ACH, EIPP, STP… OMG!

ACH, EIPP, STP… OMG! ACH, EIPP, STP… OMG!

Sifting Through the Jargon to Develop a Cohesive ePayment Strategy.Sifting Through the Jargon to Develop a Cohesive ePayment Strategy.

06/06/1206/06/12

2

Agenda

1

3

Source: Forbes Global 2000; PayStream Advisors, 2010: Association for Financial Professionals, 2010

The current landscape and where we’re heading

The options available to you

How to get started

2

3

Paper-based Payables Volume is a ResourceDrain for Companies of All Sizes

In 2010, the Global 2000 had…

11.2 billion invoices1

85% of invoices are paper2

57% of payments are check3

What is your organization’s costfor ineffective payables processing?

Source: Forbes Global 2000; PayStream Advisors, 2010: Association for Financial Professionals, 2010

4

The Tide is Rapidly Shifting

Source: IAPP, Accounts Payable Automation Survey, Sept. 2010

24.5%

61.3%

9.1%

46.0%

30.9%

18.3%

0%

20%

40%

60%

80%

100%

Now In 3 Years

Payment Method Usage: Now vs. in 3 Years

P-card

Paper Check

ACH/EFT

5

The Tide is Rapidly Shifting

Source: IAPP, Accounts Payable Automation Survey, Sept. 2010

26%

61%

7%

6%

47%

24%

22%

6%

24%

61%

10%

3%

44%

33%

19%

2%

0%

20%

40%

60%

80%

100%

Health careNow

Health care +3 yrs

All other now All other + 3yrs

Payment Method Usage: Now vs. in 3 Years

ACH/EFT PAPER CHECK P-CARD WIRE/OTHER

Healthcare

6

Payment and Reconciliation

$0

$2

$4

$6

$8

$10

$12

Wire Check ACH Card EIPP$0

$2

$4

$6

$8

$10

$12

Manual EIPP

Aberdeen Group May 2010 Study: "Global Payments: Maximizing Cash Flow with

Electronic Payments and Process Automation"

Accenture 2007 Study: "The Roleof Procurement Cards in theSource-to-Settle Process"

Electronic payments are a significant opportunity for cost savings

Illustrative Example Only

Payment Costs Reconciliation Costs

7

Which Paperless Option is Best?

8

Lots of Tools in the Payables “Tool Kit” E-Payments

• ACH/EDI• Commercial Cards• Wire• Electronic Accounts Payable

– Dynamic Adjustment Accounts

– Single Use Accounts– Ghost Accounts

Electronic Invoice Presentment& Payment

End-to-End Automation

9

Most Organizations Use More than One

Cap Ex

MROAd Hoc

COGS

Business Purchase Landscape

CARDSACH

CHECKS

WIRES EDI

10

The Options

ACH

Wire Transfers

Cards

1

2

3

Electronic Accounts Payable (EAP)4

Electronic Invoice Presentment and Payment (EIPP)5

2

11

ACH has Broad Acceptance and Uses

COMMON USES BENEFITS

Collections – Utilities, Charitable, RE, Membership

Disbursement – Payroll, Dividends, Refunds, Pension Payments…

B2B Trade Payables B2C One Time or Repetitive

Collections or Disbursements International ACH Payments Check Conversion – ARC,

BOC, POP Decoupled Debit – POS Return Fee Collection

Low Cost per Item Supports both Debit and Credit B2B or B2C Ideal for Repetitive Transactions Can Contain Remittance Info that

Travels with the Payment – Native Electronic Payment

Ubiquitous Acceptance through Banking System

Long Established NACHA Format Supported by all ERP Systems, NACHA File Software and Services Widely Available

“Green” Alternative

1

12

Key Considerations – ACH

ACH Payables/Receivables (DR/CR) (22,32,27,37) Payment that are the right fit for ACH? (COGS, MRO) Payment Applications (PPD, CCD, CTX, IAT, WEB) File creation (WEB,PC, Direct File) Format (NACHA format, Non-NACHA format) Addenda (STP 820, ANSI X12 formats, tax addenda) Rules and operating guidelines? (REG E, Reg CC, UCC4A) Returns, notification of changes, authorizations and enrollment Driving adoption (Direct Payment, Direct Deposit, UPIC) Remittance Reporting (EDI, Data Capture, Formatting, STP)

1

13

Wire Transfers Speed Payment Processing


Where funds need to be available immediately, and where finality of payment needs to be certain – mortgage closing, broker dealer, high dollar value B2B transactions

Can be used in conjunction with other payment types, e.g., a draw wire to fund an ACH credit file

Has high potential for wider B2B usage once the new FED wire remittance is in place

Funds available for immediate use Initiation flexibility and security Automated batch input can send

large volumes in automated fashion

Accurate, safe, and confidential Increased financial flexibility Simplified transfers, repetitive and

voice initiated options

2

14

Key Considerations – Wires

WIRES Type of wire input (Voice, Phone, PC, Web, Direct Connection) Network (FED, SWIFT,CHIPS, internal) Wire type (Repetitive, Semi-Repetitive, Free Form) Wire cutoff times per bank but follow Federal Reserve Security requirements Wire instructions (valid characters for each network, BNF, OBI,

BBI fields) New FED wire remittance data Wire reporting and advice information Tracking

2

Cards are Easy to Use

3

CARDS


Decentralized purchases Large number of purchases –

small amounts per purchase Travel, fuel, private aviation

expenses

Easy to use Network standardization Transfer of risk from supplier to

card issuer Increased productivity Revenue share opportunities Reduced processing costs Better cash flow forecasting

16

Key Considerations – Cards

CARDS Supplier adoption is key Buyers need to articulate benefits to suppliers The more spending you push onto the card, the greater the

benefits to all Consider mandating their use Enhanced spending controls (optional) Payment analytics can spot employee misuse (optional) Still growing

3

17

Virtual Card Accounts

CARDS

4


Management of strategic supplier relationships

Single Use Accounts “Ghost” Accounts Virtual Accounts Straight Thru Processing

Enhanced visibility and control Reduced operating costs from

process improvements Reduced fraud Improved on-time payment Increased early payment discounts Improved revenue sharing

opportunities Enhanced cash flow forecasting

abilities

18


Considerations Ideal if you have a substantial number of regular suppliers who

offer discounts for early payment Significant IT investments are not necessarily required by either

buying and selling organizations For best results, need to “sell” epayments as the standard for

conducting business to all internal/external partners

4

19


Over 25% of organizations have adopted virtual purchasing cardaccounts

For organizations with $1 billion+ revenue, the adoption rate is nearly double

Over the next three years, EAP use will grow byover 40%*

*Source: 2010 RPMG “Purchasing Card Benchmark Survey Report”

16.2%

21.9%

45.3%

37.9%

26.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

<$250M $250M to$1B

$1B to$5B

>$5B AllRevenues

Virtual/Cardless Purchasing Accounts Usage

4

20

Electronic Invoice Presentment &Payment (EIPP)

CARDS

5


When the buyer’s goal is invoice-to-payment automation

When the goal is to reduce your payment costs, reduce your paper use and maximize your efficiency

Bank can pay the suppliers how they want to be paid

Buyers can pay the bank the way they want to pay

Bank acts as the “converter”

Easily converts paper to electronic Everything - from invoice to final

payment – is electronic Buyer and supplier to have equal

access to data – promotes collaboration, mitigates disputes

Payment method neutrality Fewer lost or missing invoices Minimize fraud and duplicate

invoices Finance options for buyers

and suppliers Maintain a complete audit trail

21


Considerations Significant IT investments are not necessarily required by either

buying and selling organizations Implementation may take a little more time Rebates are not part of it, but the cost savings might exceed any

possible rebate

5

Electronic Invoice Presentment &Payment (EIPP) Incremental benefits

available... eliminating large capital investment

Buyer and supplier benefits are not dependent on each other

EIPP solutions are reaching critical mass

Organizations are recognizing A/P automation as an area offering tremendous potential for achieving tactical and strategic objectives.

Organizations are recognizing A/P automation as an area offering tremendous potential for achieving tactical and strategic objectives.

5

23


Almost 16% of organizations have adopted Electronic Invoice Presentment and Payment (EIPP) tools

• Currently, $1 billion+ organizations have the highest adoption rates

• 50% of organizations have plans to adopt within the next three years

13.1% 12.3%

22.6% 20.7%

15.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

<$250M $250M to$1B

&1B to$5B

>$5B AllRevenues

Current EIPP Usage

41.07%

55.81% 53.13%57.14%

49.66%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

<$250M $250M to$1B

$1B to$5B

>$5B AllRevenues

Plans to Implement EIPP with in 3 years

5

24

How EIPP Works

Cooperative approach between two participants• Buyer – uses EIPP for A/P• Supplier – uses EIPP for A/R

Both parties review and manage their transactions online Both parties have real-time visibility to invoice and payment status Both parties collaborate online to resolve disputes or exceptions

PRESENT

PROCESS PAY

FINANCE

5

25

How Do I Get Started?

Map out current payable and receivable processes

Review IT resources;

determine desired automation level

Consult with banking partners

Consult with trading partners todetermine interest and effort required

Obtainsenior manager

buy-in

Driveadoption

26

The Low-Hanging Fruit

COMMERCIALCARDS

ACH FORRECURRING LOWVALUE PAYMENTS

INVOICE PROCESSINGAND PAYMENT

SOLUTIONS

ZB2B PAYMENT

NETWORKS

WIRES FORIMMEDIATE

FUNDS, HIGHVALUE PAYMENTS

27

Is Now the Right Time?

Should I wait for the mobile revolution instead?

You needto get started

yesterdayYou have tools now to

fit your needs

Mobile and other

innovation will build on

these options

Cards, EIPP, ACHand Wires will

form the backbone for the

foreseeable future

28

Questions

Thank You!Jeff PapeSVP Group Product Manager

Corporate Payment Systems

U.S. Bank

[email protected]

Greg Rettinger AVP Global Treasury Management, AAP

U.S. Bank

[email protected]

ACH, EIPP, STP… OMG!

Documents

Transcript of ACH, EIPP, STP… OMG!