skies clear for receivables automation - managing electronic payments in the cloud

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@OPENSCAN

Skies Clear for Receivables Automation - Managing Electronic

Payments in the Cloud

May 6th, 2014

Dynamic Enterprise Cash Flow Processing


@OPENSCAN

Timothy F. Ray joined Open Scan in 2007 as a major account executive. Following a string of successes, he was promoted to Chief Operating Officer. In this role, Tim is responsible for all operations, including sales and implementations.

During his tenure at Open Scan, Tim has led the organization in sales by closing opportunities with many Fortune 500 companies. He has built a top notch sales organization resulting in better forecasting, increased sales, and growth for the company.

Prior to Open Scan, Tim founded a commercial lending organization that focused on serving small to medium-sized businesses. As well, Tim was the Director of Western U.S. and Latin America Sales at Moldflow Corporation, the leading provider of CAD/CAE software products and services. While at Moldflow, he was responsible for building the sales organization from the ground up and developing a reseller network in Latin America.

Tim has a Bachelor of Arts Degree in Business Administration, including the Completion of Entrepreneurial Studies Program from the Department of Economics and Business at Washington & Jefferson College in Washington, PA. Tim and his wife live in Denver, CO, with their two children.

Welcome Timothy F. Ray Chief Operating Officer

Open Scan Technologies, Inc.

[email protected]


@OPENSCAN

Founded in 1998Denver, CO

Software-as-a-Solution Development Company• Enterprise solutions• Wholesale environment• Accounts receivable• Accounts payable

Delivering industry-defining automation technology toFortune 1000 companies since 1998”

The leader in financial workflow

automation including A/R & A/P with

proven success in the market for 15

years.

“

About OPEN SCAN®


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• The Pain of Electronics• The False Promise• World Class Companies• The Cash Application Opportunity• Traditional Model to process most EFT’s• Technology Options

Agenda


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The Pain of Electronic Payments• Coupled payments and remits don’t follow a standard and are

not human-readable

• Heavy IT overhead to map EDI820’s

• Processed manually

• Most remits are decoupled from the payment

Apply Technology to:

• Automate the ingestion of EDI820’s and decoupled remits

• Intelligently match and correct data before it flows into the ERP

• Eliminate the majority of the manual tasks done today


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Invoice Volume

Average Payment Volume vs. Value

10%

80%

10%

ElectronicsLockboxRemote

Electronic Volumes are Low but Increasing.

Invoice Value ($)

30%

65%

5% ElectronicsLockboxRemote

Many of Your Most Valuable Customers are Moving

Toward Electronics


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Hackett 2012 Metric: Automatic remittance posting match rate

Peer Group World Class

40%

66%

A Hackett-Certified Practice that all productivity-focused A/R managers should take steps to incorporate automatically matching at least 80% of all customer remittances to the appropriate invoices. This percentage represents payments that are completely applied, resulting in zero manual effort required. Depending upon the nature and complexity of the business, measuring the percentage of closed invoices (80%) can be an equally effective measure. Achieving this level of remittance-matching greatly reduces the manual workload for accounts receivable.

This was Published in 2005

80% - Easier Said than Done


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The result is that approximately 61 percent of all B2B

payments are forecast to be

conducted electronically by the year 2010.

http//www.emarketer.com. (June 2003) “Electronic Payments: From Online Bill Payments to Credit Cards – Statistics, Strategies, and Trends.”

This was Predicted in 2003

B2B Payment Predictions


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Why Didn’t Electronics Fulfill its Promise in the Last

Decade?

What Happened?


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100% straight-through processing (Touchless) in B2B environments has not materialized

quite yet.

Electronic Payment Chaos

No agreement on standardization

Difficulty of forcing payers to change


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WORLD-CLASS PERFORMANCE METRICS AND BEST PRACTICES


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Peer World-class

0.018% 0.015%

0.036%

0.008%

0.021%

0.006%

0.037%

0.016%

0.020%

0.004%

Process Cost as a Percent of Revenue

Credit Billing Cash application Collections Dispute Management

63%

0.048%

0.132%

The performance gap is significant…

Taking an end-to-end view we see that Top Performers use significantly less resources than Peers

Process Cost as aPercent of Revenue


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Technology Leverage

Integrate credit, order entry, customer billing, receivables, and collections applications, tax applications, intercompany billing

Auto interface with Collections and Dispute Management systems

Automatic triggering of billing

Standardization & simplification

Company-wide credit policy, Standardized terms & conditions Centralized master data management

Peer World-class

10.7

2.0

Secondary applications per $B of revenue

Peer World-class

8.5

6.5

Billing Terms(How many different terms used in

past 12 months?)

FTE Gap

Peer World-class1.9 1.8

6.1

1.3

5.3

2.4

4.0

1.1

2.8

0.7

FTEs per $B of revenue

Credit Process

Customer Billing

Collections Process

Cash Application

Dispute Management

20.0

7.2

Simplification, Standardization, & Automation


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*Process Cost = Labor costs + Outsourcing Costs

The Cash Application process challenge is not just payment automation but also electronic receipt of remittance advice (coupled is ideal)

Electronic payments alone do not reduce process costs


@OPENSCAN #OPENUP2014

Improvements in Automatic Cash Application Rates Have a Direct Affect on Reducing Average Days Delinquent

Percentile 25

Median Percentile 75

4

8

10

Percentile 25


2

6

12

Percentile 25


2

5

14

Less than 35% 35% - 65% 65% - 100%


@OPENSCAN #OPENUP2014

Reducing the Average Time to Apply Cash Has a Significant Affect on Average Days Delinquent

Percentile 25


2

4

7

Percentile 25


4

9

12

Up to one Day1 - 2 Day(s)


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Average Time to Apply Cash (Business Days From Receipt of Customer Remittance

Through Successfully Completing the Cash Application to Individual Accounts)


1.7

1.0

Automatic remittance posting match rate


40%

66%

Automatic Matching of Remittance Influences Cash Flow


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Remittance Processing Costs


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Inefficient ways to process receivables:• Lockbox Processing• In-House Processing• Manual Electronic Payment Processing

Technology helps World-Class Corporations achieve:• Savings

• 100% Elimination of Data Entry Costs• 50-75% Process Efficiency Improvement• 40-50% Reduction in Exceptions• 1-3 Days Sales Outstanding Reduction

• Process Improvements• Cash Application• Deduction Management• Collections

• More timely and accurate data into ERPs

Cash Application Opportunity


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Coupled Payments

Decoupled Payments

Traditional Electronics

Data Entry and Matching Payments to Remittances is Manual, Time Consuming, and

Resource Heavy

EDIEDI


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Coupled Payments

Decoupled Payments

Open Scan Electronics


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Electronics Automation– How it Works

Here’s the Breakdown

Auto CorrelationSolutions ModeStandard ModeCTX / CCD+Payment Only


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After training the system, Auto Correlation will Find Matches and Process Them Without Human Interaction

Newest Enhancements– Automation Mode

Evaluating a Remit

Payment Remittance Determining a Score• Complete or partial originator email

address• Accurate or similar amount

• Manually entered• In the Subject• Located next to the word TOTAL• In the Body

• Other Attributes• Reference number• PO number

Score= 89


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Newest Enhancements– Automation Mode

Determine Routing

Remittance

Is it the highest rated

match?

Is itfar enough

from the second

candidate

Auto Correlate

Yes Yes

No No

SolutionsMode

SolutionsMode

Does it meet the minimum

confidence threshold

Not a Candidate

No


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• Highly Automated Matching and Scoring• The System Learns Which Remittances and Payments are Likely to Match• Simple One-Click Matching• This Trains the System and Creates History Which is Essential

Newest Enhancements– Solutions Mode

Choose the Correct Remit Manually and Train the System While Matching

Scoring is Based on How Relevant the Remit is to the Payment


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1

Examine a payment

2

Search and examine remit(s)

Standard Mode


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Correlate

3

4

Submit

Standard Mode


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• Coupled electronic payments such as CTX & CCD+ are processed like a check and remit. Even with electronic payments, there are typos, short pays, and other anomalies that need to be identified.

• “Payment Only” is simply processed like a “Check Only”

CTX / CCD+ / Payment Only


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Other Feedback & Questions

?


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If you would like to learn more or have additional questions, visit www.openscan.com, e-mail [email protected], or call 303.867.7431

Thank You For Attending:

http://www.openscan.com/

mailto:[email protected]

skies clear for receivables automation - managing electronic payments in the cloud

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b2b payments

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