Image-Based Wholesale Lockbox: A Powerful Transitional Solution. Achieve Greater Cost Savings on A/P Payments While Increasing Card Rebate Potential

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1 Image-Based Wholesale Lockbox: A Powerful Transitional Solution Today s state-of-the-art image-based lockbox should not be viewed as a paper collection product. It s really a transitional product that assists companies in moving from paper to electronic payment processing. Achieve Greater Cost Savings on A/P Payments While Increasing Card Rebate Potential Organizations using a U.S. Bank One Card program can now further automate purchasing and expense management and earn rebates on additional transactions by implementing U.S. Bank Access Online Payment Plus. Evaluate New ACH Opportunities to Manage Risk, Stay Innovative In tough economic times, winning organizations strive to stay innovative while continuing to focus on effective risk management, and the Automated Clearing House (ACH) payment network can support that effort in corporate treasury departments, says Janet Estep, president and CEO of NACHA The Electronic Payments Association. The Power of Green Skip the Yellow and White, Opt for Green Over 500 million phone book directories are printed every year, uilizing billions of pounds of paper, wasting enormous energy resources and ultimately filling valuable landfill space Find out how you can minimize the environmental impact.

2 Image-Based Wholesale Lockbox: A Powerful Transitional Solution As the migration from paper to electronic payments continues to build momentum in this country, a bank product you may not be hearing much about is wholesale lockbox. After all, lockbox, the longtime check collection and deposit service, is a paper product, right? And why, in this era of burgeoning e-payments, would anyone be focusing on a paper product? The reason is simple: Paper checks continue to dominate business-to-business (B2B) payment volume in the United States, and so wholesale lockbox is still a very important tool at many companies for enhancing cash flow and operating efficiency. Moreover, today s state-of-the-art image-based lockbox should not be viewed as a paper collection product, says Les Young, a Senior Product Manager at U.S. Bank. It s really a transitional product that assists companies in moving from paper to electronic payment processing. Moving toward electronic processing An image-based lockbox truncates the paper the checks and the associated remittance documents by capturing their images at the bank s lockbox operation. From that point forward, customer processing of those remittances becomes electronic. customer, and the customer applies the data to its accounts receivable system and uses the images to resolve exceptions. Instead of receiving a paper lockbox remittance package on a Wednesday morning, for instance, the company can access the receivables the previous Tuesday afternoon and begin resolving exceptions, Young explains. In addition to transmitting lockbox check and document images to customers, banks can make such images available for online viewing and provide them on CDs or DVDs for long-term storage. The lockbox bank captures receivables data from the images, transmits that data and the images to its Image capabilities can reduce the time it takes to process lockbox receipts and to access remittance

3 information, allowing companies to apply cash faster and leverage online research capabilities to improve customer service. U.S. Bank continues to invest in lockbox Some banks are so intent on preparing for the future of electronic payments that they have stopped investing in their lockbox platforms. But that s not the case at U.S. Bank. In fact, U.S. Bank is preparing for the rollout of a major wholesale lockbox platform upgrade. In a process that will begin in the summer of 2010 and extend into 2012, the bank plans to install a new lockbox platform in nine of its 15 wholesale lockbox locations. Each of these nine national lockbox locations, stretching from the West Coast to Ohio, will feature the latest in image-based lockbox features and capabilities. Consistent, multi-site processing One of the big advantages of the lockbox platform upgrade is that it will enable companies to use multiple national sites to collect lockbox receipts and deposit them in one consolidated account on a daily basis. This feature, known as multi-site processing, allows companies to use the collection sites closest to their remitters to speed receipts. But no matter which sites they use, all receipts can be deposited into the same account, and customers can review all check and related remittance images online in one place. The bank s processing procedures and the lockbox service experience for customers will be consistent across all of the national sites, Young says. Color imaging and other new capabilities Some of the capabilities wholesale lockbox customers can experience when using U.S. Bank s national processing sites will include: Color imaging. Providing check and document images in color improves readability, particularly if remitters have highlighted documents or submitted documents on thin or low-quality paper. Color imaging will be optional. Image transmission. This capability benefits customers who wish to archive images of checks and documents on their platform and have them accessible to staff over a large geographical footprint. Scannable lockbox. Users will be able to accept in one lockbox both wholesale remittances and retail-type remittances accompanied by scannable coupons. Online decisioning. Instead of returning exception items to customers by mail, U.S. Bank will provide check and document images for the customer to review online for a reject-or-process decision. Deposit splitting. Users can have one lockbox but give the bank directions on how to split individual deposits into separate accounts. Accounts receivable matching. Customers can provide U.S. Bank with their outstanding receivables file and have the bank map incoming remittances against that file to automate reconciliation.

4 Continued leadership in cash management In the next few years, U.S. Bank will be installing the upgraded image-based wholesale lockbox platform and offering a consistent processing experience at the following locations: Chicago, Los Angeles, St. Louis, St. Paul, Cincinnati, Milwaukee, Denver, Portland and Seattle. To learn more, contact your Treasury Management Consultant.

5 Achieve Greater Cost Savings on A/P Payments While Increasing Card Rebate Potential Organizations using a U.S. Bank One Card program can now further automate purchasing and expense management and earn rebates on additional transactions by implementing U.S. Bank Access Online Payment Plus. Today, more than ever, organizations are searching for easy-to-use tools that support cost reduction by promoting processing efficiencies. Payment Plus, an online payment alternative that complements a One Card program, can help achieve these objectives while improving overall payment visibility and control. Payment Plus allows organizations to: Reduce costs and fraud associated with other payment types Automate payment and reconciliation processes Enhance cash management Win-win solution Payment Plus provides a win-win solution for both buyers and suppliers. Buyers will experience improved payment visibility and control by leveraging the dynamic credit adjustments and single-use accounts found in Payment Plus. Supplier payments are processed only when approved and only for the amount authorized, allowing organizations flexible cash management. Suppliers are able to decrease their processing costs by receiving electronic payments that minimize manual effort. In addition, suppliers are guaranteed payment through this secure system. As easy as online bill payment To use Payment Plus, you go through your company s normal requisition, approval and invoice processes, explains Stephen Withrow, Vice President and Manager, U.S. Corporate Payment Services. Only the payment method changes. The process of making an accounts payable (A/P) payment becomes a lot like making a consumer online bill payment. You log into your financial application, select the invoices you want to pay and then choose how you want to pay them in this case you select the Payment Plus option, Withrow says. You deliver the payment instruction to U.S. Bank through our Access Online Web-based card program

6 management system, either by submitting an automated file or completing a simple online form. Instead of sending an electronic file to a check printer that produces and mails an accounts payable check, you send your payment instructions to U.S. Bank and we initiate payment against your card account, Withrow says. Buyers can monitor their payments with Access Online s automated reporting features. Transactions can be posted to client financial systems through Access Online file extracts. These days, companies are looking for cash anyplace they can find it, Withrow says. If you have $200,000 or $300,000 in A/P spend each month, why not earn 120 or 130 basis points on that spend through rebates? Access Online Payment Plus enables you to automate your accounts payable spend much more than you can with a One Card program alone. To learn more about this free service from U.S. Bank, talk to your Relationship Manager or Treasury Management Consultant. Controls, automation, cash back and more With Payment Plus, you maintain a high level of control over payments while achieving the additional cost savings, efficiencies and rebates of a commercial card program. The online payment process eliminates the costs associated with issuing and mailing checks, including buying check stock and postage. It also reduces staff labor by automatically reconciling payments. Furthermore, Payment Plus helps address the financial stresses that all companies are under in this economic downturn, Withrow says. Treasury departments are feeling the pressure to get more work done with fewer people, he says. Payment Plus allows you to automate your payables and cut costs without any re-engineering effort. It s a way to enhance productivity and cash management. Suppliers are paid promptly while buyers gain an additional days float because payments to U.S. Bank are based on cycle date.

7 Evaluate New ACH Opportunities to Manage Risk, Stay Innovative In tough economic times, winning organizations strive to stay innovative while continuing to focus on effective risk management, and the Automated Clearing House (ACH) payment network can support that effort in corporate treasury departments, says Janet Estep, president and CEO of NACHA The Electronic Payments Association. ACH transaction volume continues to grow because the network offers the efficiency and cost reduction that organizations need today more than ever, while subjecting them to relatively low risk, Estep says. Sources of growth Much of the ACH volume growth in the last five years has been due to the emergence of various check conversion applications. Back-office check conversion (BOC), the most recently launched of such applications, has seen growth exceeding 400% in the first half of 2009, Estep says. However, there has also been significant growth in native electronic transactions ones that don t start out as a paper check such as ACH WEB coded payments, which grew 20% in 2008 and at a rate of 12% in the first half of 2009, she notes. ( WEB is the NACHA standard entry class code for ACH debit transactions authorized by payers using the Internet.) Consumers are more comfortable making Internet bill payments than they have ever been, Estep says, and that represents an opportunity for the businesses that serve them. In 2008, Internet-initiated ACH payments reached nearly $1 trillion, Estep reports, and the overall number of ACH payments rose by 1 billion. Study, statistics highlight low risk One reason for its popularity is that the ACH payment network continues to offer low levels of risk compared to other payment types. Estep cites the Association for Financial Professionals (AFP) 2009 Fraud Study, in which 60% of respondents pointed to paper checks as the payment method most responsible for losses, compared to 20% who cited consumer cards and 10% corporate cards. Meanwhile, ACH debits and credits drew only 5% and 3% responses, respectively.

8 ACH debits can, under certain circumstances, be returned as unauthorized if they are fraudulent or for the wrong amount, among other reasons. Unauthorized ACH debit return rates, a key measure of ACH risk, have been falling for the past five years, Estep adds. Innovations to consider NACHA continues to offer new, innovative payment opportunities. Estep notes three in particular that should interest corporate treasurers: International ACH. NACHA has been working with the International Payments Framework industry group, which includes banks and the Federal Reserve, to enable U.S. companies to make and receive overseas ACH payments. The framework has developed a set of rules to create a translation link between the U.S. ACH network and similar non-urgent electronic payment systems in other countries. Estep expects international ACH transactions to utilize the framework to facilitate the flow of transactions between the United States and certain European countries by early 2010, with links to the ACH systems of other non-european countries to follow. Secure Vault Payments (SVP). This NACHA program allows organizations to provide an online, ACH credit payment option for transactions where use of a card isn t possible. SVP allows buyers to authorize payments using online banking credentials while keeping their account information secure. Colleges and universities have been among the early adopters offering this payment option. Electronic Billing Information Delivery Service (EBIDS). This program allows businesses to deliver electronic bills to their customers online banking accounts, receive authorized credit payments through the ACH network, and use ACH formats and rules to standardize electronic bill presentment and payment (EBPP) transactions among billing participants. Similar to SVP, consumers control payment timing and don t have to divulge account information to billers. Both SVP and EBIDS will enable corporations to receive payments from consumers in a secure and efficient manner, Schmidt says, and at U.S. Bank we ve been looking at how we can integrate both programs into our retail Internet bill pay site. U.S. Bank is an original member of the International Payments Framework. I expect to see an increase in international ACH payments in 2010, many of them using the standards developed through this industry initiative, says Tim Schmidt, Vice President Electronic Payments at U.S. Bank. To learn more about how you can continue to be a payment innovator while effectively managing risk, talk to your Treasury Management Consultant about new ACH opportunities.

9 The Power of Green Skip the Yellow and White, Opt for Green Over 500 million phone book directories are printed every year. That is nearly two books for every person in the country! These directories produce a staggering amount of waste, not only in terms of misused natural resources but also by filling valuable landfill space. To produce 500 million books: 19 million trees need to be harvested 1.6 billion pounds of paper are wasted 7.2 million barrels of oil are spent in their processing 268,000 cubic yards of landfill are used 3.2 billion kilowatt hours of electricity are squandered The cost associated with the delivery and disposal of these books is exorbitant. Unfortunately, these unsolicited costs fall heavily on consumers. If you would like to stop receiving phone books, visit the Opt Out tab on yellowpagesgoesgreen.org to discontinue delivery. Yellowpagesgoesgreen.org will contact the local telephone company and provide them with your name and address. This does not cost you anything. Please go to the sign-up sheet and help eliminate this problem. If you wish to continue receiving a phone book directory, be sure to recycle your old ones. Source: yellowpagesgoesgreen.org