TREASURY MANAGEMENT Corporate Payables via Virtual Credit Card Presenter: Dan Trbovic
Index 1 Industry Evolution 2 Virtual Card Technology 3 Supplier Enrollment 2
Industry Evolution 3
Card Payments: The Changing Landscape The movement towards electronic solutions in the payments industry continues to accelerate around the globe The banking industry continues to adapt to innovations in the payments arena to meet the needs of our clients Purchasing cards are one of the payment choices that provide cost savings and processing efficiencies 4
Payment Automation Continuum 5
Payment For Transactions Under $2,500 Cards Continue To Increase Share Of B2B Low Value Payments As Companies Push Migration From Paper Check To Electronic. Considerable Opportunity Exists As 1/3 Of Low Value Payments Are Still Made Using Check. Purchasing cards Paper checks ACH transfers Wire transfers & others 31% 32% 37% 44% 52% 61% 58% 51% 41% 34% 6% 3% 2003 6% 3% 2005 8% 4% 2007 10% 5% 2009 10% 4% 2011 *In 2003, the capture category was "under $2,000" Source: RPMG Research - 2012 6
Payment For Transactions Between $2,500 And $10,000 Cards Continue To Increase Share Of B2B Low Value Payments As Companies Push Migration From Paper Check Purchasing cards Paper checks ACH transfers Wire transfers & others To Electronic. Considerable Opportunity Exists As 1/3 Of Low Value Payments Are Still Made Using Check. Use of Cards for higher ticket goods and services is growing Cards also continue to gain share of payments for transactions between $2500-$10000 9% 15% 19% 28% 31% ACH also experiencing strong growth as companies automate payables 78% 71% 65% 54% 48% Considerable opportunity as checks still represent nearly half of these payments 8% 5% 2003 9% 5% 2005 10% 6% 2007 12% 6% 2009 15% 6% 2011 *In 2003, the capture category was "between $2,000 and $10,000" Source:RPMG Research - 2012 7
Virtual Card Technology 8
Benefits of Virtual Card Leverage Process & Procedures Within ERP For Controls System Integration Check-like Controls Eliminate 1099 Reporting For Card Transactions Ease of Reconciliation Reduce Expense and Generate Revenue 9
Virtual Card Process Flow 1 PO & Invoice Goods & Services Company X Optional Export Of Card Transactions For Reconciliation Virtual Card Product 5 Single -Use Accounts (SUA) Payment and Remittance Detail 2 Internal Review & Invoice Approval 4 Payment Files Are Uploaded 6 Supplier Notified To Process Payment And Use Remittance Advice To Update AR Company X s ERP 3 Approved Payments File from Customer s ERP 7 Transaction Processed By Supplier And SUA Expires 10
Supplier Enrollment 11
e-payables Participants Merchant Acquirers Authorization Interchange Settlement B2B Suppliers BIP Single-use Account Static/Ghost Account/Dynamic Limits Direct Connect Virtual Terminal POS Hardware ISOs 12
Top Reasons Suppliers Resist Source: NAPCP Supplier Acceptance Survey - 2013 13
Supplier Benefits Guaranteed Funds Eliminate collection efforts and costs Streamline Accounts Receivable Process Accelerate and streamline supplier s payment collection process and help reduce administrative costs by reducing paperwork and check handling costs PCI Compliant No secure card storage obligations for supplier Increase Cash Flow Increase supplier s bottom line by receiving funds faster through accelerated terms and reducing days sales outstanding (DSO) Preferred Supplier Status Strengthen the business relationship and could increase their business to those suppliers 14
Campaign Best Practices Customer should endorse the provider s supplier enrollment team Customer should call Strategic Suppliers to encourage enrollment Technology is implemented and ready to pay suppliers Provide accurate and complete supplier list with all available contact info Offer incentives or motivation for suppliers to enroll BE ENGAGED.provide deliverables, analyze enrollment results, leverage buyer relationships 15
Supplier On-Boarding Campaign Wrap-up Recap and Adjustments Supplier Messaging, Scrubbing and Analytics Pre- Campaign Results and Progress Reports Educate and Communicate Supplier Outreach Reporting Supplier On- Boarding Transaction Processing 16
Questions?