Quality and Productivity Database

Descriptive Title of Proposal: Show Me The Money! (Turning AP into a Profit Center)
Year Submitted 2016
Awarded 2nd prize (Themed Category)
Person(s) Responsible for the Idea
Name Title
Terri Wetton Senior Manager, Accounts Payable
Dee Henne AVP (Administration) and CFO
Name of Institution McMaster University
Office Address 1280 Main Street West
Hamilton, Ontario L8S 4L8
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Telephone: 905-525-9140 x24942
Email Address: Email hidden; Javascript is required.
Name (Senior Administrative Office of the Institution) Roger Couldrey
Title (Senior Administrative Office of the Institution) Vice-President, Administration
Office Address 12BO Main St. W.
Gilmour Halt Room 202
Hamilton, Ontario L8S 4L8
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Telephone: 905-525-9140 x24755
Email Address: Email hidden; Javascript is required.
Abstract

Show Me The Money' is an innovat~ve project implemented by McMaster University focused on reducing expenses, reducing administration payment processing time, mitigating risks and providing an opportunity to turn Accounts Payable into a profit center earning cash rebates.

Many publicly funded institutions are experiencing declining revenues and increasing expenses. For Universities this is evident in reduced Provincial Government funding, a declining University age population and growing alternatives.

With a student and staff population of over 30,000 at IVlcMaster, we began looking for revenue opportunities to address our increasing expenditures. How could we grow revenue without increasing costs and fees borne by students? Our goal: look for creative ways to increase revenue without impacting the student experience. We, Accounts Payable, focused on how we pay our bills as this opportunity.

In December 2013 we migrated to PeopleSoft, our ERP. As part of the resulting process changes, we rolled out the required use of the Procurement Card {PCard) to virtually every faculty and department for purchases valued less than $10,000. This transition change resulted in increased PCard vendor rebates immediately.

In 2015 we created a subsequent project to increase our PCard rebate capability even further. We obtained virtual PCards used by Accounts Payable to pay purchase order invoices in lieu of cutting cheques. Partnering with Strategic Procurement we contracted a favourable PCard rebate program and identified potential supplier payments targeting high dollar purchases for the initial phase.

Since starting the project we have increased the rebate we receive from our credit card provider by 150% (and climbing).

Criteria Please submit one paragraph describing how the proposal fulfills each of the evaluation criteria.
Transferability

This solution can be applied to any institution that participates in a corporate procurement card program that realizes rebates or incentives with little impact on how their Accounts Payable department functions. Where an institution does not already use a procurement card program an existing Ontario Education Collaborative Marketplace rebate program is available to be leveraged.

Quality Impact

In the fall of 2013, our contract expired with our credit card provider, Bank of Montreal. We learned that OECM (Ontario Education Collaborative Marketplace) had gone to tender for a PCard provider. BMO was the successful bidder. As we had a relationship with BMO for many years we felt this was a good fit .We accepted the terms of the OECM agreement and signed on with BMO.

The rebates in the agreement are tiered and based not only on our performance but also the spend volume of all OECM members who adopted this contract. The rebates and based on several components; spend volume of the consortium, our programs spend, our settlement days, and the average per card spend.

Two years after implementation the rebate from the PCard program has grown significantly. The program is supporting an opportunity to earn revenue to support our business goals and objectives.

The project also supports our cash management objectives by providing a monthly scheduled debit to our bank account as opposed to daily cheque runs. We have control and visibility over the transaction.

Productivity Impact

Since implementing this program in 2013 our rebate has reflected a 150% increase. Each year the PCard program and subsequent rebate grow; 2013/14 we received $99,600, 2014/15 the rebate was $249,900. We are conservatively projecting a rebate of $310,000 for 2015/16.

Innovation

This project is a radical departure from the traditional approach used by Accounts Payable to pay suppliers via cheques and/or EFTs. Paper cheques can be susceptible to fraud and EFTs may not translate into a discount or rebate for the institution. This project demonstrates the ingenuity and collaborative efforts of Accounts Payable and Strategic Procurement to develop a process that mitigates risk, reduces expenses, generates revenue while not impacting the student experience or adding additional resources to existing infrastructure.