Enterprising Payments Why Payment Hubs Make Sense · Mark K. Webster, CPA, CCM Partner Treasury...
Transcript of Enterprising Payments Why Payment Hubs Make Sense · Mark K. Webster, CPA, CCM Partner Treasury...
Mark K. Webster, CPA, CCMPartner
Treasury Alliance Group, LLC
Enterprising PaymentsWhy Payment Hubs Make Sense
Jim Furry, CTPDir-Treasury Operations
PPL
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 1
Agenda
• Introduction
• Payment Hubs
• PPL Case Study
• Q&A
Introduction
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 3
Once upon a time, payments were easy…
There was only one!
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 4
But we keep inventing new ones!
King Croesus of Lydia invents the coin
ca.. B.C.550
1800
ChecksTravelers Checks
1950
Credit Cards
ATMs
1970 1990 2000
Voice Response
Dumb Chip Cards
Shared ATMs
Global ATM Network
Popular InternetCheap Chipcards
Client/Server
Smart Chip CardsTelephone Bill Payment
PC Banking
Debit Cards
PayPalMobile
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 5
Paper
ElectronicCard
?
Transactions intended for one payment method are converted to another…
Convergence complicates life
with increased risk and reporting problems!
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 6
We struggle to adapt
Creating siloed systems with repetitive infrastructure!
Application Silos
Corporate
Consumer
Wholesale
High Value
Exceptions
Administrative Support
AC
H
Platform Silos
Pa
pe
r Ch
ec
k
Wire
Tra
ns
fer
Cre
dit C
ard
Deb
it Card
Ima
ge
Ch
ec
k
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 7
Spaghetti anyone?E
FT
!
ED
I
Tra
nsfe
r
CLS
Tax
EF
T
Lig
ht
PE
P
Check
Wire
Tra
nsfe
rs
Dra
fts
PO
S
CP
CS
Bill
Paym
ent
Cla
ims &
Reim
b
PP
DD
S
PP
DA
P
Cle
aring
Serv
ices
Positiv
e
Pay
Auto
Pay
FX
Pro
Money
Ord
ers
POS CARDS TRUST Ret. Corp. WS
EDI PC
EDI MVS
EDI Mail
CHAPS
EFT Light
TFC
FRB
CHIPS
BRAD
EDDA
EPM
FRBWT
PPDAP/PPDDS
Automated Accts Payable
Image Proof & Clearing
MICR Document Control
Payments Processing
PPD/PAP
EDI Wires Paper ClearingsACH
Payment Hubs
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 10
Enterprise Payment Hub
Data Management
Shared Services Manager
Payments Customers Rules
Balancing
&
Recon
Returns &
Repair
Reporting
&
Analytics
Security
& Risk
Mgmt
Payments Hub
Least Cost
RoutingTranslation Messaging
Release
Mgmt
Customer
Portal
Internet
Wire Room
Front Office
Back Office
ATM/POS
ChannelsPaymentsCheck
Fed
Image
ACH
SWIFT
PayPal
CLS
Target
STEP1
STEP2
VISA
MC
FedWire
Chips
ATM
Future
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 11
Why Payment Hubs
• Reduced cost
• Faster response time/Real time monitoring
• Open standards
• Fewer exceptions/Improved STP
• Improved compliance
• Network agnostic
• Available technology
• Flexible migration path
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 12
Bank 1
Bank 2
Bank 3
Bank n
PaymentsCheck
Fed
Image
ACH
SWIFT
PayPal
CLS
Target
STEP1
STEP2
VISA
MC
FedWire
Chips
ATM
Future
Corporate Payment Hub
PaymentsTrading
PartnersRules
Treasury
Workstation
General
Ledger
A/P
A/R
POS
Payroll
Enterprise Payment Hub
Data Management
Shared Services Manager
Payments Customers Rules
Balancing
&
Recon
Returns &
Repair
Reporting
&
Analytics
Security
& Risk
Mgmt
Payments Hub
Least Cost
RoutingTranslation Messaging
Release
Mgmt
Customer
Portal
Internet
Wire Room
Front Office
Back Office
ATM/POS
Channels
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 13
Why Corporate Payment Hubs
• Reduced cost
• Reduced float
• Improved information management
• Real time reporting and analytics
• Improved risk management
• Bank agnostic
• Increased control
PPL Case Study
© 2007
PPL CorporationPage 15
PPL Corporation
PPL Corporation, headquartered in Allentown, Pa., controls more than 11,000 megawatts of generating capacity in the United States, sells energy in key U.S. markets and delivers electricity to more than 5 million customers in Pennsylvania, the United Kingdom and Latin America. PPL is a $6.9 billion corporation that ranked 350 on the Fortune 500® for 2006. PPL's four principal business subsidiaries are PPL Generation, PPL EnergyPlus, PPL Global and PPL Electric Utilities. PPL employs about 12,600 people on three continents.
© 2007
PPL CorporationPage 16
PPL Treasury Organization
VP-Finance & Treasurer
Dir-Treasury
Operations
Assistant
Treasurer
Dir-Investments &
Pensions
Jim Furry, CTP
© 2007
PPL CorporationPage 17
Agenda
PPL Payment Architecture: Early 1990s
PPL Desired Architecture: Mid-1990s
PPL Actual Architecture: Mid-1990s to
Today
PPL Payment Architecture – Future
(2008 and beyond)
PPL Next Steps
© 2007
PPL CorporationPage 18
PPL Payment Architecture:Early 1990s
Accounts
Payable
Payroll
Investor
Services
Wires
Check Records
Check Records
Check Records
ACHs
ACHs
ACHs
Wires
Common
Check
Bank
Bank
Bank
Bank
Bank
FormattedChecks US Mail
© 2007
PPL CorporationPage 19
PPL Payment Architecture:Early 1990s
Problems with this architecture…
– Still largely siloed
– Duplicate functionality
PPL settlement strategy (at that time):
– Implement single disbursement system that receives “requests for payment” from PPL payable sources:
• Accounts Payable
• Payroll
• Investor Services
© 2007
PPL CorporationPage 20
PPL Desired Architecture:Mid-1990s
Accounts
Payable
Payroll
Investor
Services
Payable Records
Payable Records
Payable Records
ACHs
Wires
Common
Disbursement
System
Bank
Bank
Formatted
ChecksUS Mail
© 2007
PPL CorporationPage 21
PPL Actual Architecture:Mid 1990s to Today
Bank
Cash Receipts Details
Material/
Service
Supplier
Activities
Ve
nd
or
Ch
ec
ks
Wir
es
/
AC
HS
Remittance
Processing/
Lockbox
Fuel
Procurement
Fu
el
Ve
nd
or
Ch
ec
ks
Wir
es
/AC
Hs
Other PPL
Front Offices
(Zainet, MCS,
CSS (x2),
ECIS
Employee
Activities
Vendor
Payables
Paycycle
Oth
er
Ch
ec
ks
Wir
es
/AC
Hs
Investor
Activities
Pa
yro
ll C
he
ck
s
AC
Hs
Consolidated Cashflow Database
Receivables /
Payables
Inv
es
tor
Ch
ec
ks
Wir
es
/AC
Hs
Other PPL
Front Offices
U.S. Post Office
Electronic
Remittances
Bank Deposits
Paper Invoices
Ch
ec
k R
em
itta
nc
es
Fuel Vendor
Payables
Other
Payables /
Receivables
Interest /
Dividends,
etc.
Payroll
Electronic Invoices
Receipts /
Disburse-
ments
Legend:
Front Office
Treasury Back
Office
Treasury
Reporting
Common Check Print
© 2007
PPL CorporationPage 22
PPL Payment Architecture:Mid 1990s to Today
Problems with this architecture…
– We didn’t quite get to the complete spirit of the vision for disbursements:
• With the PeopleSoft disbursement system, all transactions have to go through the A/P vouchering process to get to the disbursement system
– So we did not implement payroll into PeopleSoft A/P, …
– And we did not implement investor payments into PeopleSoft A/P
• Controls around disbursement issuance are centralized, but we still do not have a completely automated means to implement controls around disbursements
– Cash receipts are still processed and controlled in a separate system using totally different controls and procedures
© 2007
PPL CorporationPage 23
PPL Payment Architecture:Future
PPL settlement strategy:
– Implement integrated cash settlement system (ICS):
integrated for cash disbursements and cash receipts
– Integrate Enporion’s existing physical supply chain
offerings with the new financial supply chain cash
settlement system (ICS)
– Reap business case benefits of new approach:
• Achieve reduced resources required to support
settlement business functions
• Enable greater staff flexibility resulting from common
processes, technologies and controls across
disbursements and receipts
• Operate with fewer support resources resulting from
fewer technologies supporting settlement
© 2007
PPL CorporationPage 24
PPL Payment Architecture:Future
Treasury Back Office
Receipts /
Disbursements
Receivables /
Payables
SettledCash
Receipts
Invoices
Invo
ices
Payab
les
Payab
les /
Receiv
ab
les
Payab
les
Ch
ecks
Pap
er
Bil
ls
Wir
es/
AC
Hs
Digital
Mail-
room
Material/
Service
Supplier
Activities
Fuel
Procurement
Other PPL
Front Offices
(Zainet, MCS,
CSS (x2),
ECIS
Employee
Activities
Vendor
Payables
Investor
Activities
Other PPL
Front Offices
Fuel Vendor
Payables
Other
Payables /
Receivables
Interest /
Dividends,
etc.
Payroll
Payab
les
Payab
les
Rem
itta
nce
Deta
ils
BankU.S. Post Office
Electronic
Bills
Including
ARC
Deposits
Legend:
Front Office
Treasury Back
Office
Check Remittances
Paper Invoices
Ele
ctr
on
ic
Receip
ts
Ele
ctr
on
ic
Invo
ices
© 2007
PPL CorporationPage 25
PPL Payment Architecture:Future
Advantages of this design:– Supports settlement of payables and receivables in same
system
– Provides for an exception based settlement model• Flexible verification rules implemented by business analysts
• Flexible work queues with user-definable escalation parameters
– Enables consistent procedures and controls for disbursements and receipts
– Provides integrated cash information for near-term cash planning
– Provides full management visibility into cash operations:• Operational Work Management:
– Current status of all exception queues
– Ability to dynamically reallocate resources to queues requiring additional assistance, but still maintaining appropriate segregation of duties
• Performance Metrics:
– Measures against process SLA targets (including acceptable defect rate targets)
– Drill-thru capabilities to root cause reasons for results
© 2007
PPL CorporationPage 26
PPL Next Steps
Implement Accounts Payable “OK to Pay” process on Passport A/P system
Implement Digital Mailroom for efficient extract, image and data capture
Implement Microsoft Dynamics GP for PPL’s “miscellaneous commerce”
Work with Enporion to build Integrated Cash System (ICS)
Integrate ICS with Enporion supply chain offerings – completing the integration of the physical and financial supply chains
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 27
Questions?
©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 28
Mark K. Webster, CCM, CPA
Partner
Treasury Alliance Group, LLC
http://www.treasuryalliance.com
(216) 375-4155 (mobile)
(216) 932-1678 (office)
For further information:
Jim Furry, CTP
Dir- Treasury Operations
PPL
http://www.pplweb.com
(610) -774-5237 (office)