How to do Business at McMaster
TO McMASTER UNIVERSITY SUPPLIERS:
SUBJECT: PURCHASE CARD INITIATIVE
McMaster University, in conjunction with McGill University, University of Alberta, University of Toronto and
University of Ottawa (pilot project) are pleased to advise you that we have implemented a Bank of Montreal (B of M)
Purchasing Card program covering our low dollar value purchases of goods and services. The ceiling on these purchases
ranges from $1,000 to $5,000 with ours being set at $2,500/transaction, prior to any extra charges.
We have selected the B of M as our Purchasing Card provider because, in addition to them providing all of the benefits
you can expect when you accept MasterCard as a method of payment (see attached summary), they have offered us a
means of capturing the transaction details of our purchasing activity with your firm through their "Purchase Plus"
Delivery of purchasing activity transaction details is of the utmost importance to Universities and other institutions in
the public and para-public sectors since the majority of the money that we spend, particularly research funds, are
considered "public" funds and as such are subject to additional audit by the granting agencies. Though we find that we
must implement programs such as the Acquisition Card to help us address customer service and current technology
issues, we also find it assists us in meeting budget cuts. In addition, we also find that we cannot give up the requirement
of receiving transaction details. B of M Purchasing Card is, at this time, the only program offering us delivery of these
Depleting resources and budgetary pressures dictate that we have our Acquisition Card program fully implemented as
quickly as possible. We hope that you are convinced of the potential benefits of the MasterCard Purchasing
Card/Purchase Plus program and that we can work together to make it a widely accepted payment mechanism for future
McMaster University purchases.
We thank you in advance for your support of our new Acquisition Card program and look forward to your participation,
as a preferred supplier, in this initiative. I would appreciate some feedback at your convenience.
Purchasing Card (Acquisition Card) Program
- Summary Listing of Supplier Benefits
As a supplier who accepts the Acquisition Card you will gain a broad range of advantages. These include:
- Acceleration of Cash Collection
- Reduction of Credit Risk
- Reduced Clerical Activity
- Service to Existing Customer Base
- Expansion of Customer Base
Acceleration of Cash Collection - Rather than receiving payment 30 to 60 days after the sales, cash is received within
one to three days. Reduction of Credit Risk - For transactions paid for by the Acquisition Card, credit risk is shifted from you the supplier
to the card issuer. We, as your customer, are liable to repay the card issuer, not you. Reduced Clerical Activity - Clerical activities associated with traditional purchasing mechanisms are significantly
reduced in four areas: credit, collections, billing and payment.
||Credit - You will save the time and cost associated with performing credit checks on your customers who pay
with the Acquisition Card. As Acquisition Card use expands to include a large number of small-to-medium
sized businesses, so will the savings.
||Collection - By accepting Acquisition Cards you will no longer need to perform activities to collect past-due
accounts. Acquisition Cards will eliminate the non-value-adding effort and costs associated with calling and
letter writing to collect past-due accounts. In addition, you will no longer incur fees to collection agencies, and
accounting and administrative work associated with bad debt estimation will be eliminated. Indeed, bad debt
itself will be eliminated with the use of Acquisition Cards.
||Billing - By accepting Acquisition Cards, fewer invoices will be processed, which will result in less work to
post to accounts receivable, prepare mailings and file paperwork. Naturally, the number of forms processed
and postage costs will be reduced. In addition, your accounts receivable personnel will no longer need to track
and accumulate purchases made under blanket purchase order authorization. Similar to our savings in our
payables processes this is the area, your billing/receivables processes, where you can expect significant savings
from adopting the Acquisition Card.
||Payment - Fewer invoices mean less time spent in receiving and reconciling to our remittances, applying cash,
posting checks and making deposits.
Service Existing Customer Base - By accepting Acquisition Cards your firm will position itself to maintain your
business relationship with existing accounts that implement Acquisition Card programs.
Expansion of Customer Base - By accepting Acquisition Cards your company may experience increased sales, as
buyers shift purchases from suppliers who will accept Acquisition Cards to card-capable vendors.