A/P and A/R: Unrelenting Adversaries or Synergetic Partners?

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1 A/P and A/R: Unrelenting Adversaries or Synergetic Partners? New York Cash Exchange Adam Kruis Vice President, Working Capital Consultant June 1 st, 2016

2 Historical adversaries 2

3 Historical adversaries Mohammed Ali, the Greatest! Smokin Joe Frazier! Go USA! Go USSR! Defeat the Dark Side, we will Join the Dark Side! Pay me quicker! Extend my terms! 3

4 Conflicting objectives Pay Receive Low cost Extend Financial incentives Highest profit Shorten 100% of receivable 4

5 Common ground? 5

6 Common ground? There has to be alternatives! Less fraud exposure! Pay me quicker! We need to mitigate risk! Let me pay later! We need more visibility into our payments! Give me full price! We want a discount or rebate! Help me automate these payments! Increase my visibility into the payment! Pay me 100% of the receivable! We need options! Price reduction, please! We want more electronic payments! 6

Give me full price! We want a discount or rebate! Help me automate these payments!

7 Common Goal: Automation and technology Payment Type Median Cost: Incoming (A/R) Median Cost: Outgoing (A/P) Paper Check $1.57 $3.00 ACH $0.56 $0.56 Wire $11.89 $14.42 Purchase Card % of payment $ $1.99 Source: 2015 AFP - Payments Cost Benchmarking Survey 7

8 Common Goal: Visibility into payment processes Invoice Received Invoice Reviewed More than 68% of controllers identified improving visibility into cash flow as the most critical finance and administrative priority. Invoice Clarification Payment Voucher Payment Initiated Source: 6 Ways to Improve Cash Flow by Automating Supplier Payments, AP & P2P Network 8

critical finance and administrative priority.

9 Common Goal: Mitigate risk 60% of Finance professionals cite fraud prevention as a primary factor in driving electronic payments A/P Protect Disbursement Accounts Ensure security of transaction detail A/R Protect Deposit Accounts Source: 2015 AFP - Payments Cost Benchmarking Survey 9

Protect Disbursement Accounts Ensure security of transaction detail

10 Common Goal: Developing options A/R Terms to Receive Invoice Sent Payment Received Each offers an opportunity to develop alternatives to benefit both, A/R and A/P A/P Terms to Pay Invoice Received Payment Sent 10

opportunity to develop alternatives to benefit both,

11 Executing on synergy 11

12 Invoicing migration 99% 96% 93% % 69% 63% 42% 57% 57% 33% 29% 48% Paper Fax EDI Web portal e-invoicing network Source: PayStream Advisors, Q

13 Invoicing alternatives Scanning of invoices Automation OCR data lifting Automated workflow Status update automation Visibility EDI exchange of billing data Procure-to-Pay network billing Options Payment off product receipt EBPP (Electronic Bill Presentment & Payment) 13

exchange of billing data Procure-to-Pay network billing Options

14 Enhanced Payments Automation Fraud prevention Options ACH Credit ACH Debit International ACH Same Day ACH Virtual Card Purchase Card Recurring payments Straight Through Processed 14

15 Online Collaboration Technologies Client portal for receipt of electronic payments Vendor portal for collection of account details Procure-to-Pay networks Dynamic discounting Supply chain financing Automation Fraud prevention Visibility Options 15

account details Procure-to-Pay networks Dynamic discounting

16 Terms Strategy A/R Organizational Focus Terms Example A/P Organizational Focus Quick cash Drive automation ACH: 2% 10 days, N30 Virtual Card: Net 15 Financial return Drive automation 100% of receivable Drive automation ACH: Net 30 Drive automation Willing to extend Focus on paper Paper Check: Net 60 Extend cash Options 16

return Drive automation 100% of receivable Drive automation ACH: Net 30 Drive

17 Where to start 17

18 End-to-end process discussion 18

19 What should you ask for? Engage a trusted partner YOUR SOLUTION 19

20 Analyze the Working Capital Cycle 20

21 Succeed in the ring of financial transactions together 21

22 Thank you! Adam Kruis Vice President, Working Capital Consultant Global Treasury Management U.S. Bank (651) This information represents the opinion of U.S. Bank and is not intended to serve as a recommendation or solicitation for the purchase or sale of any particular product or service. It does not constitute advice and is issued without regard to any particular objective or the financial situation of any particular individual. These views are subject to change at any time based upon market or other conditions and are current as of the date indicated on these materials. Products and services offered may be subject to credit approval. Eligibility requirements, other conditions, and fees may apply. Deposit products offered by U.S. Bank National Association. Member FDIC 2015, 2016 U.S. Bank MMWR (3/16) 22

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The Receivables Race to Maximize Control and Automation Nina Hanselmann Cheryl Lehotyak MN AFP April 28, 2015 Every race consists of key milestones 6. Finish 1. Prepare 5. Pit Stops 2. Know the Course