RefundsMore Hassle Than They’re Worth

Utility Payment Conference

Agenda

• Refund Processing Challenges

• Solution High-level Overview

• Refund Processing Components

• Summary and Questions

3

Refund Check Processing Challenges

• They’re so small!!

• Issuing refunds is an “orphan” process

• AP vendor master clutter

• Lack of information for AP or AR to handle customer inquiries

• High return rates from time lapse of initial transaction

• Escheat process intensive for small-dollar items and compliance by state

4

Refund Processing Overview

United StatesPostal Service

EscheatmentServices

Client

1

7 6

5

43

RefundRecipient

8

Refund payment filesubmission

Generatechecks

Deliver checks or Return

Cashcheck

Returnchecks

Customer Service support

Due DiligenceJurisdiction Reporting

Payments

Secure, Web-enabledRefund Processor / Tracker

Refund Audits Workflow ExceptionsShow Refund StatusStop-Void-Get Check ImageInput Manual refundsHandle refund changesPositive Payee / Acct Recon

$*VOID12,345,678.90

CHECK NUMBER

PAYEE NAMEPAYEE ADDRESS LINE 1PAYEE ADDRESS LINE 2CITY, STATE ZIP

Company Name and LogoP.O. Box XXXXXCollege Station, TX XXXXXPhone Number

MICR LINE HERE

8-26/430

CHECK DATE

01/15/1999 1234567890

PAY...VOID VOID VOID VOID VOID VOID VOID VOID

TOTHE ORDER OF:

PAYEE NAMEADDRESS LINE 1ADDRESS LINE 2CITY, STATE ZIP SCANNED IN SIGNER

BNY Mellon NAME HERE.

Customer Defined Information in this section for reference purporses. Potentially:PAYEE NAME:ACCOUNT OWNER NAME:ACCOUNT OR POLICY #:UNIQUE COMPANY #:REFUND CHECK SERIAL #:

CPT REASON DATE ADDITIONAL CO BILLED REFUNDED CODE FOR REFUND OF SERVICE UNIQUE INFORMATION AMOUNT AMOUNT

12345 ABCDEF123 MM/DD/YY DR. SMITHTON $23,456,789.90 $12,345,678.90

UP TO 20LINES

Company Name and LogoCompany Address Line 1Company Address Line 2City, State ZIPPhone Number

REFUNDED: 12,345,678.90

Free Form Text Box (Free Form text box will appear underneath the last line of detail. If detail

overflows on to another page, Free Form box will appear on the l ast page only.)

TOTAL:

2

5

Refund Solution – Key Functionality Desired

• Flexible refund data exchange from CIS to Provider – may be from multiple sources

• Funding for refund disbursements must be secure as must the disbursements themselves

• Comprehensive disbursement support (ACH, Check, etc.) and account management

• One stop information for customer service to handle calls

• Document the returns

• Maintenance on a single refund items

• Jurisdictional compliant escheatment

6

Receiving the Refund Files

Refund files created on a regular basis and sent to Provider

• Frequency: Variable based on client requirements – daily/monthly/etc.

• Send data daily, disburse weekly

• Send data from multiple systems, disburse together

• File layout: Virtually any to work with Client billing systems

• Contains all data required for making disbursement

• Can contain additional Client specific data – (e.g. customer number, account number, etc.)

Refund data can be validated

Challenge: Creating refund data files from CIS to Refund Provider

7

Funding Overview

Funding request is workflow’ed to a designated Client Associate

• Detail of all Refunds to be paid

• Refunds can be added/deleted

• Refund “Reason Codes” can be added to improve customer service

Funding request nets funds still remaining from stops/voids

Client reviews Refund detail and clicks “Approve” button

Client sends funds to a client-dedicated disbursement account set up “as agent for Client”

Challenge: Need to minimize bank account administration, but want approval ability and “last look”

8

Sample Refund Funding Request

Refund requests is net of previous refunds

“Detail” shows all the payments in this file

9

Refund Funding Request – Detail

All transactions in payment file are shown

List can be sorted by column

10

$*VOID12,345,678.90

CHEC K NUM BE R

PAYEE NAMEPAYEE ADDRESS LINE 1PAYEE ADDRESS LINE 2CITY, STATE ZIP

ClientP.O. Box XXXXXNY, NYPhone Number

M ICR LINE HERE

8- 26/ 430

CHE CK DA TE

01/ 15/ 1999 1234567890

PAY...VOID VOID VOID VOID VOID VOID VOID VOID

TOTHE

O RDER O F:

PAYEE NAMEADDRESS LINE 1ADDRESS LINE 2CITY, STATE ZIP SCANNED IN SIGNER

BNY M ello n NAM E HERE.

Cus tomer Defined In formation in th is sec tion for re ference purpors es . Potentia lly:PAYEE NAME:ACCOUNT OWNER NAM E:ACCOUNT OR POLICY #:UNIQUE COM PANY #:REFUND CHECK SERIAL #:

CPT REASO N DATE ADDI TI O NA L CO BI LLED REFU N DE D

CO D E FO R REFU ND O F SERVI CE UNI Q UE I NFO RM ATI O N AM O UNT AM O UNT

12345 ABCDEF123 MM /DD/YY DR. SM ITHTON $23,456,789.90 $12,345,678.90

UP TO 20LINES

ClientCom pany Addres s L ine 1Com pany Addres s L ine 2NY, NYPhone Number

REFU N DE D:

12, 345, 678. 90

Free Form Text Box (Free Form tex t box will app ear und ern eath th e last lin e o f d etail. If d etail

o v erflo ws on to ano th er p ag e, Free Fo rm box will app ear on th e last p ag e o nly.)

TO TAL:

Check Issuance

Sample Check

Could be customized

Could include inserts

Reason codes converted to text

Provider issues checks once funds are received from Client

Provider Performs all cash management services:

Stops/Voids

Reconciliation services

Positive Payee

Providing Check images

11

Provide Customer Service for Refunds

• Secure access to designated users• Ad-hoc query to find a single refund or a group of Refunds

meeting search criteria – also combination searches• Status tracking of Refund – stopped, cashed, voided, issued,

etc • Manual entry of a single Refund, with work-flowed approval• Easy void or stop-pay requests • View check dates and Refund check images• Attach other documentation• Audit trail of any changes made• Comments from all users recorded• Flexible and customizable to Client terms and data

Challenge: Develop a single platform to hold all refund data, check images, associated documents, history and comments. Platform must also have powerful inquiry and reporting tools

12

Inquiry Request

Inquiry by refund data, ranges of data, or combinations of data

Inquiry Results

All refunds matching criteria are displayed

“View” launches individual transactions

14

View a Single Refund Request and Check Image

Transaction detail is shown

Areas in gray cannot be changed

Images of checks and other documents available

15

View a Paid Refund Check Image

ClientNY, NY

Member Name andAddress

View Transaction History

Every action recorded – including ‘view’

User, date, and action all recorded

History and images stored and online indefinitely

Manual Refund Entry

Ability for Client associates to ‘create’ a single transaction

Client decides on ‘required’ data

18

Return Mail Process

Items returned from USPS with a forwarding address

Scan the image of check and envelope

Optional work flow of returns to Client for financial review

Mail new check to recipient at new address

Optional: Updates provided back to Client customer database

Items returned from USPS with no forwarding address

Flag work item to remain outstanding under the client’s escheat stale date rules and policies

Option: Route work item to Client for further investigation

Challenge: Developing a returned mail process to deal with changes in member address or status and for documentation required in later escheatment due diligence

19

Operational Reports

Standard reports are available to approved users

Custom reports provided during implementation

20

Escheatment

• Checks automatically voided

• Due diligence, as required by jurisdictions

• Reporting to jurisdictions

• Funding of escheated items to jurisdictions

• Responsible for changes in Escheatment laws for all jurisdictions

Challenge: Most clients don’t want to build and maintain the escheatment process required to comply with all state regulations, and then, keep up with changes

21

Refund Processing Overview

United StatesPostal Service

EscheatmentServices

Client

1

7 6

5

43

RefundRecipient

8

Refund payment filesubmission

Generatechecks

Deliver checks or Return

Cashcheck

Returnchecks

Customer Service support

Due DiligenceJurisdiction Reporting

Payments

Secure, Web-enabledRefund Processor / Tracker

Refund Audits Workflow ExceptionsShow Refund StatusStop-Void-Get Check ImageInput Manual refundsHandle refund changesPositive Payee / Acct Recon

$*VOID12,345,678.90

CHECK NUMBER

PAYEE NAMEPAYEE ADDRESS LINE 1PAYEE ADDRESS LINE 2CITY, STATE ZIP

Company Name and LogoP.O. Box XXXXXCollege Station, TX XXXXXPhone Number

MICR LINE HERE

8-26/430

CHECK DATE

01/15/1999 1234567890

PAY...VOID VOID VOID VOID VOID VOID VOID VOID

TOTHE ORDER OF:

PAYEE NAMEADDRESS LINE 1ADDRESS LINE 2CITY, STATE ZIP SCANNED IN SIGNER

BNY Mellon NAME HERE.

Customer Defined Information in this section for reference purporses. Potentially:PAYEE NAME:ACCOUNT OWNER NAME:ACCOUNT OR POLICY #:UNIQUE COMPANY #:REFUND CHECK SERIAL #:

CPT REASON DATE ADDITIONAL CO BILLED REFUNDED CODE FOR REFUND OF SERVICE UNIQUE INFORMATION AMOUNT AMOUNT

12345 ABCDEF123 MM/DD/YY DR. SMITHTON $23,456,789.90 $12,345,678.90

UP TO 20LINES

Company Name and LogoCompany Address Line 1Company Address Line 2City, State ZIPPhone Number

REFUNDED: 12,345,678.90

Free Form Text Box (Free Form text box will appear underneath the last line of detail. If detail

overflows on to another page, Free Form box will appear on the l ast page only.)

TOTAL:

2

Summary of Benefits to Client

• Reduce administrative labor costs in AR and AP relative to Refunds

• Eliminate system development and maintenance costs between AR & AP

• Improve member service by automating return and inquiry processes

• Reduce risks associated with the Refund process – complete visibility to transactions and history

• Large volume production capacity, backup, redundancy

• Central control over processes and visibility to all transactions

• Workflow to monitor and approve specific transactions (e.g. high dollar)

• Eliminate administrative effort and costs associated with Escheatment

• Reduced costs and risk associated with disbursements

This presentation is intended to provide a general overview of our services and is not an offering or commitment to provide any credit facilities or services. ©2009 The Bank of New York Mellon Corporation. All rights reserved.

Thank You

If you have questions or need additional information, contact:

Dan Reiff, BNY Mellon Working Capital Sales

(979) 691-7800 dan.reiff@bnymellon.com