KNOXVILLE – A procurement card program that has greatly reduced the number of invoices processed and checks issued for small purchases is saving the University of Tennessee up to $7 million a year, officials said Thursday.
UT adopted a procurement credit card system in the late 1990-s and is writing approximately 100,000 fewer checks annually to pay departmental purchases of less than $2,000, UT Treasurer Charles Peccolo said.
“One national study found that using a procurement card rather than writing a check for an invoice saves $69 per transaction,” Peccolo said. “In the current fiscal year, we estimate that the university will make more than 105,000 transactions under $2,000 with these cards
“If you use the $69 saving figure, that-s more than $7.2 million we will not spend this year processing invoices and checks. Whatever number is used, the savings are substantial.”
Estimated purchases by procurement cards for the current fiscal year is estimated to be nearly $21 million.
Eli Fly, interim executive vice president and chief financial officer, said our staff are having to do less routine paper processing, and UT is also saving money, Fly said.
“The procurement card program and IRIS (UT’s integrated business management software system) is saving money, allowing us to make better use of staff and providing better, more timely information on purchases,” Fly said.
Companies using procurement cards often find that the cost of merchandise is lower, Peccolo said. Because vendors- processing costs are lower, some offer lower prices on their products.
Approximately 2,000 cards have been issued to employees across the statewide UT system. Cardholders can make one-time purchases up to $2,000 with a $10,000 limit within a 30-day billing cycle.
The cards cannot be used for personal use, entertainment of more than $300 and equipment costing more than $1,000, Fly said. A departmental employee other than the cardholder must verify the monthly statement.
Purchases of the same goods or services totaling more than $2,000 cannot be spilt into two or more transactions, he said. Such action violates the university’s competitive bidding policies, he said.
“We monitor these cards very closely and have stringent controls in place to make sure they are not misused,” Fly said. “Our employees use them responsibly, and we-ve had very few problems.”
Of the more than 2,000 cards that have been issued, only 11 have been canceled for misuse.