Virtual Card Payments for A/P Making Money Paying the Bills Todd Albers, Senior Payables Program Strategist U.S. Bank Minnesota AFP Annual Conference April 28, 2015
Introduction Todd M. Albers US Bank, Corporate Payment Systems -15+ years in product management in the financial services area, the last nine years working specifically on virtual card & purchasing card integrated solutions across the public and private sectors. 2 U.S. Bank Confidential
U.S. Bank Profile and Expertise 3 U.S. Bank Confidential
Discussion Topics Current Payment Trends Overview of Virtual Card Solutions Questions Next Steps 4 U.S. Bank Confidential
Factors Driving Electronic Payment Trend Source: PayStream Advisors, Q3 2013 5 U.S. Bank Confidential
Payment Shifts Payment Shifts in Past 12 Months (Mean Distribution) Source: PayStream Advisors, Q3 2013 6 U.S. Bank Confidential
What s Driving the Change? Key Drivers of Accounts Payable Makeover Source: PayStream Advisors, Q3 2013 7 U.S. Bank Confidential
Impact of Cards on Operational Efficiency $90.20 $69.82 $20.38 Source: 2014 Purchasing Card Benchmark Survey, RPMG Palmer & Gupta 8 U.S. Bank Confidential
Questions for an Informed Decision Are we selecting the optimal methods of payment? Do we have the right level of visibility? How can we benefit from improving our procure-to-pay practices? How do our policies and procedures compare to industry best practices? Do we have appropriate controls? 9 U.S. Bank Confidential
Common Barriers to Change, Control Need to keep existing approval processes, especially for larger dollar purchases Don t want to increase the number of cards in circulation Data, Our organization has not changed payment methods because we Want to retain all pre-purchase data Tax Require tax review prior to payment Change No appetite to change existing pre-payment processes Cost Other providers charge fees for software, etc. 10 U.S. Bank Confidential
Solution Addressed by Virtual Cards 11 U.S. Bank Confidential
Virtual Card Benefits 1 2 3 4 5 Reduce operating costs Increase control Expand spend visibility Enhance cash management Improve revenue sharing opportunities 12 U.S. Bank Confidential
Virtual Cards Business Process View Only the payment method changes PAYMENT INVOICE RECEIPT FINANCIAL SYSTEM CODING APPROVAL 13 U.S. Bank Confidential
How Do Virtual Cards Work? Truly as easy as 1 2 3 14 U.S. Bank Confidential
Step 1: Submit Truly as easy as 1 Submitting your payments is easy. Simply submit an automated file or enter the required information into U.S. Bank Access Online and your payment is initiated. 15 U.S. Bank Confidential
Step 2: Pay Two automated payment options: Cardless accounts Straight-through processing Truly as easy as 1 2 16 U.S. Bank Confidential
Cardless Options Truly as easy as 1 2 Pay suppliers securely using virtual dynamic credit adjustments and single-use accounts. Suppliers receive full remittance details so your payment can be applied correctly, even when including multiple invoices on one payment. 17 U.S. Bank Confidential
Straight-through Processing Truly as easy as 1 2 Straight-through processing / Buyer Initiated Payments allows payments to be directly deposited into suppliers' bank accounts. Faster reconciliation for both buyers and suppliers strengthens relationships. 18 U.S. Bank Confidential
Step 3: Monitor Truly as easy as 1 2 3 Monitor your payments and update your financial systems using the convenience of Access Online reporting and extracts. 19 U.S. Bank Confidential
Sample Spend Categories Water and water conditioning Regional utilities Uniforms Legal fees Association memberships Media and communications Building maintenance Industrial supplies Waste disposal Health services Contractors/consulting Raw materials Inventory purchases And Many More 20 U.S. Bank Confidential
Buyer and Supplier Benefits Top Benefits of Sending or Receiving Electronic Payments (Percent of Organizations) All Respondents Cost Savings 57% Improved Cash Forecasting 46% Fraud Control 39% More Efficient Reconciliation 37% Working Capital Improvement 27% Straight-through Processing to A/P or A/R 24% Better Supplier/Customer Relations 24% Reduction in Days Sales Outstanding 20% Ability to Take Early Payment Discounts 16% Source: AFP, Electronic Payments Survey, November 2013 21 U.S. Bank Confidential
Example Business Case - Buyer Results Enhanced cash management Improve forecasting due to precise timing of payments Increased control and security Increased automation and streamlined reconciliation Electronic payments are easily matched to statement Reduced payment costs Both buyers and suppliers have streamlined processes Eliminated paper Expanded rebate opportunities PeaceHealth saves about $50 per check by paying invoices electronically so moving some of their largest P.O. vendors into electronic payments saved thousands. That s above and beyond the costs and time associated with envelope insertion, check printing and postage. 22 U.S. Bank Confidential
Supplier Results 1 2 3 4 5 6 Receive faster and more predictable payments Reduced paper Improved reconciliation Fewer trips to bank Lowered carrying costs Stronger relationships 23 U.S. Bank Confidential
Summary and Questions Many companies are looking to e-payment methods to reduce operating costs and increase control Additional benefits include expanded spend visibility and enhance cash management Some electronic payment methods allow you to pay suppliers using dynamic credit adjustments and single use accounts Buyer and Supplier both receive benefits 2015 U.S. Bank National Association. All trademarks are the property of their respective owners. CPS 1056 (R-03/15) MMWR64095 24 U.S. Bank Confidential
Thank you! Todd Albers, Senior Payables Program Strategist U.S. Bank (612) 436-6304 todd.albers@usbank.com www.usbpayment.com 2015 U.S. Bank National Association. All trademarks are the property of their respective owners. CPS 1056 (R-03/15) MMWR65788 25 U.S. Bank Confidential