05 October 2000 | David Arminas
E-commerce systems supplier Cisco Systems International will launch a ghost purchasing card system in the UK, Netherlands and Germany this autumn.
Cisco hopes to cut down transaction volumes by at least 25 per cent, said Jezz Noor, Cisco head of corporate procurement Europe, Middle East, Africa (EMEA). "This is not a pilot, this is an implementation," he added.
A ghost card is, in effect, a purchasing card number without a physical credit card. The card number triggers the payment process.
To accept the card, a supplier must be signed up with a bank. This will guarantee payment within the specified number of days as agreed with the client.
Cisco is negotiating with several banks and 30 of its most important suppliers to get them signed up to the card process.
The biggest hurdle to setting up the system is making sure government tax offices can accept the VAT information for processing corporate taxes, said Noor. This must be done for each country, a time-consuming but unavoidable process.
The ghost card will only be good for the country in which it has been sourced because of VAT information demands by tax offices.
"It's a step forward from the procurement card," said Will Parsons, a consultant with Purcon Consultants.
The next major advance is to develop the VAT software for cross-border purchasing to allow wider international use of the ghost card.
To cope with more strategic procurement planning as the EMEA division expands, Cisco's procurement department will be increased from 12 to 25 people. According to Noor, a lot of national contracts might have to be set up for the ghost card to function because the card will depend on local suppliers.
Getting vendors to commit to the ghost card will be difficult, he added, even though they will be guaranteed payment within five days.
"Vendors can get their money at a much faster rate and that should motivate them," Noor said. "And they become our preferred partner."