Use of Purchasing Cards and Electronic Payment Methods

In December 2011, the NSW Government instructed agencies to use purchasing cards for all transactions below $3,000 and to replace cheques with Electronic Fund Transfers (EFTs) where applicable. Around 85 per cent of government transactions are below $3,000.

When managed properly, such payment methods save money and do not present higher risk of error or fraud.

$33 million annual savings at risk

NSW government agencies are not making sufficient use of purchasing cards and EFTs to pay for goods and services. There are potential savings in processing costs of around $22 per transaction from purchasing cards and over $7 when using EFTs instead of cheques.

The government’s purchasing cards and EFTs initiative is in danger of stalling. Estimated gross savings of $127.4 million over the first six years are unlikely to be achieved unless action is taken. Ongoing annual savings of $33 million are also at risk.

The Audit Office estimates that by 30 June 2014 - the first two years of the government’s initiative -  savings will be less than half the expected $15.3 million.

“To maximise savings, agencies need to set targets and monitor progress for EFT and purchasing card use,” said Grant Hehir, NSW Auditor-General.

Departments with the potential to contribute the most are doing the least

“NSW public schools issue around 1.14 million cheques annually, or just over 60 per cent of all cheques drawn by government agencies. By switching these to purchasing cards, schools alone can save around $25 million annually,” said the NSW Auditor-General.

“Health and Police and Justice departments would also benefit from greater use of electronic payment methods,” he added.

Enabling technologies and bank data are not widely used

Expense management systems to streamline processes, maximise savings and improve data capture are not widely used. Even without the latest systems and technology, agencies can access high level information on transactions from the government’s banker. Few departments are accessing this information. Doing so will assist them to set targets, develop benefit realisation programs, analyse trends and monitor performance.

Further information

Barry Underwood, Executive Officer, 9275 7220 or 0403 073 664;