big companies were primarily the ones to employ procurement cards, Newman says that mid-market companies have begun to discover their efficiencies. He attributes that partly to mid-market managers' growing comfort with the controls on the cards. Karg, for instance, notes that the controls on Stanley Steemer's MasterCards, which include per-day and per-cycle limits, are tight and have contained the company's losses the couple of times that cards turned up missing. At the same time, there's flexibility: The company can "bump up a limit, if a person has a big transaction coming through, and then reset the limit," he says.
From Karg's viewpoint as controller, the information from the cards gives Stanley Steemer the edge when in negotiations with vendors. And he expects to collect even better data when Stanley Steemer migrates this year to a MasterCard platform that provides 100 different reports.
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