CFC U.S. Bank One CardTuesday, July 12, 2011

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Background• Original card programs began in 2001

• Consolidated products into One Card program in August 2006

• Program currently has 168 participants and generated $19.5 million in aggregated spending last year

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U.S. Bank – A Strategic Resource• $311 billion in assets

• 5th-largest commercial bank in the United States

• Unparalleled industry experience

• Solutions for the entire payment continuum

• Program design/implementation expertise

• Unsurpassed resource commitments

• World-class, U.S.-based customer service

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• A strong commitment to the payments business

• Ubiquitous merchant acceptance

• Competitive commercial card advantages for CFC members

• Long-term relationship with a strong and stable commercial bank

U.S. Bank Strategic Benefits

Does My Co -op Need a Commercial Card?

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Purchasing Landscape• Annual purchasing card spending in

North America grew from $161 billion in 2009 to $176 billion in 2010

• Purchasing card spending in North America is expected to increase to $213 billion by 2012 and $255 billion by 2014

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Purchasing Landscape

Purchasing Card Spend in North AmericaSource: 2010 Purchasing Card Benchmark Survey, RPMG Palmer & Gupta

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Cards Are Expanding Into Larger, Core Purchases

CARDS

• Rebate potential

• Extended DPO via credit function

• Control in the form of restricting spend categories and amounts

• Ability to automate G/L interface

• Pre-purchase process efficiencies

• Detailed transaction data

• No cost to buying organization

� T&E

� Office Supplies/MRO

� POS ad hoc purchases

� Petty cash alternative

� Increasingly used for larger purchases including COGS

Common Uses

CARDSCHECKS

Cap Ex

MROAd Hoc

COGS

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Checks

ACH

Wire

Cards

25%

10%7%

13%

2%4%

81%

58%

B2B Payment Matrix(% of total number of transactions)

Source: AFP Electronic Payments Survey Data for 2004 - 2010

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Bottom -Line Results• Average net savings of $69+ per transaction

• Average procurement cycle time reduction of 6.3 days

• Average reduction in supplier base of 31%

• 38% increase in ability to negotiate preferred pricing

• Happier and more productive employees

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Real-World Successes*Procure-to-pay and commercial card programs build the bottom line.

– One electric utility expanded its card program from emergency purchases only to all its routine purchasing, reducing manual AP check payments by more than 65%.

– A leading provider of technology and business solutions plans to move more than $8 million of company spend from paper checks to its commercial card program.

– A construction company saved more than $100,000 and grew its commercial card program from $1 million to $6 million by eliminating local “house” charge accounts.

*2008 Visa Global Procure-to-Pay and Commercial Best Practices Study, Deloitte Consulting

The Program

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What Is the CFC One Card?Meets the needs of every co-op’s spending activity—combining the benefits of corporate and purchasing cards in a single card program.

+ =

Purchasing Card

Designed to pay for small dollar, frequently purchased items

� Office equipment and supplies� Maintenance, repair and

operations� Budgetary spend� Computer hardware, software

and peripherals� Printing and duplicating services� Professional, temporary and

janitorial services

Designed to pay for travel and entertainment (T&E) expenses

Corporate Travel Card

� Airfare� Hotel� Car rental� Meals� Entertainment� Meeting and event planning� Employee relocation

Designed to manage both T&E and procurement expenses

One Card

� Office equipment and supplies� T&E� Maintenance, repair and

operations� Budgetary spend� Meeting and event planning� Miscellaneous services� Employee relocation

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Program Benefits• No annual fees or interest

• No credit check on cardholders

• No individual liability

• Flexible online reporting and administration capabilities

• Exciting rebate opportunity

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Program Benefits• Simplify and streamline operations

• Save time, money and resources

• Stay in control and in compliance

• Tailor the card program to your specific needs

• Provide a convenient payment tool to employees

• Make better-informed business decisions

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Types of One Card Accounts• Individual Cardholder Accounts

– A card assigned to an individual employee that has the employee’s name on the card

• Department Cardholder Accounts– A card that is commonly used by a department

or for a specific type of purchase

• Ghost Accounts– A virtual, card-free purchasing account tied to a

single department, supplier or spend category

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One Card for Purchasing• Reduces volume of purchase orders, invoices

and check payments

• Improves purchasing management and provides reporting for IRS and state regulators

• Enables monitoring of corporate policy compliance

• Improves employee spending controls

• Facilitates vendor negotiations

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One Card for T&E• Customized authorization controls

• Online account access

• Cash advance option

• Ability to interface with your accounting software

• Comprehensive travel benefits– Worldwide automatic travel accident insurance:

$250,000

– Excess lost/damaged luggage coverage: $1,250

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Typical Co -op Cardholders• Human resources

• Plant and maintenance employees

• Technical and office staff

• General administration

• Purchasing department

• Advertising/marketing staff

• Sales force

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Typical Co -op Expenditures• Oil and fuel

• Computer and software purchases

• Utilities payments

• Office supplies

• Continuing education expenses

• Online purchases

• Airfare and hotel expenses

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VolumeWholesale Trade

Hotels

Business Expense

Vehicle Expense

Other

Eating/Drinking

Office Services

Airline

Office Supplies

MRO Supplies

Mail/Telphone

Auto/RV Dealers

Annual Volume Type of Spend ATS # of Transactions$5,043,787.93 WHOLESALE TRADE $164.23 30,712$3,610,702.51 HOTELS $295.52 12,218$2,578,426.81 BUSINESS EXPENSE $393.11 6,559$2,418,725.45 VEHICLE EXPENSE $59.73 40,495$1,763,016.10 OTHER $198.47 8,883$1,734,222.01 EATING/DRINKING $50.48 34,354$1,466,929.51 OFFICE SERVICES $364.36 4,026$1,302,718.90 AIRLINE $227.87 5,717$972,141.91 OFFICE SUPPLIES $166.86 5,826$499,338.89 MRO SUPPLIES $365.28 1,367$435,439.17 MAIL/TELEPHONE $312.59 1,393$225,941.45 AUTO/RV DEALERS $273.21 827

One CardTop Co -opSpendCategories

One Card Rebate Opportunity

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Rebate Overview• Participating cooperatives have the

opportunity to qualify for an annual cash rebate

• The rebate period runs annually from September through August

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How the Rebate Works• Participating cooperatives must collectively

generate at least $5 million in annual charge volume and have an average transaction size of at least $120.

• The higher the collective charge volume, the higher the percentage of rebate.

• Once the collective program rebate is attained, cooperatives can earn a portion of that rebate if they meet the individual eligibility requirement.

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Individual Rebate Eligibility• The cooperative’s annual spend must be at

least $175,000.

• If the cooperative has an average transaction size of least $120, the rebate is even higher.

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Effective September 1, 2011Two separate ways of earning a cash rebate through the One Card program:

– A portion of the collective rebate will be paid to each cooperative that spends a minimum amount of $5,000 in one rebate year.

– A separate rebate will be paid to each cooperative that averages at least $120 per transaction during the rebate year.

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Rebate Success• 2008–2009 Rebate Year

– Total spend: $15.9 million

– Average transaction size: $125

– Performance Rebate: $67,687

– Individual co-op payouts ranged from $780 to $11,800

• 2009–2010 Rebate Year– Total spend: $19.5 million

– Average transaction size: $144

– Performance Rebate: $71,963

– Individual co-op payouts ranged from $640 to $8,170

Making One Card Work for You

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Access OnlineFree Web-based access tool provides:

– Convenient, secure online access to data—anytime, anywhere

– Account setup and maintenance– Ability to adjust cardholder spending limits

– Access to view cardholder statements online– Reports to better understand spending patterns,

vendor usage and policy compliance– Automated posting capabilities to integrate card

data with accounting and general ledger entries

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AutoPay• Amount due is automatically drawn from

specified account

• Cycling date is the 16th of every month unless on a weekend or holiday

• Cooperative chooses a draft date that is within 14 days of the 16th

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Fleet Capabilities• Cards issued at a driver or vehicle level

• Enhanced spending controls– Ability to limit spending to fuel and/or

maintenance only– Prompts for driver ID and odometer reading

– Velocity controls and hard limits

• Accepted by Visa and MasterCard merchants worldwide

• Enhanced fleet data capture ─provided by most major oil companies

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Merchant Category Codes • Provide a method of understanding and

managing company spending by category code

• Use merchant category codes (MCCs) to prevent employee misuse

• Open and close MCC blocks for flexibility as necessary to your organization and supplier base

• Automate annual IRS Form 1099-MISC reporting

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Flexible Spending Management• Authorization parameters

– Monthly spending limit– Daily spending limit

– Single-purchase limit (SPL)

• Supplier category restrictions– Travel, casinos, jewelry, liquor, etc.

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Automated Accounting Methods• Default account code assigned to each card

– Cost center, budget code, company code, etc.

• General Ledger object codes assigned by type of purchase

– Office supplies, computer equipment, hotels, hardware stores, etc.

• Accounting codes can be changed/edited as needed

• Transaction data can be exported for integration with accounting software

Addressing Cooperative Concerns

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Cooperative Concern 1Spend Out of Policy

– (also known as “Maverick Spend”)– A commercial card is used in a way that does

not conform to the spending policies of the organization

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• Purchase card policy violations account for 0.006% of purchasing card spending—the equivalent of $60 of policy violations for every $1 million of purchasing card spending. 1

• Cumulatively, noncompliant transactions account for about 0.021% of travel card spending (or $210 out of every $1 million of travel card spending), a figure that has fallen from 0.035% in 2006 and 0.163% in 2004. 2

Do Commercial Cards Increase Out-of-Policy Spending?

1 RPMG Research Group, 2010 Purchasing Card Benchmark Survey Report 2 RPMG Research Group, 2009 Corporate Travel Card Benchmark Survey Report

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Cooperative Concern 2Card Misuse

– An employee charges a personal expense through a commercial card and misrepresents it as a business expense.

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Will Employees Misuse Commercial Cards?• Purchasing card misuse accounts for .014% of

purchasing card spending, which is the equivalent of $1.40 of misuse for every $10,000 of purchasing card spend.

– .008% for fraud and misrepresentation– .006% for policy violations

• Losses are a fraction of the administrative cost savings and other benefits attributable to card use .

• Visa Liability Waiver Program covers your cooperative up to $100,000 per cardholder in the event of employee card misuse.

Dedicated Program Support

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U.S. Bank SupportGreg Wenisch, Relationship Manager

Jennifer Kartes, Program Coordinator– Custom implementation

– Ongoing strategic consultation– Training on Web-based access tools

– Problem resolution

– A complete partnership approach to your business success

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CFC Program Support• Manages relationship with U.S. Bank• Provides day-to-day member contact• Establishes new cooperative accounts• Answers general member questions and

concerns

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Get Started Today!Contact Tara Cromp for more details:

– Phone: 800-424-2954– E-mail: onecard@nrucfc.coop

How to Submit Your Question

Step 2: Click on the Send button.

Step 1: Type in your question here.