Adhering to Purchasing Regulations with Procure-to-Pay Systems
As Georgia Tech employees, we are stewards of state and federal dollars. And while the external state and federal regulations can be confusing to someone who doesn’t make daily purchases, Georgia Tech’s policies and processes are in place to provide guidance and help ensure compliance with these very specific regulations.
Frans Barends, senior director of Business Services, explains some of the processes in place to ensure that purchase transactions are responsible and compliant.
Why did Georgia Tech begin regulating purchases made by employees?
With the increasing complexity of regulations from the state of Georgia and the federal government, there was a real need to increase operational efficiencies and process transparency, as well as to ultimately increase compliance with these requirements. In 2010, we began introducing a number of procure-to-pay initiatives, and the results have been tremendous.
What is procure-to-pay?
A procure-to-pay system integrates purchasing and accounts payable. This provides an organization with control and visibility over the entire lifecycle of a transaction – from the ordering to the final invoice. In an environment where purchasing and payment transactions are highly regulated and audited for compliance, it is essential to have these systems in place.
What results have these procure-to-pay initiatives generated?
These changes in process, technology, and improved compliance are highlighted in two Federal Contractor Purchasing System Reviews (CPSRs). The CPSR measures purchase practices and documentation in support of federally funded research. Georgia Tech conducts more than $500 million in federally sponsored research, so it is a very important score for the Institute. Georgia Tech received a respectable 87 percent in 2010, and an extraordinary 100 percent in late 2013 – a 90 percent score is considered exceptional. The adoption of the BuzzMart procurement system helped drive these results.
What was the reason behind adopting the BuzzMart system?
If you have financial responsibilities of any kind on campus, you should be familiar with BuzzMart. It was designed to incorporate numerous requirements and regulations into a centralized process, while allowing for visibility and end-to-end reporting. The introduction of BuzzMart included numerous process changes to move Georgia Tech toward being an electronic procure-to-pay organization.
BuzzMart’s introduction to campus has had a tremendous impact on how goods and services are purchased. Since 2010, there has been a steady increase of orders (148 percent increase) flowing into the BuzzMart system and a decrease in purchases (33 percent decrease) made by PCard.
In 2013, Georgia Tech made a strategic move away from the state’s single transaction limit for PCard purchases of $4,999 and lowered it to $2,499. This action has provided better visibility and control in the purchasing of goods and services. The lowered purchasing threshold for PCard purchases has contributed to the large increase in purchase orders processed in BuzzMart, the preferred purchasing tool at Georgia Tech.
Is BuzzMart replacing the PCard?
Not exactly, but for several years, Georgia Tech has been focused on reducing PCard transactions and encouraging the appropriate use of the PCard, while following standard best practices. The PCard serves a proper and purposeful business function when properly used – for instance, on small purchases of $2,499 and less. PCard purchases are for items not available in BuzzMart including one-time purchases such as yearly memberships and registrations.
The compliance benefits of using BuzzMart over PCard are compelling. For example, BuzzMart provides the ability to obtain electronic approvals and, hence, needed financial visibility prior to the purchase order being executed. With the PCard, departmental approval may be sought prior to the purchase, but the financial transparency happens after the transaction.
What other tools are being deployed to help manage purchases on campus?
In 2012, Georgia Tech became a full member of the Educational Advisory Board (EAB) Spend Compass. EAB Spend Compass is an analytic tool that incorporates data from purchase orders, PCard transactions, and invoices to provide greater detail on spending levels and trends. It also provides cost benchmarks with other member educational institutions, allowing our Purchasing Department to leverage better value and savings when negotiating contracts with vendors. EAB Spend Compass has helped the Purchasing Department negotiate contract pricing that saved over $100,000 on just one supplier contract.
The Purchasing Department also uses the EAB tool to run reports on individual department spending to help better assess spending activity. It is a powerful tool and provides great detail on which tools departments use for purchasing (purchase order, PCard, or check request).
What resources are available if there are questions regarding procurement?
Employees are encouraged to reach out to Georgia Tech Procurement and Business Services with their questions and scenarios. We are more than happy to help steer them in the right direction. We are also looking for more efficient, cost-effective ways to help Georgia Tech employees conduct their business and research. Questions and comments can be directed to firstname.lastname@example.org.