About the Speakers Henry Ijams, CAPP/CPM

Transcription

1 Electronic Payments: Six Supplier Savvy Steps Toward epayment Success About the Speakers Henry Ijams, CAPP/CPM Managing Director PayStream Advisors, Inc. Mr. Ijams' 25 years of experience focuses on trends and technologies in financial operations automation including strategies regarding the automation and benchmarking of Purchasing and Payables processes. Through PayStream Advisors, Mr. Ijams consults with domestic and international organizations that want to take advantage of leading practices and automation solutions. Henry Ijams

2 About the Speakers Cedric Bru Global Head of Sales, Marketing & Business Development Syncada from Visa Based out of San Francisco, California, Mr. Bru is responsible for expanding the Syncada network around the world with the addition of global and domestic financial institutions. He brings experience relating to payments, finance, information management and supply chain. Prior to joining Syncada, he held roles in product strategy, corporate development, sales and consulting at Visa and Hewlett Packard. Cedric holds an M.S. from the Institut National des Sciences Appliquees de Toulouse, France and an M.B.A from the Haas School of Business, University of California at Berkeley. Cedric Bru Agenda Current State of Payables Automation epayments Trends The Savvy Six to Success Syncada from Visa Overview 4

3 PayStream s epayment Survey More than 500 respondents Geography: 98.4% respondents from North America Size Large Co s (annual rev > B): 40.3% Mid size Co s (00 M < annual rev < B): 33.4% Small Co. s (annual rev < 00 M): 26.3% Footnote: PayStream s epayment & P Card Survey was conducted in January 20 with the understand demand drivers for payment innovation PayStream s Electronic Payments and Purchasing Cards Benchmarking Survey 0/ Electronic Payment Technologies have Matured Purchasing cards and e payments have matured with more than two thirds of companies using these tools Latest survey results reveal that while epayments adoption is high, epayments penetration is low

4 Adoption of US B2B Payments has lagged Current State B2B Payments Paper Checks still dominate ACH payments only make up 2 percent of the 8.4 Billion in annual B2B payments 3,800 Large enterprises (<$500 MM) initiate more than 80 percent of these transactions ACH Remittance Enabled epayments promotion by banks and Payment Services Providers such as Syncada have boosted growth to 6 percent annually PayStream counsels clients to look for ways accelerate the use epayments Benefits: Lower business payment processing costs Drive revenues from disbursement operations Footnote: 8.4 Billion annual B2B Payments; ACH Volume is.7 billion transactions annually PayStream s epayment & P Card Survey was conducted in January 20 to understand demand drivers for payment innovation 7 Why is this so? The Chicken or the Egg? Is the Problem, Lack of payers wanting to pay OR Lack of billers ability to accept? 8

5 The Worlds Greatest Paper Processor The US has a world class check payment infrastructure: The Federal Reserve and Banks developed a very efficient way of reconciling paper payments since the 800 s The corporate payables and receivables environments in most companies are optimized for check payments, not epayments Most companies making B2B payments are geared to issue checks Most companies receiving payments have established lockboxes or internal receivables processes to post payments from the check and accompanying remittance documents. Until 9/, many organizations also had the perception that current checkbased processes work well. 9 Problems Implementing epayments Payer s Accounting software system weaknesses: Accounting applications such as enterprise systems from SAP, PeopleSoft do not sufficiently support the creation of electronic payment transactions (for example, trading partner profiles which store ACH routing numbers); Lack of enrollment processes: Collecting payment routing details and the associated remittance instructions from billers and then populating these into payables or ERP software is a significant task. Data mapping is complex: Companies using ACH transactions that carry remittance detail within the payment may require unique coding to generate a payment that is acceptable to their trading partners. Remittance limitations: Remittance capacity within certain payment types, such as wires and cards, is limited. Data translation is not automatic: Labor intensive processes for the billers to receive the electronic payments and post them into their financial applications stymie the adoption of electronic payment solutions. 0

6 What do businesses want? NACHA conducted a study to understand the payment needs of suppliers. especially small businesses. Key Insights: 65 percent of surveyed Payers and Billers would increase their use of electronic payments if: Enabled payment via their bank s online system. Make an e payment without sharing account information. Make a payment electronically and reconcile automatically with an accounting software. Ability to link invoice and payments electronically. Footnote:.NACHA Sponsored Small Business Payment Study 2008 Celent POLL QUESTION ONE PLEASE TURN YOUR ATTENTION TO THE POLL QUESTION POD 2

7 Top Automation Goals Q: What is your top AP automation goal for 20? Organizations are not interested in merely handling paper better, but want to remove paper from the source Source: PayStream Invoice Automation Benchmarking 200 Six Steps to epayment Success

8 Savvy Six Pack. Become the Payments Czar at your organization 2. Demonstrate the value 3. Evaluate Working Capital/Discount Opportunity 4. Involve your suppliers 5. Don t aim too wide 6. Empowerment through experts 5 Savvy Six Pack #: Who owns payments? Ownership of payments is tenuous Treasury, Finance, or Procurement? Where does payments start? When a payment is made or when an order is created? Or is it the entire process? Become the Czar The informal political term "czar" or "tsar" is employed popular usage to refer to high level officials who oversee a particular policy. Empower the Organization for Change 6

9 Top Reasons for epayments Automation 7 Savvy Six Pack #2: Demonstrate the value Knowledge is your power Increased awareness drives adoption Most CFO s & Controllers don t understand how simple savings can be achieved Conduct a payment spend assessment Sort file by invoices per supplier Dollars per supplier Develop a conversion forecast Prepare a return on investment model Prove the business case 8

10 Savvy Six Pack #3 Evaluate The Working Capital/Discount Opportunity. Discount opportunities are frequently multiples of your P Card rebate 9 Importance of early payment discounts 20

11 Payments & Working Capital Electronic invoicing reduces mail latency and desk float so invoices reach AP faster Invoice validation capabilities reject exception invoices back to suppliers so only clean invoices come into AP Faster approval means improved control of discount capture 2 Goal: Discount Capture is a best practice Capture all discount opportunities 2.5% Automate to minimize missed discounts 2.0%.5% 2 Pro-rated discount to cover remaining missed opportunities.0% 0.5% $$ $$ 0% Day 0 Day 45 Capture discounts against current standard terms Employ pro-rated terms across supplier base Drive incremental dynamic discounts 22

12 POLL QUESTION TWO PLEASE TURN YOUR ATTENTION TO THE POLL QUESTION POD 23 Savvy Six Pack #4: Involve your Suppliers NACHA conducted a study to understand the payment needs of suppliers. especially small businesses. Key Insights: 65 percent of surveyed Payers and Billers would increase their use of electronic payments if: Enabled payment via their bank s online system. Make an e payment without sharing account information. Make a payment electronically and reconcile automatically with an accounting software. Ability to link invoice and payments electronically. 24 Footnote:.NACHA Sponsored Small Business Payment Study 2008 Celent 24

13 Barriers to Adoption of Electronic Payment Methods 25 Overcoming the Major Barrier to Adoption Supplier Resistance: The biggest barrier hindering epayments initiatives is supplier adoption Thus, you must Involve Suppliers from the Start Buyers fail to effectively communicate the value of AP automation initiatives to their suppliers, and as a result, struggled to generate the results they expected. Buyer organizations need to be more proactive in providing supplier driven visibility into the invoice approval and settlement process Technology providers that deliver supplier on boarding services in conjunction with the solution itself are gaining strong traction in the market 26

14 Traditional Vendor Enrollment Methods Staff up with temps or gear up team for a big push Send 2 3 mailers notifying vendor base of initiative and asking for electronic banking information Follow up with 2 3 e mails notifying & asking Start the calling process Typically a one time effort that lasts 3 9 months Traditional Problems Encountered Don t mandate change strongly enough => poor adoption Day to day work prevents continual, consistent follow up One time effort means that bank account data goes stale

15 Savvy Six Pack #5: Don t aim too wide If your initiative is too broad, it has a higher chance it will: a)get derailed in the political process b)never get started 29 Savvy Six Pack #6: Use third parties to augment your capabilities Many clients use the savings or revenues generated to drive other improvement initiatives Discount Management can be an very important tool to boost your einvoicing ROI Growth of electronic payment has not suffered due to a lack of supplier adoption rather the idea (egg) was never born Buyer organizations generally have neither the expertise, nor the resources to convert a their own suppliers from paper to electronic payment The proven strategy is to leverage the experts to recruit your suppliers 30

16 Transformation in Payment types over past 2 years 3 The Open Global Financial Supply Chain Network

17 Syncada Built for banks Joint venture - Visa and U.S. Bank Consistent network rules Backed by patented global technology Supports compliance activities Web-hosted network Network Quick Facts Operational since 998 Headquartered in Minneapolis, USA Operations in North America, Asia and Europe (global staff 500+) Processed more than USD $8B in 2009 Nearly 200 buyers (Fortune 2000 companies and govt) 6,000+ suppliers Customer service in 22 languages Local payments in 47 countries in 5 currencies What is Syncada? Invoice Process Invoice Payment Invoice Financing Business Intelligence

18 How It Works: Process & Pay (). Orders for Goods or Services How It Works: Process & Pay (2). Orders for Goods or Services 2 2. Invoices

19 How It Works: Process & Pay (3) 3 2. Orders for Goods or Services 2. Invoices 3. Reference Documents How It Works: Process & Pay (4) 4 2. Orders for Goods or Services 2. Invoices 3. Reference Documents 4. Audits

20 How It Works: Process & Pay (5) Orders for Goods or Services 2. Invoices 3. Reference Documents 4. Audits 5. Invoice Approval How It Works: Process & Pay (6) Orders for Goods or Services 2. Invoices 3. Reference Documents 4. Audits 5. Invoice Approval 6. Call for Funds

21 How It Works: Process & Pay (7) Orders for Goods or Services 2. Invoices 3. Reference Documents 4. Audits 5. Invoice Approval 6. Call for Funds 7. Single Payment How It Works Process & Pay (8) Orders for Goods or Services 2. Invoices 3. Reference Documents 4. Audits 5. Invoice Approval 6. Call for Funds 7. Single Payment 8. Payment Across Multiple Buyers with Detailed Remittance

22 How It Works: Process & Pay (9) Orders for Goods or Services 2. Invoices 3. Reference Documents 4. Audits 5. Invoice Approval 6. Call for Funds 7. Single Payment 8. Payment Across Multiple Buyers with Detailed Remittance 9. Net Settlement How It Works: Process and Pay Orders for Goods or Services 2. Invoices 3. Reference Documents 4. Audits 5. Invoice Approval 6. Call for Funds 7. Single Payment 8. Payment Across Multiple Buyers with Detailed Remittance 9. Net Settlement 0. Analysis

23 Value to Business LOGO FPO Reduce processing costs Paper invoices Paper check Invoices paid in error Fees: late or post audit Improved visibility to A/P process Standardized receipt and workflow process Increase financial control and regulatory compliance Improve working capital Questions & Answers Paystream Advisors, Inc Henry Ijams Managing Director Syncada from Visa Cedric Bru Global Head Sales, Marketing, Development