How to Meet Evolving B2B Payment Demands

Featuring:

Nick Babinsky, BilltrustEric Smith, Modern Distribution Management

March 13, 2018

Sponsored by:

• The latest data on B2B payment trends, including the rapid growth in card payments

• How automation in your customers' Accounts Payable departments is creating challenges for your Accounts Receivable

• Methods for reducing manual work due to unique payment types and frequent exceptions

• Best practices for managing the fees associated with each type of customer payment

• And we'll close with a Q&A session

Agenda

Nick BabinskyVice President of Payment Strategy, Billtrust

Speakers

Eric SmithEditor,Modern Distribution Management

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Evolving B2B Payment DemandsKeeping pace with customer payment preferences in the digital age

Nick BabinskyVice President, Payment Strategy

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ABOUT BILLTRUST1,500+ enterprises automate their accounts receivable with Billtrust. In 2017, the company processed over one trillion in receivables for B2B distributors and suppliers via invoice presentment and payment channels.

Building Supply Plumbing / HVAC Electrical Supply

Medical Sport & Apparel 15+ Other Industries

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PLATFORM FOR DISTRIBUTORSBilltrust delivers invoices and processes payments through traditional and non-traditional channels.

Paper Mail

EIPP

Fax & IVR

Mobile

Email

Traditional End-Points

Non-Traditional End-Points

Virtual Card Issuers

AP / eInvoicingNetworks

Bank Portals

Invoice Data

Remittance

Funding

Bill Images

Payment Instructions

Supplier ERP

Bank / Merchant Account

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NOTEWORTHY TRENDS

The decline of checks has slowed

Cards are the fastest growing form of payment

ACH is getting faster AND slower

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PAPER CHECKS IN B2B

Association of Financial professionals: 2016

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YOUR CUSTOMERS ARE DIGITIZING A/P

75+ Payables (A/P) Platforms

Your customer

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YOUR CUSTOMERS ARE DIGITIZING A/P

75+ Payables (A/P) Platforms

Your customerCapture invoices Approve invoices

Send payment

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THE PROBLEM

75+ Payables (A/P) Platforms

Your customer

Send payment

You

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THE RESULT

75+ Payables (A/P) Platforms

Your customer

Send payment

You

I don’t know my vendors bank info?!

I know their mailing address, email, or

phone number!

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WHAT YOU GET

Lots of checks from customers and

payables platform

Lots of phone calls from customers that want to pay by card

Lots of ACH, wire, and credit card

instructions by email

Not ideal:Checks are slow

(DSO) and lockbox exceptions are manual

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WHAT YOU GET

Lots of checks from customers and

payables platform

Lots of phone calls from customers that want to pay by card

Lots of ACH, wire, and credit card

instructions by email

Not ideal:Ties up staff and

increases PCI exposure

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WHAT YOU GET

Lots of checks from customers and

payables platform

Lots of phone calls from customers that want to pay by card

Lots of ACH, wire, and credit card

instructions by email

Not ideal:Ties up staff and cash application is manual

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Here’s what yourorganization can do

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FOR CHECKS THAT LEAD TO EXCEPTIONS

Software can automatically extract data from lockbox payments that are otherwise keyed.

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Even exceptions can be auto-matched and

scored to open balances.

FOR CHECKS THAT LEAD TO EXCEPTIONS

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NEW APPROACH TO PHONE PAYMENTS

• Making staff available to field phone calls

• Asking for cards each time from repeat customers

• Unsecured storage of credit cards for subsequent

payments

• Using recorded phone lines

• Proximity of input devices (terminals)

• Using unsecured input devices

OLD

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NEW APPROACH TO PHONE PAYMENTS

• Making staff available to field phone calls

• Asking for cards each time from repeat customers

• Unsecured storage of credit cards for subsequent

payments

• Using recorded phone lines

• Proximity of input devices (terminals)

• Using unsecured input devices

• Self-service alternatives:

- Interactive voice response

- Electronic invoicing and payment portals

• Tools to tokenize and vault cards

• Point-to-point encryption devices

OLD NEW

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SELF-SERVICE FOR SMB CUSTOMERS

• Accept ACH and card

• Complete remittance is created from the invoices that are selected for payment

• Force customers choose between early pay discounts and paying with card

• Customers can’t pay late and use card

• Optimize interchange to lower costs (Level 3)

Self Service Portal

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FOR LARGER CUSTOMERS

Your customer

If you had 10+ distributors, would you visit each vendor’s portal?

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FOR LARGER CUSTOMERS

• Hand-key credit card numbers received by email

• Maintain spreadsheets of cards and login

credentials

• Manually apply remittances to ERPs

OLD APROACH

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NEW APPROACH TO EMAIL PAYMENTS

• Use automation to open emails, attachments and portals to run payments

• Data is posted to your ERP in an electronic lockbox file

• Technology can match payments to open invoices / balances

Virtual Card Inbox

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NEW APPROACH - AUTOMATION

Payment instructions are extracted from emails, attachments, and portals

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NEW APPROACH - AUTOMATION

Payment instructions are extracted from emails, attachments, and portals

Remittance data are consolidated in a electronic lockbox file for posting to your

ERP

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NEW APPROACH - AUTOMATION

Payment instructions are extracted from emails, attachments, and portals

Remittance data are consolidated in a electronic lockbox file for posting to your

ERP

Payments are processed at Level 3 rates and deposited to your bank

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WHERE VIRTUAL CARDS ARE PREVELANT

Source: 2014 Purchasing Card Benchmark Survey RPMG Research

Product Based Industries Service Based Industries

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WHO IS PUSHING THIS CARD GROWTH

• Improve cash flow throughextending payment

• Earn rebates

• Shift risk/liability of fraud to banks

• Share in the revenue that results from the cost of acceptance

Buyers Banks / Networks

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INCREASE IN THE USE OF CARDS IN THE B2B SPACE

Mercator Advisory Group

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ADDRESSING THE FEES

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Steve’s Pro Shop pays $1,000 to ACME Supply using a Capital One card. ACME Supply pays 2.5% ($25) to accept the card.

~85% of the $25

Goes to the issuer, Capital One, to fund cardholder operations and rebates

= $21.25interchange

~10% of the $25

Goes to the merchant processor which ACME Supply uses to accept card payments

= $2.50markup

~5% of the $25

Goes to the network for allowing Capital One to transmit the payment from the cardholder to the merchant

= $1.25assessment

CARD COSTS

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LOWERING THE INTERCHANGE FEE

Level One

Level Two

Customer location, zip code; merchant name; transaction amount; date;

Level 1 information and customer tax ID number; business and corporate cards must include sales tax number; purchasing cards must include sales tax and customer code; customer minority code and customer state code;

Level 1 and Level 2 information; corporate cards must include line item data; item product code and/or item name

Depending on the detail of the information that is passed along with the card transaction, it may qualify for

lower interchange rates.

1 2

Level

Three

3

Level

Two

Level

One

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CARD STRATEGY GOES BEYOND FEESType of customers you accept payment (e.g. COD and/or invoice)

Channels of payment acceptance

Terms of sale for credit card

Allocation of payment card fees

Handling of refunds and chargebacks

Level II/Level III data

PCI Compliance policy

12345

67

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Key Takeaways

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A/R IN 2018 IS COMPLEX

Processing payments is more complex & labor-intensive

Payment types are becoming more and more diverse

B2B Checks are not going away

Unauthorized deductions are growing

Decoupled remittances are growing with electronic payments

Multiple divisions and ERP’s make posting difficult

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FOUR AREAS OF FOCUS

Manual Work Security Reconciliation Fees

• Keying payments (emails and phone)

• Retrieving / keying remittance (portals)

• Researching exceptions

• Working with IT on PCI audit

• Cost of breaches

• Matching payment with remittance

• Timing• Credits / refunds

• Lockbox exceptions

• Interchange• Merchant

processing

Billtrust content only

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Thank You

www.billtrust.com

How to Meet Evolving B2B Payment Demands

March 13, 2018

Sponsored by:

Questions?