everybody wins: enhancing buyer- seller collaboration with today's epayment tools presenter:...

Everybody Wins: Enhancing Buyer-Seller Collaboration with Today's ePayment Tools

Presenter: Michael Zoupas

Everybody Wins: Enhancing Buyer-Seller Collaboration with Today's ePayment Tools

Presenter: Michael Zoupas

In 2009, of 8.4 billion annual B2B payments, only

2.3 billion were electronic (U.S.)

Of e-payments, 75% are ACH, 18% card, 7% wire

Adoption in the U.S. is slower than in Canada and

most European countries

Source: PayStream Advisors & Aberdeen Group

Electronic Payments - Facts

©2011 Copyright U.S. Bank: Confidential and Proprietary.

E-Payments: The Buyer’s Perspective

Why Automate Your Payables?

4

5

Paper: The Rule, Not the ExceptionMost companies still rely on error-prone and costly paper methods when it comes to receiving supplier invoices.

4%

4%

6%

9%

77%

0% 20% 40% 60% 80%

Other

eInvoice

EDI

Email

Paper

Breakdown of Invoices via Receipt Method

Source: PayStream Advisors, “Invoice Automation Benchmarking Report,” Q2 10

Paper InvoiceDownstream Effects

Inefficient Processes, Late Payments, MissedDiscounts, Working Capital Compression

Buyer Supplier

Lost or Missing Invoices

Manual Data Entry

Manual Routing

Lost or Missing Invoices


Payables Volume is a ResourceDrain for Companies of All Sizes

6

Last year the Global 2000 had…

18.1 billion transactions

$11.8 trillion in spending

11.2 billion invoices

134,500 average trading partners

85% of invoices are paper

57% of payments are check

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

What is your organization’s cost for ineffective payables processing?


Top factors driving organizations to focus on e-payments

Source: PayStream Advisors, “Electronic Payments Streamline P2P, Reduce Costs” Q2 2010

E-Payment Factors

PayStream Advisors, Q2 2010©2011 Copyright U.S. Bank: Confidential and Proprietary.


PayStream Advisors, Q2 2010

Drivers of Payment Mix

ACH

P-Cards

Wires

• ACH � Less costly� Ease of integration� Number of suppliers accepting

• Purchasing Cards � Convenience� Ease of use

• Wires � International payments


E-Payments: The Supplier’s Perspective

Barriers to e-Payment AdoptionSupplier willingness to accept e-payments is the primary barrier.


PayStream Advisors, Q2 2010©2011 Copyright U.S. Bank: Confidential and Proprietary.

Historically, the value proposition has been tilted towards the buyer

This ultimately increases cost for suppliers and reflects in pricing

The Value Proposition


• Most organizations consider their suppliers only when it’s time to make a payment or when they receive an inquiry.

• Buyers need to treat their suppliers as partners in the process to ensure smooth operation and maximum utility.

• An EIPP portal, whether standalone or part of a networked solution, has benefits for suppliers, who can use it to:

� Receive immediate notification about any exceptions

� Resolve those exceptions collaboratively with buyers online

� Check invoice statuses and payment details, in real-time

Making Suppliers Equal Partners


Payment by checkin the U.S. isdecreasing Already rapid pace is accelerating – B2B

check payments are down from 81% (2004) to 57% (2010)

Majority of buyers plan to convert major suppliers from checksto e-payments over the next three years

Electronification of

payments isbecoming

standard Identify and eliminate manual

processes tostay competitive

Increase efficiencyand productivity

Fraud control ismore importantthan ever 73% of businesses experienced actual

or attempted payment fraud in 2010 Of that group, 30% incurred a financial

loss 9 out of 10 incidents

of payment fraud comes from checks

Sources: 2010 AFP Payments Fraud & Control Survey 2010 AFP Electronic Payments Survey

Cash Management – Current Landscape


Electronic payments Are more economical, safer, faster and more

efficient than paper payments Allow for automation and integration into ERP

systems Include important payment information that

makes tracking and managing payments easier

Integrated payablesand receivables

solutions Enable powerful information reporting Handle complex A/R and A/P processes with

automation Build upon strategic partnerships with buyers and

financial institutions

Cash Management – Emerging Solutions


Payables & Receivables Opportunities Address challenges inherent to inefficient A/P and A/R

Re-engineer operations with the evolution of EIPP

Accounts Receivable Accounts Payable

Labor-intensive Processes

Keeping track of incoming paymentsKeeping up with bills and payments due

Entering and verifying dataWriting, verifying, mailing, tracking checks

Taking deposits to a bank Reconciling payments

Liquidity Management

Collecting timely payments Planning and/or controlling pay dates

Accessing cash Dealing with overdrafts and late fees

Accurately forecasting cash flow Accurately forecasting cash flow

Information Integration

Reconciling multiple payment systems

Lacking up-to-date, real-time information


Evolution of InvoiceProcessing

1.Reliance on paper-based manual processes

2.Automation of process-to-pay

3.Matching of invoices to buyer reference documents

4.Submission of electronic invoices by suppliers; visibility into payables and receivables

5.Enablement of complete A/P-A/R view, providing active working capital management and trade finance for buyers and suppliers

Process & Pay

Current State

Document Matching

Trade Finance

ProcessingCost

Enabled Suppliers

Lev

el o

f A

uto

mat

ion

Supply Chain VisibilityPaper

Electronic

1

2

3

4

5

Best-in-Class EIPP


17

What is the Savings Potential…

Sources: Aberdeen Group, “Global Payments: Maximizing Cash Flow with Electronic Payments and Process Automation,” May 2010

Depending on process, costs are as high as $25 per invoice and cycle time is as long as 41 days.

Maturity Class

Cost to Process a

Single Invoice

Cycle Time to Process

a Single Invoice

Best-in-Class $4.84 3.7 days

Average $18.27 14.2 days

Laggard $25.83 41.3 days

Laggard Average Best-in-Class

Cost

Days

$25.83

41.3

$18.27

14.2

$4.843.7


18

…throughout Invoice Processing and Payment?

Both A/P and A/R can achieve significant savings using best-in-class invoice processing solutions.

Sources: Aberdeen Group, “Invoicing and Workflow,” April 2010

Laggard Average Best-in-Class

Days

Maturity Class

Days to Process a

Single Payment

Transaction

Decreasein A/P

Processing Cost YOY

Decreasein A/R

Processing Cost YOY

Best-in-Class 4.6 days 14.3% 15.9%

Average 9.2 days 3.3% 1.8%

Laggard 15.9 days 2.6% 1.2%

15.9

9.2

4.6


An inclusive approach to A/R and A/P through technology, integration and collaboration can help

• Automate invoicing• Eliminate inefficient payment processes• Enable organizations to get paid faster

PRESENTMENT

PROCESSING PAYMENT

FINANCING

How EIPP Solutions Work


Two participants• Supplier: for A/R

• Buyer: for A/P

Both parties can review and manage their transactions online

Both parties can have real-time visibility to invoice and payment status

Both parties can collaborate online to resolve disputes or exceptions

Convergence between A/P and A/R


Increase Efficiencies: Reduce manual processes, such as printing and mailing, freeing up A/R for more valuable functions, like customer relations and collections

Lower Costs: Reduce labor, material and postage costs Reduce Errors: Flag errors through built-in validation rules at the time of

submission, reducing human error and prompting supplier correction prior to buyer presentment

Improve Visibility: Benefit from online supplier access to documents and payment status, decreasing the number of calls and emails to A/P help desks

Eliminate Reprint Requests: Reduce or eliminate lost and missing invoices, which means that reprint requests from buyers will virtually be zero

Resolve Disputes Quickly: View disputes and provide supporting documentation at any time, accelerating resolution

Sources: PayStream Advisors, 2010 First Annapolis Consulting observations.

Supplier Benefits: Cost Reduction


Achieve Faster Settlement: Reduce processing and approval cycles on the buyer side, such that suppliers are paid on time or even early in some cases

Accurately Forecast Cash Flow: Decrease payment uncertainty by standardizing payment timing, allowing for enhanced visibility to perform cash flow forecasting

Decrease Days Sales Outstanding: Decrease DSO without adversely affecting customer relations through dynamic discounting and supplychain financing

Access Cheaper Capital: Benefit from more attractive financing rates (as compared with factoring or asset-based lending) through dynamic discounting

Sources: PayStream Advisors, 2010 First Annapolis Consulting observations.

Supplier Benefits: Working Capital Optimization


Technology Drives EfficiencyMaximize opportunities to streamline processes and glean relevant, actionable data

23

Electronic Processing

Collaborative Interface

Exception Resolution

Electronic Settlement

Business Intelligence

Supply Chain Efficiency

Famous Paradigm Faux Pas….

“I think there’s a world market for maybe five computers.”

Thomas Watson, chairman of IBM, 1943

“Who the hell wants to hear actors talk?”

Harry Warner, Warner Brothers, 1927

“There is no reason for any individual to have a computer in their home.”Ken Olson, president, chairman and founder, Digital Equipment Corp., 1977

Automation is the Future!!

Soft Cost Savings

Questions?

©2011 U.S. Bancorp. All rights reserved. U.S. Bank is registered to U.S. Bank National Association ND. All other trademarks are the property of their respective owners.

Michael ZoupasRegional Sales MangerU.S. Bank [email protected]

everybody wins: enhancing buyer- seller collaboration with today's epayment tools presenter:...

Documents

e payments source

late payments

suppliers perspective

buyers perspective slide

costs q2

annual b2b payments

michael zoupas slide

supplier invoices