For many agencies, the vast majority of purchasing transactions account for a relatively small percentage of total spending. Seventy-five percent of the State's payments that are credit card eligible are under $500. Forty-seven percent are under $100. Twenty-six percent are under $25. There are literally hundreds of vouchers processed each year that are under $1. Believe it or not, there are checks written for payments of less than $1. We've even had a 1¢ payment.
American Express did a study that estimates it costs $67.20 to process an invoice for payment under the traditional purchasing process, while it costs $10.53 with a purchasing card. Obviously, it is in the State's best interest to increase use of more cost effective payment methods and to avoid the expenses associated with the State's traditional voucher payment system.
Using a State purchasing card requires managers to put in place control systems that replace the purchase requisition, purchase order, receiving report, invoice and voucher documents necessary for the State's traditional purchasing process. Spending limits can be set and budgets should be assigned to individuals with purchasing cards, training should be provided on purchasing guidelines and a monitoring function needs to occur monthly based on electronic or hard copy information provided by the credit card company.
The State Comptroller's Office is ready to assist you with training to help you put in place an internal control system for State purchasing cards. In addition, during the coming months, we will be asking State agency managers to develop and implement small dollar payment procedures using one of the following preferred payment methods for small dollar purchases:
- Purchasing cards
- Travel cards
- Petty cash or travel advance accounts for items that cannot be paid with a credit card.
We are also ready to provide you with information regarding your past purchasing patterns so you can see a summary of your agency purchases by dollar levels.
Working together, we can increase the economy and efficiency of the State's purchasing and payment process, improve internal control systems and allow State employees the opportunity to make required small dollar purchases in a cost-effective manner; as well as to expedite payments to State vendors.