Payments Optimization:

Mastering the Dance with Your Suppliers

Ernie Humphrey, CTP

CEO & COO

APP2P SPRING CONFERENCE & EXPO

LEARNING OBJECTIVES

➢ Identify and remove inherent barriers to accounts payable

success at your company.

➢ Define the benefits of improving supplier relationships and

impacting productivity across the enterprise.

➢ Discover how to take control of your optimize how and when

you pay suppliers.

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OUR AGENDA

➢ The Evolution of Accounts Payable

➢ Why AP is Getting so Much Attention from Finance Leaders

➢ What AP Automation Done Right Looks Like

➢ Supplier Relationship Management: Challenges & Opportunities

➢ Invoice Processing: Challenges & Opportunities

➢ Taking Control of Payments: Challenges & Opportunities

➢ 10 Ways AP Automation Done Right Impacts the Bottom Line

➢ Closing Thoughts & Resources

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The Evolution of Accounts Payable

THE EVOLUTION OF ACCOUNTS PAYABLE

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Source: Ardent Partners; The State of ePayables2016

THE EVOLUTION OF ACCOUNTS PAYABLE

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Source: Ardent Partners; The State of ePayables 2017

THE EVOLUTION OF ACCOUNTS PAYABLE

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Areas Currently Managed/Supported by AP

Source: Ardent Partners; The State of ePayables 2017

THE EVOLUTION OF ACCOUNTS PAYABLE

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Source: Ardent Partners; The State of ePayables 2017

Essential Elements for Future Success

WHY ACCOUNTS PAYABLE, WHY NOW

➢ Real time data for better cash management has become one of the top

priorities for CFOs.

➢ Companies are realizing the value of mitigating A/P processing costs.

➢ Companies are realizing the strategic value of improving supplier

relationships.

➢ Companies are realizing the value of controlling how they pay suppliers.

➢ Payments fraud is still rampant.

➢ The right technology is affordable to any business size and

cost-effective.

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LIVE POLLING QUESTION

Where is your company currently at in terms of the process of

automating AP?

A. Just starting the discovery phase

B. Currently evaluating AP automation solutions

C. Have our shortlist of AP automation vendors

D. Implementing/have AP automation in place

E. I don't know or N/A

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THE ACCOUNTS PAYABLE PROCESS

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Supplier Relationship Management:

Challenges & Opportunities

LIVE POLLING QUESTION

How would you characterize the overall state of your company’s

relationships with suppliers?

A. Not good, poor communication, constant issues

B. Not good but getting better

C. Acceptable

D. Good, we communicate and collaborate effectively

E. I don't know or N/A

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SUPPLIER ONBOARDING PAIN POINTS

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SUPPLIER MANAGEMENT PAIN POINTS

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Inefficient Dispute Resolution

SUPPLIER MANAGEMENT PAIN POINTS

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Source: Paystream Advisors: 2017 Supplier Management Report

AP AUTOMATION:

BETTER SUPPLIER RELATIONSHIPS

➢ Mitigates time spent on phone with suppliers resolving real or

perceived issues.

➢ Facilitates opportunities to own how you pay suppliers

➢ Facilitates opportunities to capture existing discounts.

➢ Facilitates opportunities to negotiate discounts, i.e., dynamic

discounting.

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Payments: Challenges & Opportunities

LIVE POLLING QUESTION

How would you characterize the level of control you have regarding

how you pay suppliers?

A. None

B. Not much

C. Some, and we are working to gain more control

D. Quite a bit, this is a strategic focus

E. I don't know or N/A

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PAYMENTS PAIN POINTS

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PAYMENT TYPES

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•Checks

•ACH

•Fedwire

•Commercial Card

COMERCIAL CARD PROGRAMS

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• Purchasing Cards- Often leveraged for low-dollar purchases

• Corporate Cards- Business travel/T&E

• Fleet/Vehicle- Fuel and vehicle maintenance

• Ghost Cards- function like p-cards with reusable account numbers and

spending limits that can be set up to refresh each month

• Single-Use Cards- A type of virtual card account. A supplier receives a

one-time use virtual account number to affect the payment for an invoice (s).

• Virtual Card Program- Certain programs option allows a straight-thru

payment through the card network or issuer where both parties are members

of an electronic payment networks.

THE B2B PAYMENTS LANDSCAPE

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Source: Paystream Advisors: 2017 Electronic Payments Report

LIVE POLLING QUESTION

How would you characterize the current mix of your supplier

payments types:

A. Majority by checks

B. Majority by electronic payments (ACH, wire, card payments)

C. About equal between checks and electronic payments (ACH,

wire, card payments)

D. I don't know.

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PAYMENT COSTS BY PAYMENT TYPE

➢ Sending a paper check is 10 times more expensive than the internal or

external cost of sending and receiving an ACH payment, and receiving

a paper check is more than 5 times as expensive.

➢ The best estimated median cost of executing a wire payment is over

$14.00.

➢ The reported median cost range for outgoing card (Procurement, T&E

and Virtual) payments is between $1.00 - $1.99.

➢ The median range of rebates rewarded on annual card spend is between

26- 50 basis points.

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PAYMENT METHOD PORTFOLIO

➢ Your company’s current portfolio of supplier payments by

payment type

➢ Changes in percentages by payment types

➢ Goals relative to the mix of payment types to suppliers

➢ Changes in payments types offered

➢ Programs in place to convert suppliers to target payment types

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SUPPLIER E-PAYMENTS:CONVERSION MYTHS

➢ Electronic payments risk exposures are more significant than those

associated with checks

➢ Customers are unwilling to convert to electronic payments

➢ Inability to link remittance and payments

➢ Lack of integration of remittance information with financial systems

(ERP)

➢ Converting to electronic payments and managing and leveraging

remittance information will require significant IT resources

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ACTUAL TRENDS IN PAYMENTS FRAUD

Source: 2018 AFP Payments Fraud and Control Survey

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SUPPLIER PAYMENT TYPE REQUESTS

Source: Paystream Advisors: 2017 Electronic Payments Report

SUPPLIER E-PAYMENTS:CONVERSION REALITY

➢ The risk of payments fraud is less with electronic payments

➢ More and more companies prefer electronic payments

➢ Technology can automate the collection and capture of remittances

➢ Technology can automate the linking of remittance and payment data

➢ SaaS-based solutions result in minimal overhead & oversight from

the IT department

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➢ Receive payments more quickly- improved cash flow.

➢ More effective working capital management.

➢ Receive detailed remittance information which lowers processing costs.

➢ Eliminate processing inefficiencies caused by manual process and inefficient

exchange of information.

➢ Increased security and controls.

➢ Easier reconciliation.

➢ Ability to track payments status- improved cash forecasting.

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SUPPLIER E-PAYMENT BENEFITS

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TOP OBSTACLES TO CARD PROGRAM ADOPTION

Source: Paystream Advisors: 2017 Electronic Payments Report

➢ Effective and efficient processes in place to support desired payment types

➢ Being a good customer

➢ Communicating the benefits to suppliers

➢ Faster payment times

➢ More secure and accurate payments

➢ Working with ePayables solution providers

➢ A multi-stage phase-out program

➢ Specify an electronic payment method within supplier contracts

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OVERCOMING E-PAYMENT ADOPTION OBSTACLES

➢ Supplier Data Management

➢ Supplier Enrollment into Programs

➢ Streamlines the payables process by consolidating multiple payment types into a single

electronic file

➢ Conversion of Suppliers to Electronic Methods

➢ Supplier Education

➢ Reduces costs by optimizing the most efficient payment method accepted by each vendor

➢ Improves working capital by speeding your payment processing

➢ Brings more control over your payments

➢ Improves working capital by speeding your payment processing

➢ Brings more control over your payments

➢ Remittance details are transmitted automatically so vendors know when, why, and

how they have been paid

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PARTNERING WITH ePAYABLES SOLUTION PROVIDERS

Source: Paystream Advisors: 2017 Electronic Payments Report

AP AUTOMATION:

TAKING CONTROL OF PAYMENT TYPES

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➢Mitigates payment fraud exposures

➢Mitigates the cost of making payments

➢ Commercial payment types can offer rebates

➢ Improves working capital management

➢ Improves compliance and controls

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TOP BENEFITS OF E-PAYMENTS

Source: Paystream Advisors: 2017 Electronic Payments Report

Closing Thoughts & Additional Resources

CLOSING THOUGHTS: SUPPLIER RELATIONSHIPS

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➢ The Onboarding Process- make it a seamless experience.

➢ Educate Suppliers- the benefits of electronic document exchange, electronic

payments, payment timing.

➢ Supplier Contracts- pay attention to terms including the payment terms (types

and timing).

➢ Maintain Open Lines of Communication- minimize response times to

supplier inquiries.

➢ Minimize the Asymmetry of Information

➢ Provide Pro-active and Consistent Support

➢ Visibility into Communications with Suppliers- leverage technology that

offers a 360 degree view of supplier relationships.

CLOSING THOUGHTS: MASTERING THE DANCE

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➢ Efficient processes and technology to support desired payment types.

➢ Efficient exchange of invoices and related remittance information.

➢ An environment of proactive supplier relationship management.

➢ Understand your supplier’s cost of accepting different payment types

➢ Communicate an understanding your supplier’s cost of accepting

payment types.

➢ Identify the conversion type that makes the most sense to a supplier-

Check to ACH. Check to Commercial Card?

➢ Communicate the benefits to converting to a desired payment type.

➢ Partner with ePayables solution providers

AP AUTOMATION IMPACTS THE BOTTOM LINE

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1. Mitigates invoice processing costs

2. Mitigates the payment of duplicate invoices

3. Mitigates time spent resolving supplier issues/disputes

4. Allows discount opportunities to be captured

5. Facilitates early payment program (dynamic discounting& supply chain

financing) opportunities

6. Impacts the productivity of employees processing invoices

7. Mitigates payment processing costs

8. Rebates from commercial card payments

9. Improves working capital management

10. Impacts the productivity of employees approving & affecting payments

ADDITIONAL RESOURCES

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➢Payment Automation: The Value Of Optimizing Payments

➢Ardent Partners: The State of ePayables 2017

➢Paystream Advisors: 2017 Electronic Payments Report

➢The State of ePayables 2017: The Convergence of Cash,

Suppliers, and Intelligence

➢The Strategic Advantages of AP Automation

➢AP Automation ROI Calculator

Q&A

THANK YOU!!!

Ernie Humphrey, CTP

CEO & COO

Ernie@360thoughtleadership

https://www.linkedin.com/in/erniehumphrey