# Presentation: 269785

## Improving Electronic Funds Transfer for Vendor Payments

- Office of the Chief Financial Officer

## Debt Collection Improvement Act

- Requires Electronic Funds Transfer (EFT) for most Federal Payments
- Definition of EFT
- Automated Clearing House (ACH)
- Fedwire
- Credit Card
- Debit Card

## Debt Collection Improvement Act

- 31 CFR Part 208, “Management of Agency Disbursements,” 9/25/98, establishes:
- Waivers
- Account Requirements
- Agency Requirements
- Withholding Payments
- Electronic Transfer Account (ETA)

## Waivers for Individuals

- Where an individual determines that EFT would impose a hardship due to
- Physical or mental disability,
- Geographic, language, or literacy barrier, or
- Financial hardship

## Waivers for All Recipients

- Where the political, financial, or communications infrastructure does not support payment by EFT in a foreign country;
- Where payment is to a recipient within an area designated by the President or an authorized agency administrator as a disaster area;

## Waivers for All Recipients

- Where paying by EFT would jeopardize military or law enforcement operation or national security interests;
- Where an agency’s need for goods and services is of such unusual and compelling urgency that the Government would be seriously injured unless payment is made by a method other than EFT;

## Waivers for All Recipients

- Where the agency does not expect more than one EFT payment within one year; or
- Where there is only one source of goods or services and the Government would be seriously injured unless payment is made by a method other than EFT.

## Why All The Fuss?

- President’s Management Agenda / CFO Council Initiatives Scorecard System Require > 96% EFT Payment Rate for a “Green” Grade.
- EFT saves money, is faster, and improves cash management.
- Treasury advised us that EFT costs $.10;  check costs $.73
- USDA January 2004 EFT Rate was 35%.
- That’s _**“Red”**__** **_and “Last” on the Government-Wide Metric Tracking System.
- EFT Rates are currently “self-reported” by Departments.

## Why?

- Benefits of Vendor Express to the Vendor:
- Provides convenience and reduced administrative costs by eliminating the check depositing process.
- Improves service to recipient by providing highly dependable, efficient and more timely payments.
- Increase security, by eliminating lost, forged, or stolen checks.
- Provides the vendor with funds on the payment date.

## Why?

- Benefits of Vendor Express to the Government:
- Eliminates checks printing, postage, and related administrative costs.
- Streamlines operations by reducing paperwork and reconciliation.
- Provides effective way to comply with the Prompt Payment Act.
- Provides a complete audit trial and traceable payments that eliminates the research and replacement of lost checks.

## Actions to Improve EFT

- Identify Most Frequent Check Recipients & Solicit EFT Data
- Focused on a list of 2004 “Top 20” check recipients.
- UPS
- Fed-Ex
- Telephone Vendors (SBC, Qwest, AT&T, Cellular One, Verizon, Sprint, Cingular, AllTel, Nextel, BellSouth).
- COD Administrative Payments Branch matching telephone vendors to TELE system to get EFT data.
- The “Top 20” vendors received approx. 40% of total 2004 check volumes.

## Actions to Improve EFT

- TOP 20			Starting		EFT Data
- 		        	2004	VEND Codes	Found For 	Percent
- 		      	_Checks_ 	 _W/O EFT_		_VEND Codes_	_Now EFT_
- Fed-Ex	        	20,145	       21		     19		 90.48%
- SBC	        		21,934	       12		     11		  91.67%
- Qwest	       	14,150	         5		       5		100.00%
- AT&T W/L      	14,342	       11		       0		     0.00%
- UPS	          		7,906	       23		     18		   78.26%
- Cellular One    	5,562	       13		       1		     7.69%
- Verizon	W/L    	5,421	       12		     12	              	100.00%
- Sprint	          	5,024	       10		     10	              	100.00%
- Cingular W/L    	4,930	       17		     17	              	100.00%
- AT&T	          	4,629	       11		       0		     0.00%
- AllTel	          	4,457	         9		       4		   44.44%
- Verizon	          	4,393                  13		     12                       	   92.31%
- _Nextel         _     	3,411           	       _  6 _                                _    6 _		_100.00%_
- Summary			     163		   115		  70.55%
- As of 4-11-05

## Actions to Improve EFT

- VENDOR Solicitation
- Identified 19,000 different vendors who received check payments in 2004.
- Quick check of VEND indicated we had already obtained EFT data for 3,000 of those vendors.
- On 3-4 and 3-7 COD mailed 9,000+ letters to vendors soliciting EFT data.
- Results:
- As of 4-11, have received EFT data for 1,536 of the recipients (17%).  Replies have also allowed deactivation of 120 vendor	   	   accounts.  Replies continue to roll in.
- NOTE: Many “waivered” vendors have supplied EFT data in reply to this effort.  Indication that waivers were not needed.
_***First question to vendor must be: “What is your Bank Account?”***_

## Actions to Improve EFT

- VENDOR Solicitation
- OCFO will consider deactivation of VEND record for non-responders who do not posses a valid waiver.
- Could cause payment rejects and inquiries.
- If adopted, agencies will be provided listing prior to deactivation.
- Still analyzing 6,400 of the 19,000 in attempt to find EFT on CCR or “related” VEND records prior to doing a mailout to these vendors.

## Actions to Improve EFT

- Agency Assistance
- COD has provided worksheets to each agency CFO detailing vendors, identified to the agency, without EFT.
- Agency help is needed in making contact with their vendors
- 	     to obtain EFT data.
- Instructions and forms were also provided to CFOs for getting the EFT data back to COD.

## Actions to Improve EFT

- Check Inserts
- COD has worked with Treasury to do a “stuffer” (check insert).
- Treasury will place the stuffer in the envelope of every non-employee USDA check recipient for a period of a month.  Depending on response, may repeat the process over several months.
- Stuffer provides vendor an explanation of our effort and a form for supplying EFT data back to COD.

## EFT Improvement Initiatives

- Where are we?
- Waivers, though allowable by DCIA, detract from our ability to get to “green.”
- 03-05 VEND Stats
- 	Active Vendors Excluding Employees:		342,872	100.00%
- 	_Less: Vendors with EFT__	__	__	__144,440__	__  42.13%__	_
- 	Vendors without EFT		                	198,432	  57.87%
- 	Vendors with Waivers			  75,917     38.26%
- Treasury is considering reviewing “green” requirements to allow for agencies having high volumes of waivered vendors.  No guarantee on a break though!
- Treasury also considering calculating stats versus allowing “self-reporting.”  Ensures stats are consistently calculated.

## EFT Improvement Initiatives

**Where are We?**
- January 2004 EFT rate = 35%
- March 2005 EFT rates by agency are:
- AMS		65%		FSA	67%
- APHIS		64%		FSIS	57%
- ARS		60%		GIPSA	54%
- CSREES		80%		NASS	56%
- DASO		72%		NRCS	61%
- ERS		80%		OIG	54%
- FAS		76%		RD	64%
- FNS		66%		RMA	77%
- FS		53%
- March 2005 Overall = 	59%
- Still “RED”.  Shows improvement but not near the 96% currently needed for “green.”

## EFT Improvement Initiatives

**Where are we going?**
- As stated, 79% of the VEND adds in 03-05 contained EFT data.  Going in right direction but means 21% of the adds requested a waiver.
- Continue to seek EFT data for Top 20.
- Continue to process replies to vendor letter mailout.
- Process replies to Treasury “Stuffer.”
- Agencies work listings provided to CFOs and provide EFT data to COD.
- Agencies enforce stricter policy over granting of waivers.
***	******First question to vendor: “What is your Bank Account?”***
- Make decision on de-activation of VEND codes without EFT.

## EFT Improvement Initiatives

- Thanks for your efforts thus far toward EFT Improvement.
- Agencies Play a _**HUGE  ROLE**_ in Improving EFT.
- Agencies are _first contact_ with vendor.  Battle Cry must be:
_***“***__***Ask and Limit.”***_
**(**_**Ask**_** The Vendor For EFT Data and **_**Limit**_** Waivers)**

## Contact Information

- Contacts:	CTGPD Policy Group
- Dale Theurer, Team Leader 202-720-1167
- Aaron Prose, Staff Accountant 202-720-1558
- Contacts:	COD Table Maintenance Group
- Darrell Kennedy, Supervisor 504-426-5345
- Eddie Malter, Lead Accountant 504-426-5362
- Julia Murphy, Accountant 504-426-5445
- Kirt Ulfers, Branch Chief 504-426-5350