Bank of America Merrill Lynch Case Study

Executive summary

In 2011, Provena Health and Resurrection Health Care merged to form Presence Health.

The merger provided the perfect opportunity for the new company to update their

payments capabilities.

After a strategic assessment, Presence decided to streamline processes and reduce

costs by implementing a comprehensive automated payments program. Their goal was

to leverage multiple payments solutions, with card as the preferred payment method.

Evolution of ePayables

at Presence Health

December 2015

Contents

Recognizing an opportunity . . 2

Moving toward a fully electronic solution . . . . . . . . . . 2

Comprehensive Payment Strategy . . . . . . . . . . 2

Promoting electronic payments with suppliers . . . . 3

Buyers have more leverage than they realize. . . . . . . . . . . . 3

Company-wide support is key . . . . . . . . . . . . . . 3

A long-term plan is coming to fruition . . . . . . . . 4

Forward planning pays off . . . 4

EVOLUTION OF EPAYABLES AT PRESENCE HEALTH | 2

Recognizing an opportunity

Presence Health has more than 150 locations in Illinois, including 11 hospitals and 27 long-term care and senior living facilities. The merger motivated the new company to seek ways to do business in a more cost effective manner. Presence explored their end-to-end approach to payments, with the goal of eliminating checks and fully automating processes. “Cost savings were a major driver for us, along with reducing errors through switching to paperless solutions that offer greater oversight,” says Robert Banwart, accounts payable system director, Presence Health.

Presence wanted to design a more efficient system that could:

�Maximize payment integration

�Ensure data accuracy

�Streamline processes

�Optimize cash flow

Moving toward a fully electronic solution

Pre-merger, both Provena and Resurrection leveraged some forms of electronic payments, using different systems and tools, but neither organization fully optimized their electronic options. To make necessary changes, the new company initiated a PeopleSoft conversion, giving Presence a unified accounts payable (AP) solution. At the same time, when the two legacy companies began to merge operations, they expanded their use of electronic payments and encouraged all suppliers to accept card payments.

Attracted by robust security features, increased efficiency and potential cost savings, Presence implemented solutions such as BofAML’s ePayables, a virtual card program that integrates seamlessly with existing AP processes. “It allowed us to easily consolidate the different methods the legacy companies were using to process payments, giving us a centralized system,” says Banwart. For suppliers not accepting cards, Presence offered alternative electronic payment methods, prioritizing BofAML’s Paymode-X solution. This payment option replaces paper checks by electronically sending payments and remittance data via ACH.

Comprehensive Payment Strategy

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Evolution of ePayables at Presence HealthA merger provides the perfect opportunity to automate payments

1Presence Health supplier payments from 09/01/15 through 11/15/15.

“Bank of America Merrill Lynch” is the marketing name for the global banking and global markets businesses of B“Bank of America Merrill Lynch” is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are

“Bank of America Merrill Lynch” is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, strategic a

FORWARD PLANNING PAYS OFF

Presence is a great example of how an electronic payables strategy evolves. Although they had to address a range of issues and disruptions related to a merger, they still thought very carefully about how to best create and deploy a successful strategy. “Forward planning was critical for us, and it’s where Bank of America Merrill Lynch had a real impact,” says Banwart. “Having someone to coach us through all the details has been indispensible.”

I

FORWARD PLANNING PAYS OFF

Presence is a great example of how an electronic payables strategy evolves. Although they had to address a range of issues and disruptions related to a merger, they still thought very carefully about

A LONG-TERM PLAN IS COMING TO FRUITION

Presence is already experiencing the rewards of their payments evolution. “The program has been a real success,” says Banwart. “We focused our efforts on suppliers we spend the most with, and have seen a big uptick in card acceptance among these organizations.” Recent data shows that Presence is paying almost 21% of their suppliers by card or ACH, amounting to $27.5 million, a figure that looks set to rise.1

T

A LONG-TERM PLAN IS COMING TO FRUITION

Presence is already experiencing the rewards of their payments evolution. “The program has been a real success,” says Banwart. “We focused our efforts on suppliers we spend the most with, and have seen a big uptick in card acceptance among these organizations.” Recent data shows that Presence is paying almost 21% of their suppliers by card or A

COMPANY-WIDE SUPPORT IS KEY

Implementing a new payments strategy requires high-level backing within a company — including department heads and key managers — that will help drive desired payment behaviors and supplier adoption. “Presence had support right from the top, including the director of accounts payable and treasury function, as well as buy-in from supply chain,” says Katie Steinfeld, senior treasury product sales specialist at Bank of America Merrill Lynch. “Without this momentum, the program may not have been as far-reaching or successful.”

T

COMPANY-WIDE SUPPORT IS KEY

Implementing a new payments strategy requires high-level backing within a company — including department heads and key managers — that will help drive desired payment behaviors and supplier adoption. “Presence had support right from the top, including the director of accounts payable and treasury function, as well as buy-in from supply chain,

PROMOTING ELECTRONIC PAYMENTS WITH SUPPLIERS

In addition to replacing two legacy AP systems and introducing PeopleSoft, Presence rethought how they work with suppliers. “Suppliers are key to any successful payments strategy,” says Jeanette Bugg, senior product manager, e-Payables, at Bank of America Merrill Lynch. “Thinking strategically about what type of payments methods they wanted to promote allowed Presence to put the right systems and processes in place early on and ensure supplier adoption.”

W

PROMOTING ELECTRONIC PAYMENTS WITH SUPPLIERS

In addition to replacing two legacy AP systems and introducing PeopleSoft, Presence rethought how they work with suppliers. “Suppliers are key to any successful payments strategy,” says Jeanette Bugg, senior product manager, e-Payables, at Bank of America Merrill Lynch. “Thinking strategically about what type of payments methods they wanted to promote allowed Presence to put the right systems a

PROMOTING ELECTRONIC PPROMOTING ELECTRONIC PAYMENTS WITH SUPPLIERS

In addition to replacing two legacy AP systems and introducing PeopleSoft, Presence rethought how they work with suppliers. “Suppliers are key to any successful payments strategy,” says Jeanette Bugg, senior product manager, e-Payables, at Bank of America Merrill Lynch. “Thinking strategically about what type of payments methods they wanted to promote allowed Presence to put the right systems and process

PROMOTING ELECTRONIC PAYMENTS WITH SUPPLIERS

In addition to replacing two legacy AP systems and introducing PeopleSoft, Presence rethought how they work with suppliers. “Suppliers ar

Presence wanted to design a more efficient system that could:

• Maximize payment integration • Ensure data accuracy • Streamline processes • Optimize cash flow

RECOGNIZING AN OPPORTUNITY

P

RECOGNIZING AN OPPORTUNITY

Presence Health has more than 150 locations in Illinois, including 11 hospitals and 27 long-term care and senior living facilities. The merger motivated the new company to seek ways to do business in a more cost effective manner. Presence explored their end-to-end approach to payments, with the goal of eliminating checks and fully automating processes. “Cost savings were a major driver for us, al

RECOGNIZING AN OPPORTUNITY

Presence Health has more than 150 locations in Illinois, including 11 hospitals and 27 long-term care and senior living facilities. The merger motivated the new company to seek ways to do business in a more cost effective manner. Presence explored their end-to-end approach to paymen

MOVING TOWARD A FULLY ELECTRONIC SOLUTION

Pre-merger, both Provena and Resurrection leveraged some forms of electronic payments, using different systems and tools, but neither organization fully optimized their electronic options. To make necessary changes, the new company initiated a PeopleSoft conversion, giving Presence a unified accounts payable (AP) solution. At the same time, when the two legacy companies began to merge operations, they expanded their use of electronic payments and encouraged all suppliers to accept card payments.

A

MOVING TOWARD A FULLY ELECTRONIC SOLUTION

Pre-merger, both Provena and Resurrection leveraged some forms of electronic payments, using different systems and tools, but neither organization fully optimized their electronic options. To make necessary changes, the new company initiated a PeopleSoft conversion, giving Presence a unified accounts payable (AP) solution. At the same time, when the two legacy companies began to merge operations, they expanded their use of electronic payments and encouraged all suppliers to accept card payments.

Attracted by robust security features, increased efficiency and potential cost s

Buyers have more leverage than they realizeWould you allow your customers to pay by card?

Unlikely to accept card

Likely to accept card

82% 18%

• Broad usage and strong acceptance

• Working capital improvements

• Seamlessly integrates with existing AP processes

Card

ePayablesPurchasing Card

• Complete settlement solution

• Streamlined receivables process

• Potential cost savings

Networks

Paymode-X®

ACH/EFT

CashPro® OnlineCashPro® Connect

• Low cost

• Fast, automated process

• Low fraud risk

PRESENCE’S PREFERRED PAYMENT OPTIONS

When Provena Health and Resurrection Health Care merged to form Presence Health in 2011, the new company saw an opportunity to update their payments capabilities. Aster a strategic assessment, Presence decided to streamline processes and reduce costs by implementing a comprehensive automated payments program. Their goal was to leverage multiple payments solutions, with card as the preferred payment method.

Forward planning is critical to implementing a successful payments strategy

Promoting electronic payments with suppliers can generate rewards

Leveraging a variety of payment options can maximize paper to electronic conversion

FPOTools for developers facing tax-credit changes

Affordable Housing Year 15 Strategies FPOThe Impact of Fair Housing LawsuitsWhat affordable housing developers should know about Supreme Court ruling FPOCommunity

Development Banking

“ Cost savings were a major

driver for us, along with

reducing errors through

switching to paperless

solutions that offer

greater oversight.”

Robert Banwart

Accounts Payable

System Director, Presence Health

Attracted by robust security

features, increased efficiency

and potential cost savings,

Presence implemented

solutions such as BofAML’s

ePayables, a virtual card

program that integrates

seamlessly with existing

AP processes.

EVOLUTION OF EPAYABLES AT PRESENCE HEALTH | 3

Promoting electronic payments with suppliers

In addition to replacing two legacy AP systems and introducing PeopleSoft, Presence rethought how they work with suppliers. “Suppliers are key to any successful payments strategy,” says Jeannette Bugg, senior product manager, e-Payables, at Bank of America Merrill Lynch. “Thinking strategically about what type of payments methods they wanted to promote allowed Presence to put the right systems and processes in place early on and ensure supplier adoption.”

Work began on introducing a new supplier process and streamlining payment terms. “Reconciling the differences between the legacy companies’ files was critical, but it wasn’t something we could easily do alone,” says Banwart. “That’s why we leveraged a third-party organization to help research supplier information for us.” Additionally, dedicated Bank of America Merrill Lynch specialists worked with Presence to help shape their supplier enrollment strategy.

The process began with detailed data analysis on payment types, suppliers and solutions. These efforts helped create a robust database and a fluid and consistent supplier on-boarding process, beginning with every new supplier completing a questionnaire on their payment capabilities. This allows Presence to segment by payment type, designating regular suppliers who opt to receive card payments as “preferred suppliers,” and offering more favorable terms. Card acceptance language is now required in new supplier contracts, and suppliers benefit from the opportunity to get paid faster and receive detailed remittance information.

Buyers have more leverage than they realize

Would you allow your customers to pay by card?

Company-wide support is key

Implementing a new payments strategy requires high-level backing within a company — including department heads and key managers — that will help drive desired payment behaviors and supplier adoption. “Presence had support right from the top, including the director of accounts payable and treasury function, as well as buy-in from supply chain,” says Katie Steinfeld, senior treasury product sales specialist at Bank of America Merrill Lynch. “Without this momentum, the program may not have been as far-reaching or successful.”

82% Likely to accept card

18% Unlikely to accept card

Implementing a new

payments strategy requires

high-level backing within

a company — including

department heads and key

managers — that will help

drive desired payment

behaviors and supplier

adoption.

Source: Kaiser Associates Study, 2013

EVOLUTION OF EPAYABLES AT PRESENCE HEALTH | 4

“ Bank of America Merrill Lynch” is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed. ©2015 Bank of America Corporation 12-15-0319

1Presence Health supplier payments from 09/01/15 through 11/15/15.

This high-level buy-in also helped streamline the company’s approval processes, saving time, energy and effort. “Because the guidance we’re following comes right from the top, we’re able to make decisions at a relatively low level on issues such as supplier payment methods and terms,” Banwart comments. “It’s rare that we run into issues we can’t deal with ourselves.”

A long-term plan is coming to fruition

Presence is already experiencing the rewards of their payments evolution. “The program has been a real success,” says Banwart. “We focused our efforts on suppliers we spend the most with, and have seen a big uptick in card acceptance among these organizations.” Recent data shows that Presence is paying almost 21% of their suppliers by card or ACH, amounting to $27.5 million, a figure that looks set to rise.1

The company is also benefitting from their work on the supplier database, with greater transparency into their transaction behavior at the individual supplier level. Additionally, leveraging card solutions fully across the entire organization has brought working capital benefits. Electronic transactions cost less to process, and improve visibility into and control over payments.

Forward planning pays off

Presence is a great example of how an electronic payables strategy evolves. Although they had to address a range of issues and disruptions related to a merger, they still thought very carefully about how to best create and deploy a successful strategy. “Forward planning was critical for us, and it’s where Bank of America Merrill Lynch had a real impact,” says Banwart. “Having someone to coach us through all the details has been indispensible.”

In the four years since the merger, Presence has made significant progress with payment automation. The company now has everything in place to expand their program to drive down costs and improve processing efficiencies.

Presence is paying almost

21% of their suppliers by

card or ACH, amounting to

$27.5 million, a figure that

looks set to rise.