May 20-22, 2018

Orlando, FL

Aligning Payments

Jack Reynaert: Manager, Global Travel, Financial Shared Services

Dominic Calderone: Manager, Accounts Payable Site Integrations, Financial Shared Services

Meritor Inc.

• Meritor, Inc. is a global supplier of a broad portfolio of axle, brake and suspension solutions to original equipment manufacturers and the aftermarket for the transportation and industrial sectors. We serve commercial truck, trailer, bus and coach and off-highway machinery manufacturers, in addition to defense contractors.

• Operations in 20 countries, 5 continents, 62 locations with over 8000 employees

Global Footprint

Purchase 2 Pay Organization

• Under Financial Shares Services Structure

– Director P2P/GPO• Project Manger/Site Integration

– Vendor Maintenance

– AP inquiries

• Manager, Shared Services Processes

– Global invoice processing

• Manager, Payables

– Global payment processing

• Manager, Global Travel & Expense

– Indirect / Individual incurred expense

– Typically via Corporate Card

Meritor’s Corporate Travel Department• Rent-a-Plate with own ARC#

– Direct Support for Travel Bookings, from on-site operations

• USA

• Canada

• Mexico

• Australia

• Singapore

• Japan

– R12 Global Travel/Expenses

– $20m (95% on Card)

– 200k Transactions

– 30% non-Travel

» (one-card/non-USA)

• USA P-Card $25m (managed indirect materials Purchasing)

• Supporting / Staff:

- Travel Booking – 1.5 on-site agent(s)

- Expense, Audit, Reporting , Implementation – 1 Sr. analyst

- Corp. Card, Risk Mgmt. – 1 Sr. analyst

- Meetings Mgmt. – 1 on-site agent

- Corp. Jet - .5 on-site agent & 2 pilots

- Dept. & Vendor Mgmt. – 1 Manager

Global Travel Services

Collaboration within Finance

• Integrated within FSS - P2P ~ Expense Report Payables Process

• FP&A - Expense Detail & Spend Analysis Reporting – Budget

• Accounting – Accrual Capture / Reporting

• Internal Audit – Trained & Granted Complete Access to Expense Detail

• Tax – Payment via Corp. Card & Concur Expense Controls- Concur Expense Access & Receipt Reconciliation

- Global T&E VAT Reclaim Third/Party Management

Optimizing Travel Payments

• Expenses properly aligned to GL through daily PeopleSoft (HR system, feed)

• Mandated Global Travel Corporate T&E Cards linked to a Global Expense Management Tool

– All card expenses & credits are posted, individuals are notified by the expense tool = accurate data

• Audit trails are created and maintained

• Customized reporting available for quick analysis

Value of Corporate Card Mandate

• Travel Card utilization

– Bypass of card program results in:

• Lost Basis Point Recovery (1.5%)

• Inability to track credits applied to personal cards (.5%)

• Fraud Controls, eliminate dupe payments (.5%)

• FX Fees (.5%)

• Employee credit/fraud exposure

• Cost of Above• $20m x 3% = $600k

– 10% are not using card = $60k/yr. lost opportunity (1%=$6k)

Unified Payment Channel

• Expense detail = greater management controls

• Using a unified payment channel for Travel, pushing these “controllable” expenses though an expense processing tool designed for travel, provides the detailed reporting necessary for negotiations… with other benefits:

– Reduces duplicate payments• No check requests or wire transfers to hotels

• Reduces burden on payables

– Captures all expenses associated with an event for post-event reporting/analysis

Credit is King in Foreign Lands

• Mandate Card Usage “Whenever Possible”

• Choose a Highly Accepted Card Brand

• Avoid Cash / Currency Exchange Fees– These fees add up quickly

– Encourage Travelers to use ATM to Withdraw Small Amounts of Cash

• Advise them to use “Floating Rates” from ATM’s

• Provide ATM Safety Tips (don’t use free standing ATM’s)

– Eliminate Cash Advances• Provide a path to payments & prompt personal

funds reimbursement

Individual Card vs. Everything Else

• Expense systems provide an easy path for

individual reconciliation… explore options that fit

• Where do Ghost/Central Cards work best

– Recruitment, Contractors, Credit Risk Regions

– Bucketing Expense Types: Meetings, Air,

Incentive/Events

• Options to Consider: Managers Card, Virtual,

etc.

– Using a “Managers Card”, which is Corporate Liable,

and linked to the GL of the department responsible for

the expense, reduces manual reconciliation.

Show Me The Money!

• Accounting for Basis Point Revenue

• Build Your Case (Track Your Results)

– Revenue can cover the cost of the expense tool

– FX Fee Avoidance

– Surplus revenue allocated back to departments

– Shared Services budget reduced by revenue

• Program bypass costs the company $’s

Tracking Card Metrics

Shared Services – Accounts Payable

▪ Headquarters in Troy, MI

▪ Locations serviced: 22- North America: 16 sites- Europe: 5 sites- Asia-Pac: 1 site

▪ AP Responsibilities- Invoice processing- Process Reengineering- Payment processing- Vendor Maintenance & Purchase Order administration- Internal & external AP “help desks” for invoice and payment inquiries

▪ Continuing to integrate additional locations into the Shared Service model

- Asia-Pac- South America- India

Shared Services – Accounts Payable

• Key drivers- Process standardization

- Reengineering

- Common, automation software

- Centralization (conversion from two AP centers to one)

Evolution of AP Shared Services 2008 Today

Personnel XX ~50%

Site personnel 28 0

Annual invoices processed ~130,000 ~200,000

Sites integrated 4 13

Shared Services – Accounts Payable

▪ Personnel reductions/reallocations

▪ Process controls- Segregation of Duties- Accounting accuracy- Eliminate risk of duplicate payments

▪ Improved supplier relations- Pricing- Issue resolution

▪ Common process for vendors- Payment terms- Invoice processing- Central point of contact

Shared Services – Accounts Payable

▪ Volumes per month - ~16K invoices- ~400 internal/external help desk inquiries

▪ Metrics- Percentage of invoices on hold- Percentage of electronic invoices- Percentage of on-time payments- Purchase order compliance- Electronic payments- PO Price accuracy

▪ Electronic invoice processing- ~ 60% of total invoice volume- Evaluated Receipt Settlement (~80% of North America productive suppliers- Employee Expense Reports, EDI and Pay on Consumption (POC)

Integration Strategy

▪ Transition travel process into automated Concur process- Documented and clear approvals- Automated expense processing & payment- Improved process controls- Reduced risk of errors & fraud - Efficiency gains translated to personnel reduction or reallocation

Shared Services – Accounts Payable

Paperless Processing

On Time Payments

On

Tim

e P

aym

ents

by

Loca

tio

n

Location # of Invoices PaidOn Time

Payments %

Total 23,876 86.7%

Region 1

Region 2

Region 3

Region 4

Region 6

Region 5

18,451

3,448

1,049

50

301

577

86.4%

95.6%

82.4%

74.0%

29.2%

85.3%

Pap

erle

ss P

roce

ssin

g b

y Lo

cati

on

LocationElectronic

Payments %Electronic Invoices %

Total 95.3% 63.1%

94.0%

100%

100%

100%

100%

100%

75.0%

44.9%

0.2%

15.0%

2.6%

0.0%

Region 1

Region 2

Region 3

Region 4

Region 6

Region 5

94.8% 93.7%95.3% 95.3% 94.9% 94.6% 95.8%

92.1%

97.1% 96.2%94.7% 96.0% 95.3%

57.7%59.4%

62.6%

58.5%60.7%

64.2%

60.0%61.7%

57.5%

63.9%60.6% 61.3% 63.1%

40%

50%

60%

70%

80%

90%

100%

Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18

Electronic Payments %

Electronic Invoices %

Goal

85.2% 85.9%86.7%

86.9%

87.2%

88.7%86.0%

88.4% 90.5% 88.9%

76.3%87.4%

86.7%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar-17 Jun-17 Sep-17 Dec-17 Mar-18

# of Invoice Payments

On Time Payment %

Goal

Goal

Shared Services – Accounts Payable

Purchase Order Compliance

Invoices on Hold at Month End (OCR)

Invo

ices

on

Ho

ld b

y Lo

cati

on

LocationMonthly Scan

Volume% of Invoices

on Hold

Total 15,720 3.3%

8,472

2,843

1,574

63

1,927

841

4.1%

8.2%

4.8%

2.9%

6.9%

12.9%

PO

Co

mp

lian

ce b

y Lo

cati

on

LocationPO Price

Accuracy %PO

Timeliness %

Total 87.5% 93.4%

99.5%

61.5%

84.8%

100%

90.5%

68.4%

93.4%

96.2%

87.2%

85.7%

95.8%

81.1%

Region 1

Region 2

Region 3

Region 4

Region 6

Region 5

Region 1

Region 2

Region 3

Region 6

Region 5

Region 4

10.0%

8.5%

11.2%

7.2%

4.9%

5.7%

2.9%

2.4%

2.5%

3.0% 2.4% 2.3%3.3%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Mar-17 Jun-17 Sep-17 Dec-17 Mar-18

Monthly Scan VolumeOn Hold as % of Monthly Scan Volume

Goal

87.3%86.9%

88.2%

87.8%

86.9%87.5%

82.1%84.3%

80.0%

88.3%82.9%

86.9%

87.5%

96.1% 95.2%95.1% 95.5%95.3% 94.8% 95.7% 93.3%91.1% 92.4% 93.5% 94.0% 93.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18

PO Price Accuracy %PO Timeliness %

Aligning Payments

• We hope you gathered some nuggets of information which you can use to enhance your processes.

• Every Company is different… building the optimal model to fit your needs takes time and effort, with continual monitoring to achieve desired results

Payments for travel come in all forms from multiple directions all over the globe. Travel is procured on the fly, or months in advance, and often changes like the wind. Travel vendors offer a smorgasbord of options and upgrades to purchase. Travelers often act on impulse, doing anything and everything in their power to get to their assignment in reasonable time and comfort… while fully expecting the Company to cover all their expenses. In this session we will identify the pitfalls of not having a definitive payment process as well as the advantages of a fully aligned payables procedures.

May 20-22, 2018

Orlando, FL

Q & A

May 20-22, 2018

Orlando, FL

Contact InformationJack Reynaertjack.reynaert@meritor.com

248-435-6753

Dominic Calderonedominic.calderone@meritor.com

248-435-4409