Accounts Payable News^®

Functional Requirements for European Public Sector - Government Payment Card and Purchase-to-Pay Solutions - by Tom Wilson (Appropriate Fit Procurement)

Introduction
The  purpose of this document is to provide an overview for European Public Sector Buying Organisations to assist to establish evaluation criteria when considering the selection of Payment Card Providers, schemes and purchase-to-pay solutions. The EU Consolidated Directive and legislation for European nations requires a rigorous and robust approach to the competitive procurement of payment cards providers for Government Procurement Card Programmes.

Background : i2010 eGovernment Action Plan: Accelerating eGovernment in Europe for the Benefit of All

The Action Plan focuses on major objectives for eGovernment with specific objectives for 2010 :

• Making effectiveness and efficiency a reality
• Implementing high-impact key services for citizens and businesses, procurement will be available electronically with 50% actual usage

Member states expect eGovernment to contribute and significantly lighten the burden on businesses. Moreover, the public sector should achieve considerable efficiency gains as well as increasing transparency and accountability through innovative use of ICT by 2010.

A high level of the take-up of eProcurement is therefore highly desirable. Member States have committed themselves to giving all public administrations across Europe the capability of carrying out 100% of their procurement electronically.

Mandatory and desirable requirements for Member States and Public Sector : Government Procurement Card Programmes to ensure compliance to EU legislative requirements.

A range of payment cards to provide e-enabled payment solutions for the wide range of goods and services which Member States and public sector organisations purchase. The payment cards should address various commodity categories and services which public sector organisations purchase. Commodity categories are groupings of similar goods and services which are commonly purchased across public sector organisations. The following procurement cards will meet the needs of public sector buying organisations : Corporate Cards, Lodge Cards, Fuel Cards and Prepaid Cards.

“A Multi purpose prepaid card is a stored value card which can be used for a wide range of payment purposes and which has the potential to be used on a national or international scale, but which sometimes may be restricted to a certain area.” – Definition from the European Central Bank

The inclusion of Small and Medium-Sized Enterprises (SMEs) is a key core requirement for the European Public Sector and Member States.

Government Procurement Cards make administrative savings. The Public Sector Buying organisations want to import bank files into the ERP payables to allow for automatic payment for the transaction. The objective is to streamline the process to ensure efficiency and effectiveness by minimising the manual intervention required and eliminate low value and mid-value paper invoices. The basic business needs would be :

1) To receive invoices / statement details electronically ;
2) To allow the invoice / statement lines to be coded individually to one or more account codes ;
3) To pay the invoice without requiring manual entry of the invoice / statement ;
4) To drill down from the general ledger for individual details

An industrial robust web-based reconciliation and auto-matching tool is required. Scalability to upload finance data onto general ledgers for the wide range of public sector buying organisations. Transparency and auditability is also a major European public sector requirement.

Desirable requirements in looking forward

Innovation is of major importance. Consideration should be given by Member States and Public Sector Organisations to product developments and product roadmaps in looking forward for 1 – 3 – 5 years.

A move to the standardisation of electronic file formats is important when considering the desirable requirement of interoperability. Innovation around the entire procure to pay chain is desirable.

Effective programme management and implementation support to ensure that the Government Procurement Card Programme is successful through meeting throughput and efficiency targets. With Project Initiation Documents and Project Plans to ensure appropriate governance.

Functional requirement specification to ensure compliance to EU public sector procurement requirements and national legislative requirements

• Identify innovative card products software which meet European public sector needs (hierarchies /
• approval routings / compliance / control / budget control)
• Security : a secure purchasing card system
• Maximise process benefits and administrative cost savings
• Standard management information reports in a timely manner
• Seamless integration in a scalable manner to upload the electronic bank file onto the general ledger of the ERP (Oracle, SAP) or Finance Mangement System (Agresso etc)
• Greater compliance
• Enhanced authorisation controls
• Flexible transaction routing and budget allocation
• Part of a purchase-to-pay eco-system

Due diligence and Total Quality Management Methodology required for an excellent Government Procurement Card to meet the needs of the Member States :