Virtual Payments Innovations to Help Grow your Purchase Card Program. Dale Brauer Mark Becker August 3, 2016

Transcription

1 Virtual Payments Innovations to Help Grow your Purchase Card Program Dale Brauer Mark Becker August 3, 2016

2 Agenda Virtual Payments / Payment Plus Enhanced Security Flexible Payment Models (speed of pay) Program Optimization / Accounts Payable Analysis Growth Categories U.S. BANK PROPRIETARY AND CONFIDENTIAL 2

3 Virtual Payments/Payment Plus U.S. BANK PROPRIETARY AND CONFIDENTIAL 3

4 What is Virtual Pay / Payment Plus? Functionality within Access Online designed by U.S. Bank specifically to facilitate all types of payments and large transactions Contract Payments, Tuition Assistance, Utility Bills, Medical Supplies, Grants, Training, other payments Extension of the functionality you are already familiar with in Access Online, providing additional features and improved control Enhanced Security Improved Efficiency / Payment Models Systemically Enforced Policy Improved Auditability Maximized Refunds U.S. BANK PROPRIETARY AND CONFIDENTIAL 4

5 Virtual Pay/Payment Plus Process Flow 1. Submit 2. Pay 3. Monitor Create Payment Request Load to Access Online (Manual or Electronic) OPTIONAL - Forward for second level approval Cardholder recieves Single Use Account number Merchant processes transaction Transaction post in Access Online and is matched to the payment request - OPTIONAL automatch Cardholder reviews and approves transaction in Access Online OPTIONAL - Forward for second level approval Cardholder provides account number to merchant Billing Official final approves and certifies EDI file(s) flow Financial/ERP system U.S. BANK PROPRIETARY AND CONFIDENTIAL 5

6 Virtual Pay/Payment Plus Enhanced Security No Plastic Designed to be truly virtual Cannot be lost or stolen Transactions initiated remotely Phone Internet (Straight Through Processing) Plastic remains an option for select accounts if needed U.S. BANK PROPRIETARY AND CONFIDENTIAL 6

7 Virtual Pay/Payment Plus Enhanced Security Single/One Time Use Accounts (SUAs) Unique 16-Digit account number per transaction Available to charge below a specified dollar amount for limited time Default - Good for 45 days from date of creation - configurable Cardholder sets expiration date Prevents reuse by merchant Virtually eliminates fraud and misuse Online Payment Request required to obtain SUA Secure Address in User Profile required for Payment Plus info Use instead of check, ACH or EFT payment U.S. BANK PROPRIETARY AND CONFIDENTIAL 7

8 Virtual Pay/Payment Plus Enhanced Security Precise Pay Optional functionality that requires vendor to charge the exact amount Declines all transactions attempted for.01 more/less than identified amount Prevents splitting of charges, unexpected amounts, multiple transactions Reduces the possibility of fraud/misuse even further Not recommended for transactions with fluctuating exchange rates U.S. BANK PROPRIETARY AND CONFIDENTIAL 8

9 Virtual Pay/Payment Plus Improved Efficiency Improved Process Flow - Second Level Approval The ability to require additional approval(s) before actions take place Multiple layers of approval can occur at each processing point below Process Point A. When Creating the Payment Request Option to require second approval before cardholder receives SUA A/OPC can designate the second approver: CO, RM, Budget, AO, other Systemically enforces that policy be followed before SUA generated Process Point B. When Approving and Certifying for Payment to the Bank After the cardholder has matched the Payment Request with the transaction, the cardholder can select a second approver to review their work before forwarding it on to the Approving/Billing Official for certification Oftentimes agencies would like the Resource Manager to take a last look at the line of accounting to ensure it is correct U.S. BANK PROPRIETARY AND CONFIDENTIAL 9

10 Virtual Pay/Payment Plus Improved Efficiency Forwarding Technology The entire process from the creation of the payment request to certification allows for each step to be forwarded within Access Online to the next user's queue for action For example, if the cardholder forwards the payment request to a Contracting Officer, it will move to the CO's queue for action. The process continues this way until certified by the Approving/Billing Official. Notification Cardholder can designate any number of users to receive an when the payment request is generated Anytime within the Virtual Pay / Payment Plus process where a user receives a task in their queue, that user is automatically notified via . U.S. BANK PROPRIETARY AND CONFIDENTIAL 10

11 Virtual Pay/Payment Plus Improved Efficiency Straight Through Processing - Ability to automate all steps between creation of payment request and reconciliation - Configurable E-Payment Requests ability to receive an electronic file from a financial/erp system to automatically load the payment request/instruction Automated Vendor Notification ability to automatically send the Single (one-time use) number to the vendor once all approvals are in place Automated Payment ability to send immediate payment to vendor Auto-matching ability for Virtual Pay/Payment Plus to automatically match Payment Request/Instruction with Transaction making the match ready for Approval and Certification U.S. BANK PROPRIETARY AND CONFIDENTIAL 11

12 Virtual Pay/Payment Plus Improved Efficiency Vendor paid by the bank within 2-3 days No late fees No interest charges No disruption in service Potential for discounts for early payment U.S. BANK PROPRIETARY AND CONFIDENTIAL 12

13 Virtual Pay/Payment Plus Improved Efficiency Speed of Pay to Bank No need to wait until the end of the cycle to pay Can approve and certify for payment at any time during the cycle Reduces or eliminates delinquency, interest penalties Improves speed of by up to 30 days faster Maximizes Refunds Payment Models Daily Pay certify/pay transactions daily Cycle Pay certify/pay entire statement at cycle U.S. BANK PROPRIETARY AND CONFIDENTIAL 13

14 Cycle-based Standard GPC Static account number Daily Pay Payment Plus Single use account number Freedom Cycle Payment Plus Single use or static account number Standard security Enhanced security Enhanced security Order form Payment request form Payment request form Merchant can process account number at any time no restriction No second level approval Access Online reporting Confirmed R & A before payment Option for second level approval/certification Additional specialized reporting Confirmed R & A before payment Option for second level approval/certification Additional specialized reporting Minimal training Moderate training Moderate training Must Certify all transactions that posted within cycle at cycle end Certify each transaction individually throughout cycle Certify selected groups of transactions at any time Standard refunds Maximized refunds Maximized refunds U.S. BANK PROPRIETARY AND CONFIDENTIAL 14

15 Virtual Pay/Payment Plus Improved Efficiency Ability to Send EDI Invoice Only to Improve Speed of Pay after Certification Contracts obligated up front No need to send Obligation file for some Financial/ERP systems Saves an additional 2 days in payment process Cycle Based Micro Purchase Cards = 7-10 Business Days to Pay after Cycle Ends Payment Plus with Obligation & Invoice = 5-7 Business Days to Pay Payment Plus Invoice Only = 2-4 Business Days to Pay U.S. BANK PROPRIETARY AND CONFIDENTIAL 15

16 Virtual Pay/Payment Plus Improved Efficiency Tremendous improvement over Cycle Based Payment Options within Virtual Pay/Payment Plus allow for further improvements Reduced or eliminated delinquency and interest penalties Increased refunds by 40% Cycle Based Payment Delayed for days until After Cycle Ends Cycle Based Micro Purchase Cards = 7-10 Business Days to Pay Payment Plus with Obligation & Invoice = 5-7 Business Days to Pay Payment Plus Invoice Only = 2-4 Business Days to Pay U.S. BANK PROPRIETARY AND CONFIDENTIAL 16

17 Virtual Pay/Payment Plus Improved Efficiency Transaction Initiated Day 1 of Cycle Day 1 Day 2-3 Day 4-30 Day 31 Day 32 Day 33 Day Create Order Call Vendor Transaction posts Vendor Processes payment in Access Online Create Order Call Vendor Transaction posts Vendor Processes payment in Access Online Create Order Call Vendor Vendor Processes / Receives payment Reconciliation Approval Certification Obligation file sent Invoice File sent Day 1 Day 2-3 Day 4 Day 5 Day 7 Day 9-12 Reconciliation Approval Obligation file Invoice File Certification sent Sent Day 1 Day 2-3 Day 4 Day 5 Day 6-8 Transaction posts in Access Online Cycle Based Payment Process Time Virtual Payment Average Process Time Reconciliation Approval Certification Invoice file sent Payment sent to bank day buffer before delinquency Baseline refund (file turn ) Payment Sent to bank day buffer before delinquency Refund up to 40% higher (file turn 8-20+) Virtual Payment Sraight Through Processing with Invoice Only Potential Process Time Payment Sent to bank day buffer before delinquency Refund up to 40+% higher (file turn 3-15+) U.S. BANK PROPRIETARY AND CONFIDENTIAL 17

18 Virtual Pay/Payment Plus Systemically Enforced Policy Second Level Approval - Configurable to suit your program Contracting officer can approve transactions before they take place One time use account number does not get provided without CO approval Budget/Resource Manager can review accounting code before certification Compliance with Prompt Payment Act Reduces or eliminates delinquency and interest penalties Faster payment models (Daily pay) notification to ensure users are aware and act promptly Reduction/Elimination of Fraud, Waste and Abuse Single (one-time) use accounts minimizes availability of live account Precise Pay limits charge to exact amount Second Level Approval ensures proper transaction up front U.S. BANK PROPRIETARY AND CONFIDENTIAL 18

19 Virtual Pay/Payment Plus Improved Auditability Tracking Records the user id for every action from the creation of the payment request all the way through to approval and certification Allows A/OPC to monitor, or an auditor to confirm, that users are following policies Reporting Detailed reporting available online for 2 years Transaction data by request for 6 years, 3 months All standard reports plus 4 additional reports designed specifically for Virtual Pay / Payment Plus. Notification Configurable to notify A/OPC or others when actions take place U.S. BANK PROPRIETARY AND CONFIDENTIAL 19

20 Program Optimization U.S. BANK PROPRIETARY AND CONFIDENTIAL 20

21 Program Optimization GSA SmartPay Training Forum Washington, D.C. August 3-5, 2016 Mark Becker Manager, Commercial Card Program Optimization U.S. BANK PROPRIETARY AND CONFIDENTIAL 21

22 Agenda 2014 RPMG Purchasing Card Benchmark Key Statistics Program Optimization Overview Getting Started U.S. BANK PROPRIETARY AND CONFIDENTIAL 22

23 % of Policy Tier Transactions Placed on Card 60% 50% 53% 40% 30% 32% 20% 10% 13% 0% <$2500 $ $10,000 $10,000 - $100,000 Source: 2014 Purchasing Card Benchmark Survey RPMG Research U.S. BANK PROPRIETARY AND CONFIDENTIAL 23

24 Average Transaction Size Top Quartile $645 Average $441 Source: 2014 Purchasing Card Benchmark Survey RPMG Research Federal Government U.S. BANK PROPRIETARY AND CONFIDENTIAL 24

25 Goods Placed On Cards Office Equipment and Supplies Operating Goods and Supplies Computer/Mobile Hardware/ Software Construction Materials and Capital Assets Other MRO Goods Inventory 41% 40% 38% 92% 91% 87% % of respondents placing commodity on cards 0% 20% 40% 60% 80% 100% Source: 2014 Purchasing Card Benchmark Survey RPMG Research U.S. BANK PROPRIETARY AND CONFIDENTIAL 25

26 Services Placed On Cards Education and Training Business Services 84% 81% Contractual Repair and Maintenance Transportation and Delivery 65% 60% Professional Services Utilities Other Services 44% 37% 47% % of respondents placing services on cards 0% 20% 40% 60% 80% 100% Source: 2014 Purchasing Card Benchmark Survey RPMG Research U.S. BANK PROPRIETARY AND CONFIDENTIAL 26

27 EAP/Ghost Account Adoption 50% 45% 43% 40% 35% 30% 25% 20% 18% 26% 34% Average Transaction Size $4,842 (survey wide) Little to no impact on traditional purchasing card 15% 10% 5% 0% Source: 2014 Purchasing Card Benchmark Survey RPMG Research U.S. BANK PROPRIETARY AND CONFIDENTIAL 27

28 EAP Adoption (Virtual Payments) Commodities Expansion Inventory Construction Capital Assets Repairs and Maintenance Professional Support Utilities Source: 2014 Purchasing Card Benchmark Survey RPMG Research U.S. BANK PROPRIETARY AND CONFIDENTIAL 28

29 EAP (Payment Plus) Considerations Systems modification cost/supplier training Potential EAP eligible spend vs. added value Ability to use ghost card as alternative Need for controlled card payment solution U.S. BANK PROPRIETARY AND CONFIDENTIAL 29

30 Supplier Acceptance Best Practice Organizations pay 35% more suppliers with cards Best Practices Employ issuer supplier enablement assistance Clearly address supplier benefits Improved Cash Flow Lower Credit/Risk Bad Debt Reduced Credit Check/Lines of Credit Processes Lowered NSF/Non- Payment Claims Reduced AR/Billing Manpower Expanded Customer Base Increased Customer Loyalty Source: 2014 Purchasing Card Benchmark Survey RPMG Research U.S. BANK PROPRIETARY AND CONFIDENTIAL 30

31 Program Optimization Definition Best practice evaluation process used to maximize commercial card program Focuses on process, policy and opportunity identification Provides best practice recommendations, financial business case, and action plan Benefits 1. Transaction Cost Savings 2. Rebate 3. Working Capital Improvement 4. Improved Supplier Management 5. Enhanced Control 6. Improved Cardholder Convenience U.S. BANK PROPRIETARY AND CONFIDENTIAL 31

32 Program Optimization Process Understand Objectives & Challenges Collect Data Benchmark & Capturing Opportunity Commitment & Action Present Program Collect and Analyze AP Data Provide Benchmark Comparison Obtain Executive Approval Develop Initial Plan Discuss Preliminary Findings Identify Opportunity Build/Execute Action Plan Interview Key Personnel Build Business Case Measure Results Conduct Additional Analysis U.S. BANK PROPRIETARY AND CONFIDENTIAL 32

33 Opportunity Capture Approach Long Term Higher volume Short Term Lower volume P-Card Slippage & Non-Card Travel Spend Current Policy/ Process Enforcement Policy & Process Adjustment/Ghost Accounts Payment Plus U.S. BANK PROPRIETARY AND CONFIDENTIAL 33

34 U.S. Bank Optimization Supporting Products Enhanced Product Suite Access Online Payment Plus Travel VirtualPay Managed Spend/Event Planner Comprehensive benchmarking and business case Best practice recommendations and action plans Supplier enablement assistance Financial System Support Ghost Cards U.S. BANK PROPRIETARY AND CONFIDENTIAL 34

35 Sample Financial Benefit Benefit Category Benefit Amount Rebate $83,127 Client Financial Benefit Transaction Cost Savings $177,964 Cash Float Savings $1,361 Total Financial Benefit $262,452 U.S. BANK PROPRIETARY AND CONFIDENTIAL 35

36 Getting Started - Eight Easy Ways to Optimize Require Card Usage for Small Purchases Increase Card Limits Expand Access to Cards Unblock MCC Codes Set up Ghost Accounts Target Specific Spend Categories Identify Payment Slippage Establish Card in Accounts Payable Source: 2015 Visa Program Optimization Research U.S. BANK PROPRIETARY AND CONFIDENTIAL 36

37 Growth Categories U.S. BANK PROPRIETARY AND CONFIDENTIAL 37

38 Growth Categories Micro purchase Pre-priced Contracts up to $150K Contract Payments Tuition Utilities Grants Miscellaneous Payments Other U.S. BANK PROPRIETARY AND CONFIDENTIAL 38

39 Questions? U.S. BANK PROPRIETARY AND CONFIDENTIAL 39

40 Thank You! Presentations are available at: U.S. Bank (R-07/16) MMWR U.S. BANK PROPRIETARY AND CONFIDENTIAL 40