Targets rise for procurement cards

6 January 2000
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06 January 2000 | David Arminas

The Treasury has raised the stakes for its procurement card scheme by trebling the target spend for 2000.

It wants £55 million-worth of transactions to be billed to government cards this year, compared with around £18 million in 1999 and just under £2 million in 1998, the scheme's first full year, according to the latest annual report by consultancy KPMG.

When the card is being used fully as planned, it should handle around £300 million of annual spending on low-cost, high-volume items. KPMG has calculated that this could save £70 million in the processing of between two and three million transactions.

Only £3.7 million of savings have been achieved so far because total transactions - just under 180,000 - are low. The average permitted individual maximum spend is around £1,000.

The government procurement card was launched in October 1997, and Visa's contract to run it was recently extended until 2002. Forty-four departments and agencies are already using cards, while 34 have selected a bank and are ready to start. Another 13 are in the process of implementation. Around 7,500 cards are currently in circulation.

"We have signed on all the departments we had wanted to and achieved our target audience," said Jane Gibbs, the Treasury's strategic procurement adviser. "Now we must get people to use it. Individual departments don't have targets. That may be another step for us, but it is up to them to decide."

Departments are not forced to use the cards, she said. "That might work on the surface, but it will undermine use. A non-mandatory scheme has proved a good model."

KPMG's annual report is critical of the take-up time. It says that managers may have been too cautious and hesitated over letting junior staff use the card. This means fewer pilot schemes are running than there should be.

The report adds that the card is more readily accepted in procurement, while finance still lacks the systems to process transactions. "There is now explicit guidance for accountants that the card is a good thing," said David Harbey, Visa's commercial products manager.

"It is important to have support from senior managers who realise it is beneficial for finance teams as well," said Gibbs. She added that a momentum is developing behind the cards now that 50 per cent of government departments use them. Revised guidance will be published in the spring.

SMjan2000

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