Division of Administration - Kristy Nichols, Commissioner - State of Louisiana
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August 9, 2013
Contact: Michael DiResto, 225-342-7000

State government expanding electronic payment options for vendors to save money

BATON ROUGE - In an effort to increase efficiencies and effectiveness as well as to be strategic in utilizing technology and resources, the Division of Administration announced today that it is beginning implementation of a convenient new payment option for state government vendors that will reduce state government costs of issuing paper checks and save taxpayers at least $2.5 million per year.

In the coming weeks, the Division is conducting enrollment outreach to all vendors that do business with the state to participate in this new optional payment program called Electronic Vendor Payment. If a vendor elects to enroll in the program, its payment is processed through a credit card network similar to the state's existing P-Card system but with a virtual card. Once the state approves an invoice for payment, the payment is deposited to a merchant account, and the vendor is notified electronically that the payment is authorized and the funds are available.

"This is great example of our efforts to modernize government business practices and apply smarter technologies that save taxpayer dollars,"Commissioner of Administration Kristy Nichols said.

The state currently issues thousands of checks per year to vendors, with a yearly average of more than 150,000 checks issued the last three years, with the Division of Administration incurring the costs associated with printing and processing a check, conservatively estimated at $2.99/check. In an effort to reduce the costs of issuing checks, the state is offering vendors this additional way to receive electronic payment that is also more environmentally friendly due to the reduction of paper used in printing and mailing.

The program has no cost to the state. In fact, through the Electronic Vendor Payment solution, the state receives a rebate on the annual spend amount, extends float, increases cash flow, streamlines accounting and cost allocation, and increases earnings on state investments. Currently the state receives an annual rebate on P-Card, Travel Card and LSU's electronic payment program for the total annual spend. Annual rebates to the state have ranged from $1.1 million in 2010 to $1.5 million in 2013. The implementation statewide is estimated to increase the rebate by an additional $2.5 million annually.

This electronic payment option affords a number of benefits to vendors, such as expedited payment, elimination of paper check processing costs, collection costs associated with lost or misplaced checks, more efficient handling of exceptions items, improved invoicing, and reduced exposure to fraud.

Of particular importance to many vendors, unlike with traditional electronic fund transfers, vendors that elect to enroll in this optional program are able to take advantage of receiving their payments electronically without having to provide their banking information to the state.

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