Payment solutions come to the fore !

Posted On Monday, 11 November 2002 10:01 Published by
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Most companies and suppliers spend too much time and money processing low value purchases. The purchasing card has evolved into an effective mechanism that essentially readdresses the inefficiencies of current procurement systems or lack thereof.

Property is not immune to the paradigm that roughly 80% of all purchases represent 20% of the total purchasing cost. Most companies and suppliers spend too much time and money processing low value purchases. Corporate purchasing cards seem to represent a solution that essentially readdresses the inefficiencies of current procurement systems.

The main aim of procurement systems is to enhance the value being generated through:

  • Supplier acceptance
  • Automated system driven controls
  • Consolidated payment
  • Specialised Management Information System (MIS) reporting
  • Automated cost allocation

Addressing these factors make a lot of difference to the way that spending gets controlled.

Commerce Solutions, part of the AST JSE listed IT company, beleives that through its Infospan and C-Solve products they can serve the need of a corporate that may choose to implement a B2B procurement solution while addresssing the issue that the corporate suppliers or merchants need to be part of such a solution, especially in the case of SME’s and the previously disadvantaged.

Purchasing Cards Explained

The Purchasing Card is a means of streamlining the traditional purchase order and payment processes for low value transactions (in recent times many corporates are moving to use the purchasing card for high and higher value purchases). Users, typically corporations and government agencies, find a disproportionate number of small rand payments, those less than R10, 000, make up the majority of payments while representing a small percentage of rands spent. This scenario represents the 80/20 rule at its best.

The transactional cost of making these payments using the traditional process is the same regardless of the rand amount of the payment, i.e., it costs the same to process a R25 payment as it does a R100, 000 payment. Often the cost of making a payment exceeds the value of the item being acquired, i.e., the cost to acquire a R25 wrench may exceed R100. The Purchasing Card simplifies the process and reduces the cost.

In South Africa a study was recently conducted at a large petroleum company and it’s spend at a single large supplier; some of the more ‘salient’ findings were as follows:

  • Total spend with a particular supplier = R685,000
  • Approximate cost to process these transactions = R282,000

In total it was found that this company, during the year analysed, spent approximately R12, 1 million just in processing transactions with an average cost of processing of R198 per transaction! Surprisingly this processing cost is considered to be good within the industry as most range between R300 and R400 per transaction

Additionally, values go beyond transactional savings when the organization begins to realize the behavioural changes required to make a Purchasing Card work most effectively. Additional values include:

  • Supply base consolidation
  • Reinforcement of general purchasing best practices
  • A significant source of spend information
  • Significantly streamlining payees in the accounts payable system
  • An opportunity for suppliers to streamline their process

Who does this locally ?

The software used to power these B2B solutions is Visa's Infospan, of which AST Commerce Solutions is the exclusive distributor and support organisation in the Sub-Saharan region. Infospan is the Visa Management Information System (MIS) that is internationally used by participating corporate organisations to receive and manage their daily B2B trade information.

Through Infospan, AST Commerce Solutions provides sophisticated information management and reporting tools to ensure that Corporate buyers obtain a full and complete view of their daily trade and daily status of budgets and spending patterns.  Infospan is the de-facto and most critical component of the Visa Procurement solutions. It is also a product that generates VAT reports accepted by the Receiver of Revenue in many international countries and soon in SA.

An additional product to be used in the solution will be AST Commerce Solutions’ C-Solve, a locally developed B2B Point-of-Sale software product that supports the B2B trading merchants. 

“Through C-Solve, merchants can enter the B2B orders including 3rd level detail, obtain authorisation for the intended transaction, manage B2B orders placed on the merchant, settle B2B transactions for payment and obtain daily settlement reports,” explains Anthony Roux from AST.

For more information contact

Anthony Fourie
AST Commerce Solutions
083 452 4599
This email address is being protected from spambots. You need JavaScript enabled to view it.

 


Publisher: AST ICS
Source: Sapoa Online

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