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10.15.01 - Procedure for Purchasing Credit Card CITY OF BOYNTON BEACH, FLORIDA ADMINISTRATIVE POLICY MANUAL CHAPTER: 10 Purchasing POLICY NO. 10.15.01 SECTION: 15 Purchasing Credit Card PAGE: Page 1 of 13 SUBJECT: 01 Procedures for Purchasing Credit Card PURPOSE: The City of Boynton Beach Purchasing Card Program is designed to improve efficiency in processing low dollar value purchases from any vendor that accepts the Visa credit card. Many of our current suppliers, currently being paid by the purchase order or blanket purchase order system, will accept the Visa credit card. This program will allow the cardholder to purchase approved commodities and services directly from our vendors. Each purchasing credit card is issued to a named individual and the City of Boynton Beach is clearly shown on the card as the Governmental buyer of the goods and services. Also, included on the credit card will be the City's sales tax exemption number. Financial Services Department will monitor the performance of the program. All questions or concerns should be directed to: to: Mike Dauta 742-6324 The purpose of this policy and procedures is to accomplish the following: 1. To provide an efficient method of purchasing and paying for goods and services not exceeding $500 per purchase (total invoice). 2. To assist departments in the procurement of small dollar purchases. 3. To replace manual hardcopy requisitions and purchase orders for low dollar value purchases. 4. To ensure purchasing credit card purchases are in accordance with the City's ordinances, policies and procedures. 5. To reduce the time spent by Procurement Services and Financial Services to process low dollar value transactions. 6. To ensure that the City bears no legal liability from the inappropriate use of the procurement credit cards. 7. To provide for disciplinary action if the purchasing credit cards are misused. 1 The policies and procedures provided herein are minimum standards for departments. Departments may establish additional controls as they see fit for their particular operations. PROCEDURE: HOW IT WORKS. The Purchasing Card Program simplifies the procurement and disbursement process. Procurement responsibility is delegated to the Department/Division enabling an authorized Cardholder to place an order directly with the vendor. When a purchase authorization is requested by the supplier at the point-of-sale, the Bank of America Visa Purchasing Card system validates the transactions against pre-set limits established by the employee's Department/Division Head. All transactions are approved or declined (electronically) based on the purchasing card authorization criteria established. The authorization criteria may be adjusted periodically as needed and may include, but is not limited to, the following: • Single purchase limit as set by the Department/Division (not to exceed $500 per invoice) • Monthly spending limit (normally is $2,500 per month). • Approved Merchant Category Codes • Number of transactions allowed per day. • Number of transactions allowed per month. The authorization process occurs through the electronic system that supports the purchasing card processing services under the City of Boynton Beach's agreement with Bank of America. WHAT IF THE SUPPLIER DOES NOT ACCEPT CREDIT CARDS It is important to the success of the Purchasing Card Program that merchants interested in doing business with the City of Boynton Beach have the capability to process VISA credit cards. If merchants currently accept VISA credit cards, they are already equipped to accept the City of Boynton Beach Purchasing Card. A merchant who is not currently accepting VISA credit cards should contact: Bank of America’s merchant service provider at 1-800-847-2911, their own financial institution, or other merchant service provider. WHO DOES WHAT? The following is a summation of the responsibilities of the individuals and organizations involved in the purchasing card system. Cardholder: ♦ Hold and secure purchasing card. ♦ Complies with procurement policies and procedures. 2 ♦ Purchase materials and services. ♦ Assures receipts identify detail of items being purchased. ♦ Assures no sales taxes are charged to purchase price. ♦ Identifies account number, associated dollar value, and reason for purchase on back of each purchase receipt. ♦ Collect sales receipts for each transaction. ♦ Turns in sales receipts to Department/Division Purchasing Coordinator within one day of purchase. ♦ Review monthly statement with Purchasing Coordinator. ♦ Assures that budget exist for purchased items. ♦ Certifies Monthly Purchasing Card Transmittal Form. ♦ Identify disputed charges. ♦ Responsible for all purchase transactions on the assigned purchasing credit card. Department/Division Purchasing Coordinator: [Individual(s) designated by Department/Division Head] ♦ Review monthly statement with cardholder. ♦ Prepares the Monthly Purchasing Card Transmittal Form for each Cardholders monthly statement and forwards to the Purchasing Agent within five days of receipt of statement. ♦ Verify the account numbers for the purchase transactions. ♦ Handle disputed items. ♦ Forward statement(s) with supporting receipts to Procurement Services. ♦ Ensure sufficient budget exists to cover all expenditures to date and available balances on all cards. If not sufficient, to provide budget transfer to cover expenditure amount. Department/Division Head ♦ Request purchasing card for designated employees. ♦ Set spending limits for each Cardholder within established guidelines. ♦ Designate Department/Division Purchasing Coordinator. ♦ Collect cards from cardholders that terminate employment. ♦ Evaluate the need to cancel or reissue cards when employees transfer. ♦ Notify the Purchasing Card Administrator of terminated cards. Purchasing Agent (Purchasing Card Program Administrator) ♦ Purchasing Division -Purchasing Agent serves as the Purchasing Card Program Administrator. ♦ Approve/disapprove all purchasing card requests. ♦ Maintain a detail log of all purchasing credit cards issued. ♦ Evaluate purchasing card feedback from suppliers. ♦ Coordinate and maintain internal controls. ♦ Coordinate issuance and cancellations of cards. 3 ♦ Participate in ongoing program reviews. ♦ Participate in resolving billing disputes. ♦ Maintain policy and cardholder guides/manuals. ♦ Provide orientation for new cardholders to policies and procedures. ♦ Receive consolidated statement and Cardholders monthly statements for review, and have Procurement Services prepare the journal entry for distribution of expenses to the account numbers as provided on the Monthly Purchasing Transmittal Form. ♦ Notify Department/Division Head and Purchasing Coordinator when approved monthly statements are not received in a timely manner. ♦ Calls Bank of America and initiates the wire transfer to pay for the monthly expense from the credit cards. ♦ Process to default account number any Cardholder monthly statement not received in a timely manner. Finance ♦ Receives approved Cardholders monthly statements and consolidated monthly statement from Purchasing Agent for filing. ♦ Receives journal entry for keying the distribution of expenses into the HTE system. A. ASSIGNMENT AND CONTROL OF THE PURCHASING CARD 1. REQUEST FOR AND ISSUANCE OF PURCHASING CREDIT CARDS. a. Purchasing cards will be issued to individual employees who frequently purchase goods and services. Generally, these are the same employees that were purchasing low dollar value items through a Blanket Purchase Order prior to the credit card program. b. The purchasing card will have the employee's name, the City name, the tax-exempt number, the Cardholder account number, and an expiration date embossed on the face of the card. The purchasing card issuing company will not have individual cardholder information other than the cardholder’s work address. No credit records, social security numbers, etc. of the cardholder are maintained. c. All requests for new cardholders or for changes to current cardholders must be made by the Department Head by submitting the Purchasing Card Request Form (Attachment I). The completed form will be forwarded to the Purchasing Agent. d. All requests for purchasing cards must be approved by the Department Head and Purchasing Agent. 4 e. When the Purchasing Agent receives a purchasing card from Bank of America, the cardholder will be required to personally take receipt of the card and sign the “Purchasing Card Program Employee Agreement ” (Attachment II). The Purchasing Agent will provide the Cardholder a copy of the Purchasing Card Policy and give an oral review of the program. 2. LOST OR STOLEN PURCHASING CARDS a. If a purchasing card is lost or stolen, the Cardholder must immediately notify Bank of America at 1-888-449-2273 and the Purchasing Agent of the loss, verbally and in writing. b. The Cardholder will be responsible for reporting all information necessary to minimize the liability to the City for a lost or stolen card. 3. TERMINATION OR TRANSFER OF CARDHOLDER a. When an employee ends his or her employment, or is transferred to another Department/Division, the Department Head shall immediately collect the purchasing card and destroy it. Place the destroyed card in an envelope and send to the Purchasing Agent. b. If the Department Head is unable to collect the purchasing card when an employee terminates, or is transferred he/she shall immediately notify the Purchasing Agent. The Purchasing Agent will ensure that the card is cancelled. 4. PURCHASING CARD INVENTORY a. On a semi-annually basis, the Purchasing Agent will provide to each approving Director Head a list of all the Purchasing Cards issued to employees within their department. Each Department Head (or designee) will be responsible to conduct a physical inventory of the credit cards and certify the listing and return it to the Purchasing Agent. B. LIMITATIONS ON USE OF PURCHASING CARD 1. CARDHOLDER USE ONLY The purchasing card may be used only by the employee whose name is embossed on the card. No other person is authorized to use the card. The Cardholder is responsible and accountable for all transactions that occur on his/her card. 5 2. CITY PURCHASES ONLY The purchasing card is to be used for City authorized purchases only. The purchasing credit card cannot be used for any personal use and any such use will require immediate reimbursement and will result in disciplinary action which may include dismissal and/or criminal charges. 3. DOLLAR LIMITATIONS a. The Department Head approving the assignment of a purchasing card will establish two (2) dollar limits for each Cardholder. A single purchase limit and a 30-day limit. The normal maximum limits shall be $500 for a single purchase and $2,500 during the 30-day billing cycle. Exceptions will be made to the maximum dollar purchase limit as approved by the Purchasing Agent. Requests for spending limit changes must be initiated and authorized by the Department Head. The Department Head may impose additional limitations. b. A purchase may be made of multiple items, but the total invoice cannot exceed $500, or the Cardholder's limit if less than $500.00. CHARGES FOR PURCHASES SHALL NOT BE SPLIT SPLIT TO STAY WITHIN THE SINGLE PUCHASE LIMIT. This will be considered abuse of the purchasing card program and can result in cancellation of card and/or disciplinary action. 4. PROHIBITED USES OF PURCHASING CARDS The following types of items may not be purchased with a purchasing card, regardless of the dollar amount. • Gasoline, fuel, or oil; • Vehicle repairs.; • Travel expenses such as hotels, food, and airline tickets; • Cash advances; • Items available through the Warehouse; • Telephone charges; • Any additional goods or services specifically restricted by the Department/Division Head. 5. PURCHASING CARD SECURITY Your purchasing card should always be treated with at least the same level of care that you do with your own personal credit cards. 6 a. STORAGE OF THE PURCHASING CARD Keep your purchasing credit card in an accessible but secure location. Since you, as the Cardholder, will be the only one using the purchasing card, it needs to be accessible only to you. b. ACCOUNT NUMBER Guard the purchasing card account number carefully! Do not post it at your desk or write it in your day planner. c. SHARING OF CREDIT CARD The only person entitled to use the purchasing card is the person whose name appears on the face of the card. Do not lend your purchasing card to another person for use. d. LOST OR STOLEN CARDS If the purchasing card is lost or stolen, you must immediately notify the Purchasing Agent. C. PROCEDURES FOR MAKING AND PAYING FOR PURCHASES 1. DOCUMENTATION OF OVER-THE-COUNTER PURCHASES. a. When an over-the-counter purchase is made, the Cardholder must obtain the customer's copy of the charge slip. b. The charge slip shall be turned in to the Department/Division Purchasing Coordinator within one business day of the purchase. Identify on the charge slip the purpose of purchase and account number(s) to be charged at time of payment. The Purchasing Coordinator will retain the charge slips for matching with the monthly statements and preparing the Monthly Purchasing Card Transmittal Form. c. All items purchased over-the-counter must be immediately available. No back ordering is allowed. 2. TELEPHONE ORDERS Purchases must be described in sufficient detail so that the parties to the transaction have a clear understanding of what is being acquired. a. The Cardholder must confirm that the vendor agrees to charge the procurement card when shipment is made so that receipt of the supplies or service may be certified on the monthly Cardholder’s monthly statement. 7 b. Instruct the vendor to include on the shipping document or packing slip: “Purchasing Card Purchase”. This information will alert the receiving office and the Cardholder that the supplies have been purchased with the purchasing card. c. A Telephone Order Form (Attachment III) shall be used to record each telephone purchasing card order. This documentation should be provided to the Department/Division Purchasing Coordinator within one day of the telephone order. Any subsequent invoice received with the order will also be forwarded in the same manner. 3. MISSING DOCUMENTATION If for some reason the Cardholder does not have documentation of the transaction to support the transaction on the monthly statement, the Cardholder must attach a signed certified description of the purchase. Continued incidents of missing documentation may result in the cancellation of the employee's purchasing card privileges. 4. PAYMENT AND INVOICE PROCEDURES a. The purchasing card company, Bank of America, will mail all individual billing statements to the Department/Division Purchasing Coordinator and one consolidated statement for all cardholders to the Purchasing Agent. The individual billing statement will list all transactions processed during the billing cycle. If no purchases were made on the purchasing card during the billing cycle, no individual monthly statement will be generated unless adjustments for previously billed transactions have been processed during that cycle. b. The Cardholder must review the individual monthly statement and the Monthly Purchasing Card Transmittal Form with the Department/Division Purchasing Coordinator and note any errors or disputes. Charge slips/receipts for all items listed on the statement shall be attached to the statement. These receipts are to be stapled to the monthly statement in the order as it appears on the statement. Failure to keep adequate receipts will lead to the loss of Purchasing Card privileges. c. The Department/Division Purchasing Coordinator will complete the Monthly Purchasing Card Transmittal Form (Attachment IV). This form will provide the account number(s) and reason for purchase for each transaction listed on the monthly credit card statement. The Monthly Purchasing Card Transmittal Form must be certified by the Cardholder and signed by the Department Head. The 8 signatures certify that all charges are appropriate and authorized that all charges are proved by attached charge slips/receipts. d. The original individual monthly statements and the completed original of the Monthly Purchasing Card Transmittal Forms must be mailed to the Purchasing Agent within five workdays from receipt of the statements. This will assist in meeting the timely payment to avoid any potential late fees which could be accessed by the issuing credit card company. e. It is recommended that the Department/Division Purchasing Coordinator continually record the charges/receipts, account numbers, and reason for purchase on the Monthly Purchasing Card Transmittal Form during the month. This will expedite the reconciliation process at month end when the monthly statements are received. f. The Purchasing Agent will be responsible to receive the consolidated monthly statement, the individual monthly statements and the Monthly Purchasing Card Transmittal Form. Transactions will be reviewed to assure, as best as possible that purchases are in compliance with the procurement guidelines and limitations as established in the credit card program. It is the responsibility of the Cardholder and the Department/Division to assure that bid awarded vendors are being used, and to monitor the pricing in accordance with awarded bids. The Purchasing Agent will balance out the individual statements and transmittal forms to the consolidated statement within two workdays, sign the consolidated statement as to review, and process to Accounts Payable for payment. g. Department /Division Heads and Purchasing Coordinators will be notified by the Purchasing Agent when individual statements are not received within the prescribed timeframe (five workdays). Late statements will automatically be charged to the default account number as shown on the Procurement Credit Card Program Agreement. Continual failure by the Department/Division to process the monthly statement in a timely manner will result in the revocation of the purchasing card program. h. Accounts Payable will ensure that the consolidated statement received is reconciled against the individual cardholder statements, and purchasing card charges are processed for payment in a timely manner. The distribution of expenditures will be based on the account numbers and amount as shown on the Monthly Purchasing Card Transmittal Form. 9 i. If the individual monthly statement has not been received within five workdays, then Accounts Payable will pay the statement and charge the transactions to the Cardholder’s default account number within the department budget. D. DISPUTED ITEMS 1. WHAT IS A DISPUTE A dispute occurs when a Cardholder questions a transaction that has been charged to their account. The following steps must be taken to ensure prompt settlement. a. If items purchased with the purchasing card are defective, the Cardholder must return the item(s) to the vendor for replacement or credit. If the service paid for with a purchasing card is faulty, the vendor must be notified and asked to correct the situation or provide a credit. If the vendor refuses to replace or correct the faulty item or service, the purchase will be considered in dispute. b. A disputed item must be explained with a note on the Cardholder’s monthly statement before the statement is processed to the Purchasing Agent for review. c. It is essential that the time frames and documentation requirements established by the purchasing card issuer be followed to protect the cardholder's rights in dispute. 2. PROCEDURE FOR HANDLING DISPUTES A dispute occurs when a Cardholder questions a transaction that has been charged to his/her account. The following steps must be taken to ensure prompt settlement: a. The Cardholder contacts the merchant about the transaction and supplies the necessary information to begin the resolution process, and; b. The Cardholder completes the Statement of Disputed Items Form (Attachment V) and faxes to Bank of America 1-888-678-6406 explaining the reason(s) for the dispute as well as a copy of the individual statement, if the item has been posted. Bank of America will then place the transaction into a disputed status. c. If the problem is resolved between the merchant and the Cardholder, the Cardholder should write the solution agreed upon on the bottom of 10 the Statement of Disputed Items Form that was previously faxed to Bank of America, and fax the updated form to Bank of America as soon as possible. If an agreement cannot be reached the following steps will be completed: I. After the item has been entered as a dispute, Bank of America must determine who is responsible by researching the transaction including requesting a copy of the sales draft when necessary. When responsibility for the transaction is determined, the dispute will be settled. II. When an account is in a dispute status, the disputed amount is still included in calculating the available balance for authorizations (monthly limit). At the time the item is placed in dispute, it is removed from all finance charges, late charges, over limit fees, past due amounts and calculations. Finance charges which accrue from posting until the item is placed in dispute must be handled according to City policy. Any Cardholder statements generated while the account is in dispute will display the following message: YOUR ACCOUNT IS IN DISPUTE FOR $XXX.XX. THIS AMOUNT HAS NOT BEEN INCLUDED IN THE FINANCE CHARGE OR PAYMENT CALCULATIONS. III. If the Cardholder is actually responsible for the transaction, the dispute is settled in favor of Bank of America and no further actions are required. If the Cardholder is not responsible for the transaction, the dispute is settled for the Cardholder and the charge back process may be initiated against the merchant. IV. If problems continue with a particular merchant, the Cardholder should notify the Purchasing Agent of the problems. E. REVIEW OF PURCHASES BY DEPARTMENT/DIVISIONS Because of their knowledge of the job responsibilities and requirements, Departments/Division representatives are required to review each purchasing card expenditure (items purchased, dollar values, and vendors) to ensure the purchased goods or services were necessary, and for official use only. When purchases are questioned, the Department Head, or their designee, will be responsible for resolving the issue with the Cardholder. If the Department Head cannot be satisfied that the purchase was necessary and for official use, the 11 cardholder must provide either a credit voucher proving the item(s) were returned for credit or a personal check for the full amount of the purchase. Checks must be sent to Finance Department with an explanation and account number. Serious or repeated misuse of the purchasing card will result in the revocation of the card. Employees incorrectly using their purchasing card will be disciplined, up to and including termination. To help the Departments/Divisions in their reviews, management reports will be available from the purchasing card company. F. DISPLINARY ACTION GUIDELINES IMPROPER OR UNAUTHORIZED USE OF CREDIT CARD a. Any incident of improper or unauthorized use of the Purchasing Card shall be immediately reported to the Department Head and the Purchasing Agent. b. The Purchasing Agent may suspend or terminate Cardholder privileges for improper or unauthorized use. c. Improper or unauthorized use of the purchasing card will subject the employee to appropriate disciplinary action. d. In addition to any administrative and disciplinary action that may be taken, the employee may be required to reimburse the City for the total amount of the improper charges through payroll deduction or direct payment. e. Failure to submit reports related to the individual statement activity within the time periods specified in these polices will result in revocation of the credit card. G. QUOTATIONS Although verbal quotations are not required for credit card purchases it is always good management practice to obtained the best price for the City. The use of the purchasing credit card program will allow the individual departments the flexibility to make small dollar value purchases, and at the same time reduce the paper intensive and expense associated with the purchase order process. The credit card program will be continually monitored and reviewed by management to determine its success and recommend any necessary changes to the program. 12 13 DEVELOPED BY: Procurement Services Division EFFECTIVE DATE: October 1, 1998 REVISED: November 1, 2005 Kurt Bressner Kurt Bressner City Manager